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The strategic repositionning of Olympique Lyonnais: towards a new business

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Aurélien Francois Emmanuel Bayle

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THE OLYMPIQUE LYONNAIS STRATEGIC REPOSITIONNING:
TOWARDS A NEW BUSINESS MODEL
Aurélien François, University of Burgundy, and Emmanuel Bayle,
University of Lausanne

Learning outcomes:
Upon completion of this case the reader should be able to:
• Define the concept of business model for sport professional clubs;
• Identify the determinants of business model changing in a longitudinal perspective;
• Consider the stakes of CSR and community-based strategies in professional sport;
• Critically assess the opportunistic transition of an economic-based model to a more social one.

Overview of the case:

This case focuses on the French soccer club of the Olympique Lyonnais (OL) which presents
particular features in many kinds of ways. In France, OL is the only club listed on the stock exchange
market and the only to own a private stadium which should be delivered in 2016.
The OL case is really interesting since several recent economic and sportive failures pushed the club’s
managers to think their traditional business model over. Cornerstone of this new strategy, the stadium
must support that model following a pattern which takes its roots in a more social dimension.

Case study
Founded in 1896, OL establishes itself in its own rights in 1950. Until the end of the 80s, it was
growing in the shadow of AS Saint Etienne, suffering by comparison from this successful
neighbouring club. In 1987, OL was taken over by Jean-Michel Aulas, a local company-owner and a
young sport passionate man. This year, OL had a 1.5 M€ projected deficit. It represented 60% of the
2.5 M€ turnover though the club worked, technical staff excepted, with 4 persons only.
Aulas proceeded to a complete structuration of the club by duplicating his entrepreneurship methods.
During his first year as a President, he decreed a plan entitled « OL Europe », tackling with several
professionalization steps through which the club should quickly go. In 1992, a commercial company
was added to the historic association turning the former non-profit logic to a more commercial one.
Then, Aulas progressively recruited on the communication and marketing levels. But it's undoubtedly
at the end of this decade that several changes got OL in the sportainment era. In 1999, Aulas opened
part of the club's capital and welcomed Jerome Seydoux, CEO of the cinema corporation Pathe.
Putting 15M€, Seydoux became the second OL’s stockholder and also its vice-president.
Those two men then deeply restructured the club, by creating « OL Groupe », a holding displaying
various capital stakes in several sub-companies like OL Voyages, OL Images, OL Merchandising…
The activity of these sub-companies embodied a double strategy. Firstly, they allowed to internalize
costs previously paid to external services providers. Secondly, they participated in enhancing OL
brand value. Several licenses and by-products were thus created enlarging the club’s marketing
products offer. Even if their number has decreased, the organization is almost the same nowadays (cf.
Figure 1). In 2002, the former status of the club’s commercial company was turned into the status of a
SASP (Société Anonyme Sportive Professionnelle) then in 2012, in a SAS (Société par Actions
Simplifiée), This kind of status even closer to the common status reserved to the regular companies
allows the redistribution of profits to the stockholders and the remuneration of the managers as well.

Figure 1: Simplified Group organization chart as of 30 June 2014.

This strong professionalization allowed OL to reach an higher sportive and economic level. On the
sportive side, OL started to dominate French soccer by winning seven championships in a row
between 2002 and 2008 and participated regularly to the very competitive Champions League. On the
economic side, the club became meanwhile the first one (and the unique yet) to enter the financial
market. In 2007, the “OL Groupe” stock was introduced at a nominal price of 24 euros and allowed to
leverage almost 90 M€ the days following its introduction. In 2008, the club was going through its
more prosperous period generating 211.6 M€ of financial gain for a net excess result of 15.6 M€ and
employing 256 collaborators.
In the mid 2000s, the emerging models of construction and private exploitation of stadiums in Europe
reinforced Aulas’ conviction to build a new stadium to generate some extra incomes and maintain OL
at the top. Despite remodeling works which started for the 1998 World Cup, the Gerland Stadium,
built in 1926, was considered too old and too small. That Stadium wasn’t indeed able to answer the
demand of extra tickets, which for some of the Champions League matches, can go up to 200%.
Above all, OL is obliged to pay a fixed rental charge to the city of Lyon that owns the Gerland
Stadium and cannot currently enjoy its financial benefits except for ticketing. In 2004 was revealed the
project of a private stadium called OL Land. It was firstly set to be a 70 000 seats stadium deliverable
in the next 5 years for the amount of 140 M€. Revising its ambitions downwards, Aulas then proposed
in 2005 a Gerland remodeling project to Gérard Collomb, mayor of Lyon. However, this project was
quickly given away. The new stadium project resurfaced at the announcement of the UEFA Euro 2016,
attributed to France, and for which Lyon is a host city. The prospecting for such a complex to arise
were then oriented in the east part of Lyon. On July 2013 officially started the construction of the
“Stade des Lumières”.
The Stade des Lumières was thought like the multifunction arenas, to make sure of its year round
exploitation. Inside the new OL’s Park, including many facilities (hotels, restaurants, meeting
rooms…) that were commercialized since the start of the built, the new stadium should be able to
welcome 58 000 spectators, with 6000 seats reserved for VIP. Far from what was expected at first, the
 projected budget for the stadium financing reaches 405 M€. It is divided between own funding (135
M€) brought by the Foncière du Montout, a civil estate company specially created for that project,
bank loans (136.5 M€), issuing of bonds (112 M€) and benefits from the commercialization of the park
during its construction (21.5 M€). The prospection to attract a sponsor which would give its name to
the stadium is actually going on. The board of directors claims that the naming strategy will lead to an
annual gain of 10 M€ on a term running for at least 10 years.
However the building project was suffering from critics especially among some of the residents of the
11 impacted cities. Politicians and among them the ecologists protested as well. Even if that kind of
facility is privately funded, the access layout, estimated for 160 M€, should be yet financed by the
public sector and at the end by the taxpayer. Therefore, the construction of the stadium fell behind
schedule between the late 2000s and early 2010s.
Besides the postponed stadium project, the new model the OL managers want answers to economical
and sportive difficulties which accelerated the decline of the former “business” oriented project. That’s
why OL developed its “OL Academy” since 2010 aiming at refunding OL’s sportive politicy by giving
its resources to its formation center in priority. The reflection about that project was brought after
many mistakes in player’s trading at the end of the years 2000 and because of important financial
difficulties. The club then focused its recruitment on a formation policy allowing it to light its payroll
up thanks to the selling of big contracts (Bastos, Lloris, Lopez …). The nomination of Rémi Garde in
2011, former player and in charge of the formation center, as head coach and the arrival of young
players from the formation center each symbolized that new sportive strategy. This adaptation also
found its explication with the increasing gap between OL and the richer European and French clubs
(PSG & Monaco). On the economic hand, the OL Groupe stock has continued its drop since its entry
in 2007, going as low as 2 € in 2013. Finally, the relative failure of the brand OL in terms of marketing
rates confirmed the difficulties the club was going through. In 2014, according to the last available
report, OL Groupe boasted 120.5 M€ of financial gain and a net loss of more than 26 M€ (partly due to
the huge stadium investment) (cf. Table 1).

2007-2008 2013-2014 EVOLUTION

FINANCIAL GAIN 211.6 120.5 - 43%
Ticketing 21.8 13 - 40%
Sponsoring & advertising 20.4 19 + 7%
Media & marketing rights 75 56.2 - 25%
Brand-related revenues 38.5 16.2 - 58%
Player trading 55.9 16.1 - 71%

NET RESULT + 15.6 - 26.4 - 269%

Table 1: Comparison of revenues and net result between 2007 and 2014.

All these factors led OL to put forward the social dimension of the Grand Stade project. The
replacement in 2011 of the “OL Land” project by the one called “Stade des Lumières” then
semantically symbolized that strategic reorientation. In 2012, in the club’s financial reports statement,
Aulas was declaring that the construction of the new stadium offered wonderful development
perspectives, but also imposed a certain number of responsibilities.
De facto, OL undertook a corporate social responsibility (CSR) strategy at the dawn of the years 2010.
Following the example of great European clubs, OL wanted to emphasize on its citizen role. By
reaffirming the community dimension of its action, the CSR strategy wished by OL allows the
justification of its legitimacy as a major social and economic actor in the city. This new orientation
took its roots at first in the will to rationalize the club’s philanthropic initiatives with a private
foundation, created in 2007. OL Foundation thus led to maintain the historic relationships created
between OL and a pool of local non-profit organizations. But more than a simple philanthropic
strategy, the creation of the foundation was the symbol of the start of OL’s CSR strategy. In 2012, the
direction nominated one of the two only female administrators at the head of a CSR comity. Recently,
a CSR department was even created to develop the social policy of OL, a first for a French sport club.
OL managers gave a large slot to the feminine soccer, section for which the club affected both
important material and human resources compared to the standards of French and European soccer.
The transiting model in which OL is should be over by the delivery of the new stadium. Initially
forecasted on 2013, its inauguration won’t be celebrated before 2016. The annual stadium exploitation
incomes, which have been estimated between 70 and 100 M€ in 2020, must form the new financial
windfall of the club. It remains to be seen if these strategic orientations anchored in a strong social
dimension will be, as well, transitive or on the contrary be at the core of this new business model.

Questions
1. What is a business model? What does it mean for a professional sport club?
2. The determinants of change of OL traditional business model to a new social one are
numerous. List them and discuss about it.
3. What is CSR? How does it take shape in this case?
4. Could CSR perspectives be fully integrated to the core strategy of a professional sport club?
5. Could the new business model that appears in the OL case be sustainable? Enlarge your
answer to the other professional soccer clubs and more generally to the business of sport.

Conclusions
The business models of the professional football clubs have long been thought as an answer to the
need of sportive and economic performances. However, the introduction of new logics distilled by the
sustainable development trend, such as the necessity for an organisation to take into account the
interests of its stakeholders, questions this traditional model.
Clubs managers are more and more asked to think according to global performance principles, aiming
at the creation of new sustainable business models. The emergence of the model of private property of
European stadiums, painted in this case, totally illustrates our point. If this model answers first a
rentablity objective, it also engages the clubs in a long term relationship with their stakeholders.
Therefore, analysing the change of business model proves to be precious for clubs managers wishing
to have new managing possibilities at their disposal and also for the people responsible of the support
of the change conditions
 Recommended reading
The literature on the concept of business model is flourishing. We first suggest to the students to refer
to Drucker’s text (1994), published in the Harvard Business Review. Although he doesn’t use the term
‘business model’ explicitely, this author defines its concept. In the same review, Johnson, Christensen
and Kagerman’s article (2008) enables us to go beyond the definition of the concept by introducing the
benefits of a change of model with the help of recent examples.
Focusing on the football management, a book like Chadwick and Hamil (2009) allows to put the case
into perspective through the problematics every professional football club is confronted to. The French
speaking students could also refer to the very last work of Desbordes et Chanavat (2015), and more
especially the chapter of Scelles and Andreff (2015) allowing a contextualization of this study in the
french football.

Bibliography
Breitbarth, T., & Harris, P. (2008). The role of corporate social responsibility in the soccer business:
towards the development of a conceptual model. European Sport Management Quarterly, 8(2), 179-
206.
Chadwick, S. & Hamil, S. (2010), Managing football. An international perspective. Butterworth
Heinemann, Oxford, UK.
Desbordes, M. & Chanavat, N. (forthcoming), Le marketing du football, Economica, Paris.
Drucker, P. (1994). The theory of the business. Harvard Business Review, 72(5), 95-106.
François, A., Anagnostopoulos, C. & Bayle, E. (forthcoming). CSR practices in the French
professional sport context. Sport, Business and Mananagement: An International Journal.
Johnson, M.W., Christensen, C.M. & Kagerman, H. (2008). Reinventing your business model.
Harvard Business Review, 86(12), 50-59.
Paramio-Salcines, J., Babiak, K. & Walters, G. (2013), Routledge handbook of sport and corporate
social responsibility, Routledge, Oxford, UK,
Scelles, N. & Andreff, W. (forthcoming), Le modèle économique d’un club professionnel de football
en France, In Desbordes, M. & Chanavat, N. (Eds), Le marketing du football, Economica, Paris.

Recommended websites
Financial Times (2013). Jean-Michel Aulas: Football man who scores in big business, accessed 11th
July 2015 from http://www.ft.com/intl/cms/s/0/bf238a34-80d6-11e2-9fae-00144feabdc0.html
Le Nouvel Economiste (2011). Le business model de l’Olympique Lyonnais – du club de foot à
l’entrerise de spectacle, accessed 11th July 2015 from http://www.lenouveleconomiste.fr/le-business-
model-de-lolympique-lyonnais-du-club-de-foot-a-lentreprise-de-spectacle-11702/ (only in french)
Olympique Lyonnais (unknown). New stadium – Stade des Lumières. Accessed 11th july 2015 from
http://www.olweb.fr/en/team/new-stadium-167.html
The Harvard Business Review (2015). What is a business model?, accessed 11th July 2015 from
https://hbr.org/2015/01/what-is-a-business-model

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