Under Philippe Blatter, one of the sports industry’s brightest young executives, the Infront Sports and Media Group has undergone a recent rapid expansion – and is undeterred by a difficult financial climate.
Philippe Blatter does not like Infront Sports and Media to be referred to as an agency. The 44-year-old, who took up his position as chief executive of the company nearly three years ago, firmly believes it’s much more than that. “An agency buys something and sells it to someone else,” he says. “Infront adds value and tries to improve the sport. We believe that if you improve the sport all the stakeholders will be better at the end.”
It is a simple strategy that has served Blatter well in his first years in charge of the Swiss-based sports marketing group. Its standout deal with world soccer’s governing body Fifa sees one of Infront’s subsidiary companies, Host Broadcast Services, responsible for the entire television production at the World Cup as well as co-selling the Asian television rights for the tournament. In addition to this, Infront is also active in a multitude of sports including winter sports, basketball and motorsport. In many it is proactive, involving itself in the promotion of events and the development of leagues.
The Infront group is made up of a total of 12 companies. It is a majority shareholder in FG Sport Group, the promotional company responsible for the World Superbike Championship. Infront’s other subsidiaries are APF Marketing Services, a winter-sports marketing company holding contracts with World Cup biathlon as well as Austrian television channel ORF and the Austrian Olympic Committee. The group also owns Empire of Sports, a multi-sports online gaming platform developer; Infront Advanced Media Solutions, the group’s distribution service for new media rights; its archive Management company, which manages Fifa Films, an archive of major football tournaments; an Austrian hospitality company called Walch’s Event Hospitality; as well as wholly-owned subsidiaries in China, Finland, Germany, Italy and Sweden.
In Europe, aside from soccer, Infront is active in handball as the exclusive commercial partner of the European Handball Federation and also has interests in European volleyball and the Ladies European Tour golf. In winter sports it has long-term commercial agreements with six of the seven major winter sport governing bodies, working in ice hockey, bobsleigh and skeleton, luge, biathlon, curling and skiing.
All this activity across the sporting world adds up to a total of around 400 employees spread over 24 offices in 11 countries.
The group’s expansion has been swift. Its current incarnation was formed in 2002 after a management buyout of KirchSport, which was previously a subsidiary of Kirch Group. The buyout was supported by the late Robert-Louis Dreyfus, former Adidas chairman, and the international advertising agency Saatchi and Saatchi. The value in the company, which had formerly been part of International Sports Media and Marketing, was its wide-ranging agreement with Fifa. The new company was charged with selling Fifa’s international media rights for the 2002 and 2006 World Cups after International Sports Media and Marketing had filed for bankruptcy a year earlier, in 2001, after running up debts of US$425 million.
At the day-to-day helm since the end of the 2006 World Cup soccer tournament in Germany has been Blatter. He replaced Oscar Frei as part of a staggered succession process that had begun when Blatter had joined the company eighteen months earlier. He had previously made his name at management consultancy McKinsey Sports Practice for 11 years before joining Infront. He is also the nephew of Fifa president Joseph Blatter leading to inevitable claims of nepotism. The facts simply don’t back that up. Shortly after Philippe Blatter joined Infront, Fifa decided to internalise much of its international media rights distribution. While its relationship with Fifa remains strong in several other areas, the younger Blatter decided to push the company in a new direction.
“We needed a bit of a new strategy”, he says. “It basically has five pillars. One is that we would like to be number one in the business we are in; we would like to work to being the leader in winter sports and today we work with six of the seven federations. In summer sports it is just as important and we work in motorsport, football, in Italy and Germany, and basketball. The third pillar is China: we want to be the number one sports-marketing and entertainment company in China. We also want to develop our portfolio so as not to be too dependent on rights and to be very innovative. The fourth pillar is the entertainment part: if we look at the market, the gaming industry is something that, year-by-year, is growing very fast. The fifth is providing services to our winter sport partners”.
The highlight of its activity in soccer was the successful delivery of the global media rights sales of the last two Fifa World Cups, held in Japan and South Korea in 2002 and Germany in 2006. It is a marketing partner of the DFB, the German football association, and has recently been selected as the exclusive media rights advisor to Italian football’s governing body Lega Calcio, the precursor to the organisation’s new policy of centrally selling its television rights to Serie A. Infront is also handling the distribution of Asian media rights for the 2010 and 2014 World Cup, working with the Japanese agency Dentsu. It also works in Chinese football and has deals in place with China’s football association and the Chinese Super League.
Through the group’s largest and most prestigious subsidiary, Host Broadcast Services, Infront was chosen by Fifa to organise and produce the television coverage of the 2002 and 2006 World Cups and several other Fifa-sanctioned competitions. The partnership will continue until at least the 2014 World Cup in Brazil. Before that comes the 2010 World Cup in South Africa. “I think it’s on track,” Blatter says of early preparations. “Fifa is quite happy. Of course there are many challenges but I don’t think it’s because it’s South Africa – we had the same in Germany. It’s a huge, major event that needs to be put together and there are many operational items that need to be sorted. On the planning we are well on track, initially for the Confederations Cup next year. That is important not just on the sporting side, but also as a test of operations, the media management, transport, the stadiums.”
HBS currently has around 17 staff based in South Africa working out of two offices in Johannesburg. By this time next year it intends to have around 500 on-site working on the project, with up to 2,000 in South Africa by the time the tournament starts.
As Blatter explains, at the core of HBS’s plans for the tournament is being innovative. “We did high definition television in 2006, with 26 cameras in each stadium and we want to innovate – we are trying many different things. We are producing the French league for this season and we are the first people to introduce a special feed for mobile phones. At other events, it is always the feed taken for the television which is compressed and is sent to your mobile but because the mobile is a smaller screen it was not optimised. We have done this for the French league – it’s innovative and we’re very proud of it.” HBS also has plans to increase its delivery of 3D broadcasts, which it trialled this year at the ice hockey world cup.
Aside from its football and ice hockey commitments, HBS was also host broadcaster of the 2007 Rugby World Cup, staged in France, and has been involved in the 2006 Asian Games, which took place in Qatar, and the 32nd America’s Cup in Valencia in 2007.
Blatter’s claims that the company is much more than an agency are perhaps best illustrated by Infront’s activities in China, where it has been active for over three years. Unusually the company is involved in developing the product, notably basketball and soccer, as well as selling it in the country. The company calls it “absolutely key to creating the momentum that Chinese sport needs. Blatter puts it this way: “We have a little bit of a different approach, which is to develop the sport in the country.”
He adds: “There are 750 million teenagers in China and if even half of them are sports fans – you just have to do the calculation to see how big the market is. We also have to say it’s a very challenging market for many reasons. There’s two ways of entering the Chinese market. On the one hand you sell products from the outside, like for example the NBA does or the World Cup or even the Olympics. We took a slightly different approach. We said we wanted to develop Chinese sport. We have built from scratch operations in China working for the Chinese basketball league, where we deliver over 300 games per season and for the national team. We do the same for the Chinese national team in football and do some work with the Chinese soccer league.”
Its alliance with the Chinese Basketball Association goes far beyond the role of a traditional rights distributor. Blatter says that Infront has been involved in hiring proper nutritionists or coaches as well as arranging proper television coverage. It is also able to contribute ideas such as filling stadiums with children in order to present the right image to the wider world. “Sport is about energy, inspiration, motivations – very basic stuff, which in China we had to build up,” says Blatter. “In China they have been very responsive and thankful for it.
Chinese companies today don’t, I think, exactly know what to do with sponsorship or what activation really is – some have maybe thought that if they put money into events the government may one day help us. But we are lucky that China is a huge market, sport is a fantastic communications platform and many European companies are trying to enter China. We’ve been able to work with Tissot, UBS, big companies who are entering China through the platform of sport. It is still heavy weight-lifting there but it’s a fascinating place – there is so much being built in terms of facilities. It is going to be a huge market, just by the numbers.” Infront’s Chinese subsidiary has a staff of 50 people and has just appointed a new managing director with significant local experience, the former CCTV-5 (China Central Television’s sports channel) television executive Ma Guoli. Guoli was most recently the chief operating officer of Beijing Olympic Broadcasting, the host producer of the 2008 Olympic Games.
The rapid development of Infront’s services and subsidiaries has been based on securing long-term contracts with its major partners, a strategy that Blatter believes will certainly help the company during the current global economic downturn. “It gives us some immunity,” he says. “We have very long contracts, which makes us less hurt by the kind of downturn we have seen recently. We are in a lucky position. What we want to do is have long-term relationships and we have a very strong rate of renewal with our partners.”
Nevertheless Infront’s business has been adversely affected, at least in the acquisition of new business. Blatter has “concrete examples” of advanced negotiations with potential partners that have been postponed as a direct consequence of the financial crisis. And he is well aware that the first casualty for any company affected by an economic downturn, or even recession, is its marketing budget. “Sport has a core asset, which is a strong link with consumers,” he says. “Based on this I believe sport has quite a strong economic power. Of course, it is hit by the current situation in many places and it would be wrong to say that any business is immune from the current economic conditions. I was a consultant for many years for McKinsey and I did many cost-cutting projects and the first place to cut costs, and it’s very easy to do and quickly done, is in the sponsorship programme.”
He adds: “You are seeing some of the financial institutions who are having big trouble – many of these are sponsoring the sport industry. Banks and financial institutions have traditionally been quite strong sponsors. In England, in the Premier League, there are clubs who are working with financial institutions who have to ask themselves questions. There are other examples, like in tennis where sponsors are trying to work out if it is the right thing to do right now.”
However far from being bleak about the future Blatter believes that the “robust” nature of the sports industry will see it through even the most challenging economic period. “What is important with sport is its qualitative core values. When you look at the press, for instance the Financial Times, they don’t speak about who is winning [in business], they speak about who has cheated, who has taken big bonuses or banks going bankrupt. With sport it is quite different because it’s about winning and winners, youth and health and competition.”
“There is an overwhelming presence of sport where even now, in a financial crisis which is the worst we’ve had in many, many years, there’s still the Champions League, for example, and people going to stadiums and the stadiums are full.”
And he adds, with characteristic understatement: “I think that’s still quite an important element for sponsors and media companies.”