By Alan Joch
A David-versus-Goliath battle played out earlier this year in the 40,000-seat stadium that’s home to Barcelona’s RCD Espanyol Futbol Club. Like the biblical underdog, RCD Espanyol faced its local rival, the Futbol Club Barcelona (FCB), knowing the team enjoyed some obvious advantages. It had long dominated on the field—FCB perennially sits at the top in the Spanish First Division and frequently prevails in pan-European finals. It also reigns off the field—the management-consulting firm Deloitte ranks the club as the third-richest soccer franchise in the world.
“In the past, we were the poor neighbor, but now we are working to become more competitive, both in football and in the marketplace,” says Joan Fitó, RCD Espanyol’s chief financial officer.
Fitó is referring to an ambitious three-year strategic plan designed to modernize the business for future success. “Our strategy is to consolidate our balance sheet, manage the company according to industry best practices, and attract new business talent,” he says.
The transformation strategy took shape last year when RCD Espanyol’s executives replaced an error-prone legacy accounting system with Oracle Enterprise Resource Planning Cloud (Oracle ERP Cloud), a sophisticated financial management platform that Fitó says is helping the club scale for growth and save money. The move to modernize seems to have fueled a new competitive spirit. One of RCD Espanyol’s sweetest victories this season came when it outscored its powerful nemesis in a head-to-head clash on the underdog’s home turf. “That’s one point for us!” Fitó says.
He sees the win as more than symbolic; it’s also a glimpse of what’s to come.
Getting the Financial House in Order
In international soccer, on-field wins fuel business success. Revenue from tickets and team merchandise skyrockets as local fans and tourists gravitate to winning teams. Winning clubs also have greater financial resources for re-signing top players, which in turn breeds fan loyalty and increases the odds that teams qualify for finals competitions. Those competitions open the door for greater revenues, additional sponsorship contracts, and competitive prestige.
Fitó says RCD Espanyol’s business staff clearly understands these realities, but before they could hope to see success in these areas, they had to get the team’s finances in order. “With the former accounting system, we didn’t have the necessary financial controls to avoid errors or even develop accurate budgets,” he says. The first step: implement Oracle Financials Cloud, a module within Oracle ERP Cloud.
The fuel for the new cloud platform and other modernization efforts came with the club’s acquisition in 2016 by the Rastar Group—a US$408 million company based in Shantou, China, that manufactures a variety of products for children, including bikes, remote-controlled toys, and safety car seats. Around the same time, the club saw an influx of additional revenue from broadcast licensing agreements that nearly doubled RCD Espanyol’s pay-per-view receipts.
The new ownership and capital provided a unique opportunity for the club to become a modern, well-managed enterprise with a financial framework that can scale to fulfill the three-year growth strategy. That’s a break from the past when outdated accounting tools and a lack of financial oversight contributed to a large debt load the club had been carrying for years. The problems stemmed in part from the financial department’s inability to quickly gather accurate and up-to-date summaries of basic financial information, including accounts receivable and payable. The club also lacked tools for real-time monitoring of personnel expenses. “We had to gather all of this information manually, and it was impossible to do that in time for our monthly closings without introducing errors in the results,” says Mercè Lafuente, head of administration at RCD Espanyol.
In addition to making oversight and planning difficult, the old system was a regulatory nightmare. The scramble to produce reliable month-end reports became more intense after the acquisition by the Rastar Group, which—because it is listed on China’s Shenzhen Stock Exchange—must file financial statements that include an accurate accounting of RCD Espanyol’s performance.
Because we spend less time on routine tasks, we can focus more closely on analyzing the information to help us decide what new initiatives to undertake or to use digital transformation to improve the club.”–Joan Fitó, CFO, RCD Espanyol
Soon after the acquisition, RCD Espanyol’s financial staff huddled with counterparts from the Rastar Group to write a new financial game plan. “We decided we needed an ERP system to manage costs more effectively,” Fitó says.
They considered a number of ERP options, including both on-premises and cloud-based platforms, and found most of the short-list candidates would either be too expensive to acquire and maintain or require long implementation periods that didn’t work with RCD Espanyol’s transformation timeline. The exception was Oracle ERP Cloud, with modules for financials, procurement, and project portfolio management. With the new cloud service, the club could focus its spending and implementation resources on Oracle Financials Cloud—the module that was most critically needed—and scale up additional ERP capabilities, such as the procurement capabilities, as needed.
Because RCD Espanyol implemented the financials module so fast—it became fully operational in about four months—Fitó and his staff quickly saw value in the financial modernization effort. For example, the financial-industry best practices that are incorporated within Oracle Financials Cloud helped the club overcome “bad habits” that Fitó says had grown out of the old accounting system. He points to invoice approvals: Club policies require the financial manager to check every invoice against the team’s master budget and then decide whether to authorize payments to contractors. Controls within Oracle Financials Cloud ensure that these steps are completed as part of the standard payment workflow; whereas in the past, lack of such controls meant staff members could circumvent these key parts of the process and potentially contribute to budget imbalances.
Scalable cloud capabilities are also helping RCD Espanyol pay approved invoices faster than in the past—cutting processing times by 80% in some cases, according to Fitó, thanks to the platform’s ability to handle automated workflows and digital invoices.
“Once the financial manager approves the invoice, he pushes a button and the system generates files to banks in Europe to initiate direct payments,” Fitó explains. In the past, that had to be done manually.
|Headquarters: Barcelona, Spain
Industry: Sports and entertainment
Revenue: US$85 million in 2017
Oracle products: Oracle ERP Cloud, Oracle Financials Cloud
Length of tenure: Two years
Converting from paper and enabling automated processing in turn frees the club’s financial staff from manually slogging through the more than 4,000 paper documents it receives in a year.
Digital capabilities and the elimination of manual processes also significantly reduce cycle times for billing contractors, he reports.
Speed wasn’t the only goal for financial modernization—the staff also had to eliminate the data errors that burdened business operations and created regulatory risks. To improve accuracy, Fitó and Lafuente are capitalizing on Oracle Financials Cloud’s ability to centrally control financial information. “Better accessibility to the financial information means we can view full results from every department,” Lafuente says.
Electronic processing made possible by the platform also mitigates the data-entry mistakes common when documents were handled manually. That, along with the application’s automatic cross-checking of financial information, has reduced errors associated with reporting, expenses, and invoicing by more than 25%, Fitó says.
Unified financial data also enables the staff to analyze financials in greater detail and quickly generate summary reports. “We can extract information for the comptroller and satisfy the regulatory reporting requirements of the Spanish League,” Fitó says. “The information is more readily available and easier for month-end closings. In the past, we’d have to manually compile the information by going line by line through financial records, even for basic analyses, such as determining whether our revenues and profits increased or decreased over a certain time period.”
The cloud platform’s data-sharing capabilities permit colleagues throughout the enterprise to access and share files. This means everybody is able to contribute and to collaborate efficiently.”–Mercè Lafuente, Head of Administration, RCD Espanyol
That gives Fitó, Lafuente, and other department personnel more time for strategic planning. “Because we spend less time on routine tasks, we can focus more closely on analyzing the information to help us decide what new initiatives to undertake or to use digital transformation to improve the club,” Fitó says.
As an example, he is currently assessing the profit potential of opening a retail store to sell team merchandise in Barcelona’s main shopping area and plans to make a decision about the venture this summer.
Another plus with Oracle Financials Cloud is remote access to the data from anywhere authorized staff members happen to be working, whether at the club’s Barcelona headquarters or at the Rastar Group’s corporate offices. “The cloud platform’s data-sharing capabilities permit colleagues throughout the enterprise to access and share files,” Lafuente says. “This means everybody is able to contribute and to collaborate efficiently with the data managers in the accounting department.”
Business and IT transformation are progressing, but on-field transformation is still a work in progress. By finishing 11 out of 20 teams in the regular season that concluded in May, the club placed well behind FCB, which topped the rankings again. That means RCD Espanyol missed this year’s cut for competing in upcoming finals matches with Europe’s best teams. It also means that club officials will have to wait at least another year before enjoying postseason glory, as well as the revenues that come from additional sponsorship contracts, ticket revenues, and T-shirt sales.
But Fitó is confident RCD Espanyol has the financial and technology infrastructure in place to make and sustain the club as an international contender. “Oracle Financials Cloud gives us the controls we need to ensure our financial information is accurate, complete, and up to date,” he says. “As a result, the business transformation we have achieved as of today has been quite significant.”
Score another point for RCD Espanyol.
Photography by Siqui Sanchez/The Verbatim Agency, Power Sport Images/Getty Images, Alex Caparros/Stringer/Getty Images