fcbusiness spent 48hrs with AS Monaco speaking exclusively to Vice-President – CEO Vadim Vasilyev about the club’s success on the pitch, their transfer policy, building the business and Financial Fair Play.
“From the very beginning of the season it felt pretty special,” recalled Vadim Vasilyev as we discussed the club’s 2016/17 season sitting in his office overlooking the harbour on the edge of Monaco’s border with France. “Then we had a victory over Paris [Saint-Germain] at the end of August and at that moment I was convinced that something very special was happening. I went to the dressing room and I said ‘Guys, this season we will go very very far!’,” he continued tapping his desk to force home the point.
Monaco would finish the season eight points clear of Paris Saint Germain collecting their 8th league title following a 17 year hiatus, scoring 107 goals and setting a record of 15 consecutive victories in the French league.
“There was just something there, there was a spirit,” he continued. “When you talked to the players it felt special. When everyone is friends and they push each other, and if they don’t play they’re still happy for the team to win, each one makes the other stronger. It was just there.”
And just there, in front of me, sitting proudly atop a shelf is the grand Ligue 1 trophy. But it wasn’t just the French league where success was achieved. In Europe, Monaco marched through to the semi-finals of the Champions League, sweeping aside the likes of Tottenham Hotspur, Manchester City and Borussia Dortmund. They would eventually be vanquished by Italian giants, Juventus.
Their success was built upon a team spirit and a willingness by coach Leonardo Jardim to change the playing system to 4-4-2 to accommodate the club’s front pairing of the experienced Radamel Falcao, who had returned to the club following a unsettled period in England on loan at Manchester United and Chelsea, and the raw talent that was emerging from the club’s academy – Kylian Mbappe.
“I give credit to the coach because he changed the system. We had never previously played 4-4-2 and in pre-season we started scoring goals and we had the feeling that things were going the right way,” he continued.
But this success didn’t come easy. Russian born Mr Vasilyev joined in 2013 after his fellow countryman; Dmitry Rybolovlev purchased a 66.67% stake in the club from the House of Grimaldi with the club floundering at the bottom of Ligue 2 and in very real danger of going out of business. With a background is in diplomacy, international trading and investments, Mr Vasilyev was charged, with investment from Mr Rybolovlev, of overseeing the club’s transfer business with significant
With the club stabilised, focus turned to achieving promotion under the guidance of then manager Claudio Ranieri. Winning the Ligue 2 title in 2012/13 saw the club achieve this goal and the following season they would finish second in Ligue 1 and reaffirm their place in the top league.
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Talent Development
During the 2013/14 season, AS Monaco’s squad boasted the likes of James Rodriguez and a young Anthony Martial with total transfer spend reaching over €160m. However, only €5m was recouped in player sales. The following season they would make a huge profit on player transfers with James Rodriguez moving to Real Madrid for over €75m after a number of sparkling displays for Columbia in the World Cup. The year after, Anthony Martial joined Manchester United at a record fee for a teenager at the time making him one of Monaco’s most profitable acquisitions.
Since then the club have garnered a reputation for nurturing young talent and the rise of Kylian Mbappe through the club’s academy being another sign of this astute sporting and business model.
“This is one of the great strengths of the club and a corner stone in our business model because the other revenue streams – for the time being – remain limited. Today, the transfer policy is the core of our business and sporting model,” he continued.
The club’s scouting network now includes sporting director Michael Emenalo who joined from Chelsea in November 2017 and will work with Mr Vasilyev in developing the club’s talent pathway. But AS Monaco, historically, are a successful club in French football, and a development pathway for young talent. Indeed, four of France’s 1998 World Cup winning squad came through Monaco’s academy system – Fabian Barthez, Theirry Henry, David Trezeguet and Emanuel Petit – the latter having left the club the year before that victory.
Noting with some frustration however, Mr Vasilyev, said: “When I came to the club five years ago, we tried to get a couple of players coming to Monaco – we were at the bottom of Ligue 2 and they were like ‘what is this club?’.
“But as we started to be successful, and we are historically a successful club, the interest came back and the transfers that made headlines mean we are now in a situation where players see us as the best opportunity to develop. So now when they look at where they can go, so many of them give us priority.”
AS Monaco is now seen as a step on a longer path for many players and is something Mr Vasilyev is well aware of, and indeed embraces, stating: “It’s a business model, but it’s a business model that is a part of the sporting model because as long as we let players go at the right time, then others will come because they will see us as part of the path.”
On the morning of my arrival, Southampton FC had reached a deal to sign Guido Carrillo for around €22m, joining Monaco’s other Premier League transfers for the 2017/18 season – Benjamin Mendy (€57m) and Bernardo Silva (€50m) at Manchester City and Teimoue Bakayoko at Chelsea for €45m. The sale of these four players to the Premier League made Monaco a healthy €174m.
Fundamental to the continued success of the club’s talent pathway is La Turbie. The academy complex that sits high up in the mountains above Monaco is one of the most profitable in world football with €250m+ of sales in the last 3 years. Counting the likes of Layvin Kurzawa, Yannick Ferreira-Carrasco, and of course, Mbappe as alumini, the complex is currently undergoing a €50m transformation to make it one of the most high tech elite training centres in Europe.
“It’s massively important to the continued success of the club. We will never be able to compete with the size of infrastructure with the likes of Manchester City or Tottenham Hotspur who have fantastic facilities, but I think we can compete with the expertise we have. I’m confident that we have the edge – a competitive advantage – in that we can bring our academy players through to the first team on a regular basis.”
That pathway continues with the signing of Pietro Pellegri, the 16 year old Italian who joined from Genoa at the end of January and is seen as one of the hottest prospects in European football. But he didn’t come cheap with Monaco paying €20m for his services making him the second most expensive young player in Europe. However, if the club’s trend for development and resale continues, it could look like a very shrewd investment.
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Developing A New Business Model
The previous evening I watched Monaco face an accomplished Olympic Lyonnais side in the Coupe de France. Despite a late resurgence, Monaco missed out in a 3-2 defeat. The game at the Stade Louis II was watched by less than 9,000 fans and therein lies a problem.
“You went to the game yesterday and the stadium was not full. This is a very small population and we have so many other disadvantages – so we said to ourselves ‘ok, how do we get the best out of what we have?’.”
Although the club would like to be the final destination for the players coming through, they are realistic to the restrictions that surround the club. Their stadium is owned by the local government and has a capacity of just over 16,500. Average Ligue 1 attendances during their title winning season reached just 9,586, someway short of rivals Paris, Marseille and Lyonnais who boast averages of over 45,000.
With profits on player trading central to the club’s business model at the moment, Mr Vasilyev is under no illusions of the need to drive revenues in other areas of the business. It’s also no secret that the club were sanctioned by UEFA for breaches of Financial Fair Play regulations in 2015, a major factor for their change in transfer policy, so I ask Mr Vasilyev his opinion of the regulations.
“Now that I can judge from a certain perspective I would say overall it’s a good thing for European football,” he commented. “I’m not saying that all has been remedied here and there are still issues to address but overall I think in Europe, less clubs are losing money and clubs are more careful about their financial models.
“For us, we had to really drastically change our business model. It was very difficult, it was very painful – people didn’t believe in me – but in the end it brought us success and we’ve got this experience and come out stronger.
“But this project would be not possible without the passion and vision of the President, Dmitry Rybolovlev. His everyday support guides us to perform better.”
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Unique Forever
So how does a club with a limited number of fans grow revenues and move away from its reliance on transfers? “This is very important because we have been breaking records in the transfer market and you can get very good profits, but it’s also risky. There are so many elements in relation to transfers that it’s absolutely impossible to always get it right.
“So we need to grow a more stable base to be less dependent on transfers and that’s why we are focused on building our commercial activities. When I came to the club you could not buy a ticket online.
“We analysed our strengths and weaknesses. Our weakness is we have a maximum 100,000 people around us. We have Italy on one side, Nice on the other with its own club. There are only a few small towns around us and of course there are many other things here besides football in Monaco. So this is our weakness. But our strengths, which are developed into our brand, are our legacy and history.”
Using this, the club have built a clear brand proposition ‘Unique Forever’ which is visible across all its properties from the stadium to online and social media, driving home the uniqueness of the club’s position in European football.
“Monaco is unique. It’s a Principality which is a very favourable destination for people around the world. I think we’re much more than just a team, this is about a very special place in the world – a tiny country whose importance is out of proportion, but we have the support of his highness Prince Albert II who loves the club.”
On the evening we head over to Bagatelle, a restaurant that overlooks the Casino and Mirabeau corners for those familiar with the Monaco Formula 1 GP circuit. Tonight is the monthly AS Monaco Business Club networking evening. Inside the restaurant, VIPs and club sponsors gather for food and drink in the company of Mr Vasilyev and two of the club’s first team players – Stevan Jovetic and Rachid Ghezzal.
Here, I’m introduced to Juli Ferre Nadal who joined the club in December 2017 as commercial director from FC Barcelona where he spent five years as director of international partnerships. Key to Mr Nadal’s role is the development of the club’s network of global partners.
“It is a challenge, but one I am relishing,” he told me, “as they have so many similarities to Barcelona.” Mr Nadal admitted that he’d not seen anything like the Business Club during his time at Barcelona but was confident that opportunities existed to grow the club’s international business and his appointment a clear statement of intent from the club’s board and Mr Vasilyev’s overall vision.
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A Positive Image
“We have the most positive image in French football,” Mr Vasilyev said of the results of a survey conducted by the French league using images of its clubs.
“We have our own base of supporters but we are also seen as a second club for other fans – so for instance you could be an Arsenal fan but also a fan of AS Monaco. We’re something different, we have this positive image and this is good for the brands that work with us.
“Nike appreciates us a lot because, yes, Paris has all the big stars but Monaco is a destination for young talent. This is, for the sports company, the place that nurtures young talent and this is a club that has a very positive image around the world.”
Building the commercial base around this positivity is the domain of marketing and communications director, Bruno Skropeta who joined the club in 2013 from PSG. Over the last 3 years sponsorship revenues have increased by 50% and work on developing the digital and social media platforms is helping spread the club’s fanbase across the world. The official Facebook page attracts over 5 million followers, second only to Paris Saint Germain, and on Twitter they attract just shy of 2 million followers. Not bad for a club in a country with a population of just 38,000. They have also developed an ecommerce platform for the first time allowing fans to purchase match day tickets, merchandise and replica kits online.
Mr Vasilyev continued: “Last year we had some very good results. Our jersey, for the first time in our history, sold out completely before the end of the season. This year, results on the pitch are not as good but we are doing plus 50% on last year’s jersey sales. This is great and now we sell much more online and if you look at the figures for our social media we are in the top two in France, being below PSG but above Marseille, historically the biggest club in the country.
“Our weakness of being small at an operational level is being offset with the growth of our social media and online business. Through this we will become stronger as the world of technology develops. Everybody will grow but to us we get access to many more fans and therefore it is important to us. We can look at new markets like China. We are not there yet but we are looking at setting up partner academies because we have the knowhow and the expertise which China desperately needs today.”
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Stadium Development
Despite its relatively small capacity, the Stade Louis II is still underutilised on a match day. Built in 1985, the terracotta tile roofed municipal complex serves not only the club, but the local sport and business economy. Within it lays the AS Monaco basketball team as well as hosting many athletics clubs and a public swimming pool.
But Mr Vasilyev was keen to outline his vision to enhance the commercial potential of the stadium. “We have been visiting stadiums in England and Europe where hospitality is very important,” he said.
“In Monaco we don’t have the number of fans but they have the purchasing power. We have people with money willing to spend. Today you only come to the stadium if you are a fan; you don’t come for an experience.”
And by experience, he means hospitality, something that in England is very well developed and a key component in a club’s match day revenue generation potential. With the approval of the local government, the club are set to embark on an ambitious plan to reduce the overall capacity of the stadium but nearly tripling the current number of hospitality spaces that are available with the building of 18 new Sky Boxes, all of which are sold out before work has even begun.
“We have a waiting list for the boxes because we have so few right now. We are starting the construction of 18 new Sky Boxes which will be launched next season. These will be very high quality. So we are making progress. We have had approval to modernise the whole stadium and this is another step in developing our commercial revenues.”
In the week ahead of my visit, Deloitte released their annual Football Money League report which suggests clubs need to have revenues over €200m to enter the top 20 and that Manchester United had broken the €600m earnings barrier. I pose the question: ‘How does a club like AS Monaco bridge that gap in revenues?’
“We have broken two world records for transfer sales,” he insists. “We have produced 86% growth in operating revenues last year.” But he was also realistic to the challenges, adding: “We can either go through a proper reforming of the way football functions – and that means a salary cap and things which will make competition more sportingly equal. But realistically I think this is impossible with all the different interests that exist today.
“Financial Fair Play is good but we should allow for new investors to come in. A new Chelsea would not be possible, you would not be able to reconstruct this today so we have to be more flexible and we should not separate the big clubs, we should allow the business to grow.
“The downside of the system that exists today is that you cannot aspire to grow. But anything else would require really profound changes and I don’t think there is a will for a club at European level to go through this. To change that would require something drastic.”
One thing is for sure, AS Monaco, under the guidance of Mr Vasilyev, are moving the in the right direction but with a potential €170m+ transfer fee expected from Paris Saint Germain for the on-loan Kylian Mbappe this summer, their dependence on transfer revenue may well take a little longer to recede but bridging that revenue gap with the richest clubs may well be easier.