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Harvard Case - Angel City Football Club: Scoring a New Model

"Angel City Football Club: Scoring a New Model" Harvard business case study is written by Jeffrey Rayport, Jennifer Fonstad, Nicole Tempest Keller. It deals with the challenges in the field of Entrepreneurship. The case study is 20 page(s) long and it was first published on : Mar 29, 2024

At Fern Fort University, we recommend Angel City Football Club (ACFC) pursue a hybrid growth strategy focused on both organic expansion and strategic partnerships. This approach will leverage ACFC?s strong brand, community engagement, and existing infrastructure while mitigating financial risk and maximizing long-term value creation.

2. Background

Angel City Football Club is a professional women?s soccer team based in Los Angeles, California. Founded in 2020, ACFC quickly gained popularity for its commitment to social responsibility, diverse ownership group, and engaging fan experience. The case study focuses on ACFC?s decision to expand its operations and explore new revenue streams to achieve financial sustainability and long-term growth.

The main protagonists of the case study are:

  • Julie Uhrman: ACFC?s co-founder and CEO, responsible for overall strategy and operations.
  • The ACFC Ownership Group: A diverse group of investors with expertise in various industries, including entertainment, technology, and sports.
  • The ACFC Management Team: Responsible for executing the club?s strategic plan and managing day-to-day operations.

3. Analysis of the Case Study

This case study can be analyzed through the lens of strategic management, specifically focusing on growth strategy, financial strategy, and risk management.

Strategic Analysis:

  • Strengths: Strong brand, passionate fan base, diverse ownership group, community engagement, strong leadership team, and a growing women?s soccer market.
  • Weaknesses: Limited revenue streams, reliance on ticket sales, and potential for high operating costs.
  • Opportunities: Expanding into new markets, developing new revenue streams, leveraging technology and analytics, and partnering with other organizations.
  • Threats: Competition from established teams, economic downturn, and potential for negative publicity.

Financial Analysis:

  • Revenue Streams: Ticket sales, merchandise, sponsorships, media rights, and potential future revenue streams from partnerships and new ventures.
  • Cost Structure: Player salaries, staff salaries, stadium rent, marketing and advertising, and operational expenses.
  • Financial Performance: ACFC is currently operating at a loss, but its strong brand and growing fan base suggest potential for future profitability.

Risk Assessment:

  • Financial Risk: High operating costs, reliance on ticket sales, and potential for economic downturn.
  • Operational Risk: Competition from established teams, potential for negative publicity, and difficulties in managing growth.
  • Strategic Risk: Failure to attract and retain sponsors, inability to expand into new markets, and potential for misaligned partnerships.

4. Recommendations

ACFC should pursue a hybrid growth strategy combining organic expansion and strategic partnerships. This approach will leverage ACFC?s strengths while mitigating financial risk and maximizing long-term value creation.

Organic Expansion:

  • Increase Ticket Sales: Implement dynamic pricing strategies, offer premium seating options, and leverage technology to improve the fan experience.
  • Expand Merchandise Sales: Develop a comprehensive online store, offer exclusive merchandise, and partner with retailers to increase distribution.
  • Develop New Revenue Streams: Explore opportunities in content creation, esports, and youth soccer programs.

Strategic Partnerships:

  • Partnerships with Businesses: Seek sponsorships and co-marketing opportunities with companies targeting ACFC?s diverse fan base.
  • Partnerships with Non-Profits: Collaborate with organizations promoting social justice, equality, and women?s empowerment to enhance brand image and community engagement.
  • Partnerships with Other Sports Teams: Explore co-branded events and joint marketing initiatives with other professional sports teams in Los Angeles.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  • Core Competencies and Consistency with Mission: ACFC?s core competencies lie in its strong brand, community engagement, and diverse ownership group. The recommendations align with ACFC?s mission to promote women?s soccer, inspire young athletes, and create a positive impact on the community.
  • External Customers and Internal Clients: The recommendations focus on enhancing the fan experience, attracting new sponsors, and creating new revenue streams to benefit both external customers and internal clients.
  • Competitors: The recommendations consider the competitive landscape of women?s soccer and aim to differentiate ACFC through its unique brand, community focus, and innovative approach.
  • Attractiveness ? Quantitative Measures: The recommendations are expected to increase revenue, improve profitability, and enhance shareholder value. While specific financial projections are not provided, the recommendations are based on sound business principles and industry best practices.
  • Assumptions: The recommendations assume a continued growth in the women?s soccer market, strong demand for ACFC?s products and services, and the ability to secure strategic partnerships.

6. Conclusion

By pursuing a hybrid growth strategy focused on organic expansion and strategic partnerships, ACFC can achieve financial sustainability, maximize long-term value creation, and solidify its position as a leading force in women?s soccer. This approach will leverage ACFC?s strengths, mitigate financial risk, and create a positive impact on the community.

7. Discussion

Alternatives:

  • Going Public: While an IPO could provide significant capital, it would require significant financial disclosures and potentially dilute ownership.
  • Leveraged Buyout: A leveraged buyout could provide immediate capital, but it would also increase financial risk and potentially limit strategic flexibility.

Risks:

  • Competition: Increased competition from established teams could impact ticket sales and sponsorship opportunities.
  • Economic Downturn: A recession could negatively impact revenue streams, particularly ticket sales and sponsorships.
  • Negative Publicity: Negative publicity could damage ACFC?s brand and reputation.

Key Assumptions:

  • Continued growth in the women?s soccer market.
  • Strong demand for ACFC?s products and services.
  • Ability to secure strategic partnerships.

8. Next Steps

  • Develop a detailed financial plan: This plan should include revenue projections, cost estimates, and a clear path to profitability.
  • Identify and prioritize potential strategic partners: This process should involve thorough due diligence and negotiation strategies.
  • Implement a comprehensive marketing and branding strategy: This strategy should target ACFC?s diverse fan base and highlight the club?s unique values.
  • Continuously monitor performance and adjust strategies as needed: ACFC should regularly review its financial performance, customer feedback, and competitive landscape to ensure its growth strategy remains effective.

By taking these steps, ACFC can position itself for continued success and achieve its goal of becoming a leading force in women?s soccer.

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Case Description

In January 2024, Kara Nortman, Julie Uhrman, and Natalie Portman, the founders of Angel City Football Club (ACFC) were developing the club's first three-year strategic plan. Founded in 2020, ACFC had a star-studded investor group, including Portman and celebrities such as Eva Longoria, Jennifer Garner, Billie Jean King, and 13 former players from the U.S. Women's National Soccer Team (USWNT). As outsiders to professional sports, the all-female founding team had rewritten the playbook for how to build a sports franchise by applying lessons from the tech and entertainment industries. They had harnessed digital platforms to establish and cultivate a global brand. Unlike typical sports franchises that built their teams and track records over many years before extending their brand beyond a local base, Angel City had inverted the model, generating as much global as local interest in the club within the first three years. ACFC's success was reflected in its estimated private market valuation of $180 million, the highest in the league. But perhaps equally important to ACFC, the club had made a positive impact on its local community and had started to bend the curve toward greater pay equity in women's sports-the club's ultimate goal. The founders knew there was much more to do to capitalize on the club's momentum. There were opportunities to build the brand further globally and to build out fan engagement and membership in the mobile app, but these would require investments in digital content and production, CRM systems, and e-commerce. There were also opportunities to build the "on-field product" (team and facilities) that would demand budget allocation to training facilities, the field, coaching staff, and medical rehabilitation facilities and staff. The founders weighed the most effective ways to build value for the franchise. Was it better to allocate the incremental budget dollar to investments in digital brand building or to investments in the on-field product?

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