Rakuten founder Hiroshi Mikitani on the power of sport

Rakuten founder Hiroshi Mikitani on the power of sport
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Japanese e-commerce giant Rakuten has decided that its future will be decided on the playing field as much as in the marketplace. aggressively in sports business. The company has been making major investments as a sponsor, but also as an owner: In Japan, its soccer franchise Vissel Kobe signed a three-year contract with with Spanish superstar Andrés Iniesta for 10 billion yen ($90m).

Rakuten’s sports investment outside Japan is even more impressive. Starting with the 2017-2018 season, it’s been the main global partner of FC Barcelona, the world-famous Spanish soccer club, with a €220 million ($262m) contract for four years. In September 2017, Rakuten partnered with the NBA Champion Golden State Warriors, with a three-year advertising badge deal worth $60 million. Then last September, Rakuten entered a global partnership deal with Spartan Race, a series of obstacle race events, who now includes ‘Rakuten’ in its race titles.

Moreover, Rakuten CEO Hiroshi Mikitani has personally invested in sports. Together with another FC Barcelona star, Gerard Piqué, he founded the sports-investment group KOSMOS, which struck a 25-year partnership deal in February with the International Tennis Federation to manage the Davis Cup.

How does sport figure in to Rakuten’s overall strategy? Our colleague, Norihiko Sasaki, CCO of NewsPicks Japan, spoke with Mikitani in Barcelona in late October, a day after the final El Clásico of the season, a well-watched match between the two Spanish soccer rivals Real Madrid and FC Barcelona.

Targeting 3 million Barca Fans

Quartz: Europe is the center of world soccer, where top players from different nationalities compete with each other. Do you feel a similar dynamism to that of Silicon Valley?

Mikitani: First of all, soccer is truly a global sport. Wherever you are in the world, from the wilderness in Africa to the asphalt of the city, all you need to play soccer is just a ball. Similarly, basketball doesn’t need much equipment, but you need to be tall enough to play well, which I think is the major difference from soccer.

In addition, soccer is simple as a sport but the games are quite complicated and deep. In Europe, the Bosman ruling allowed more top players from different nationalities to play in a club, which helped boost popularity of Champions League. I found it very exciting.

Although soccer may not be at the center of sports in the U.S., its popularity in other parts of the world is enormous.

Do you expect global advertising effects from the sponsorship deal with FC Barcelona, not just in Europe?

Yes. I genuinely believe that Barca is one of the best advertising platforms in the world. The fact that Rakuten can attach itself to such a special brand is significantly effective. We will not end up just attaching a Rakuten logo on the jersey, but go much further exploring various business opportunities. Currently Barca has about 320 million fans, but that number should increase. According to reports, El Clásico has an audience over one billion people around the world.

And do you expect those Barca fans will sign up and use Rakuten IDs?

That’s right. The internet allows us to try so many different things. Together with Barca we could build a new community, or even create a new currency. We’re considering many possibilities.

What is the idea behind sponsoring the NBA’s Golden State Warriors, the Davis Cup, Spartan Race and other sporting events?

It’s because each of them has a different audience in different segments. In the U.S., there’s basketball, American football and other sports that are more popular than soccer. Spartan Race attracts a significant number of fans who belong to yet another segment. They are not satisfied with just watching games. They want to participate in the sporting events themselves.

What’s common in our sports investment is the determination that we will not end up just being a sponsor, but that we would jointly explore new business opportunities with our partners. As for the NBA, I think we should be able to host a game next year in Japan. And I believe we’ll be able to form a win-win relationship by not just broadcasting the game, but also by developing a comprehensive package covering related events, social media, and e-commerce.

The Golden State Warriors, for their part, can strengthen their brand by not just attaching Rakuten logo to their jersey but also by making use of Rakuten’s reach and social networks. I think that’s the biggest difference the partnership can bring to them.

Do you expect the Rakuten brand will be more recognized in emerging markets as a result of Barca sponsorship deal?

I think it will have tremendous advertising effects. Less recognized is its positive effect on our recruiting and BtoB activities. I can’t go in detail now but Rakuten TV, for example, is finalizing major partnership deals one after another. And I can clearly see the “Barca effect” playing a significant role in facilitating those deals.

Rakuten’s new strategic alliance with Walmart was also helped by the credibility we had earned by sponsoring Barca and the Warriors. Everyone knows that Barca doesn’t allow a regular sponsor to attach its logo on their jersey, and but now they have Rakuten’s. So the people at Walmart probably thought, “They have this sponsorship deal with Barca. Maybe it’s a good idea for us to partner with them too.” Sometimes this kind of “maybe effect” plays a significant role in business deals.

How Rakuten Beat Amazon and Alibaba

Why do you think Josep Maria Bartomeu, the president of FC Barcelona, chose Rakuten among all the sponsorship candidates?

I think he trusted me. During the final negotiations, he said, “It’s OK. You don’t need to go into details. You help me, and I help you.” It was as if two gentlemen shook hands and the deal was done.

I heard there were very strong candidates such as Amazon and Alibaba.

I’m not surprised to hear that. But I guess they detailed a long list of terms and conditions while I was more like “This is an agreement between two men, and our faith and trust will work things out.” So we did not need to go too much into details.

The Three Iniesta Effects

Do you think such a trust-based relationship with Barca helped ‎Vissel Kobe’s successful deal with Iniesta?

Of course. It played into it a great deal. Mr. Bartomeu personally suggested Iniesta to play with ‎Vissel Kobe.

With a superstar like Iniesta, what is your plan to change Vissel Kobe? You declared that it will become one of top clubs in Asia that can compete on a global level.

Barca has two strong foundations: the socio [members of Barca who can purchase priority tickets and vote to elect a club president and directors] and the youth system. While it’s a big club that attracts top players from around the world, Barca is also an academy-based club which develops and nurtures young talent.

Currently Vissel needs to find and acquire talented players from other teams, but I hope to develop it into an academy-based club that can provide opportunities for many young players from its own youth academy

How do you make the best of Iniesta’s participation to Vissel?

I definitely expect the team to be stronger. I expect him to take the lead as a player, but I also expect the unit he’s brought from Spain to be the core of the club. Secondly, Iniesta himself has a strong desire to contribute to the nurturing of young talent. We will seek to build Japan’s best development program, possibly expanding our partnership with FC Barcelona. And thirdly, I hope to develop other areas of business including content distribution and sponsorship.

Rakuten also has Japan’s champion baseball team. In terms of sports-club management, do you find managing a football club more difficult, because of its global market, than managing a local baseball team?

For the moment, the baseball team has a wider range of commercialization as a business. It’s partly because baseball teams have far more games to play. Also each baseball game brings at least eighteen intervals between innings, and there are many related events, food, and other merchandising opportunities that we can control. So the baseball business is larger in size, for now.

But if you look globally, probably the world’s highest-paid soccer player is Lionel Messi. And I think football players occupy a good proportion of highest-paid athletes rankings. Currently we play in a closed market within Japan where the soccer business is smaller than baseball, but it will be different if we start to play in the global field.

Some say that there are more Barca fans in Indonesia than in Barcelona. I hope that one day everyone in Asia including China watches J.League.

Japan has the third biggest economy in the world. Soccer is not extremely popular in the U.S., nor in China. You’ve maintained that “J.League should be able to become one of the most popular soccer leagues in the world.”

I think there is the possibility. It requires, however, that ACL (Asia Champions League) to be very popular. I was speaking with Mr. Bartomeu earlier today that in the long run, even Champions League may change its format and turn into a global league. I think there are a lot of possibilities. And I believe Japanese soccer will attract significant attention from the world.

(English translation: Tomoko Fujiwara)