Xoloitzcuintles and The Beautiful Business Model

Sports fans know all too well that sometimes owners are not fully invested in the on-field success of their franchise. Many suspected that to be the case when Grupo Caliente–led by Jorge Hank Rhon–established Club Tijuana, a soccer team, in 2007. They believed Rhon wanted to use the Xoloitzcuintles de Caliente to launder illegal profits and conduct other unscrupulous activities, and their concerns were well founded. As Jorge Arangure Jr. notes:

To call Hank Rhon, who served as Tijuana’s mayor from 2004 thru 2007, controversial would be an understatement. He has been accused of consorting with drug dealers; was arrested in 2011 when police found 40 rifles, 48 handguns, 9,298 bullets, 70 ammunition clips, and a gas grenade in his home; had his name appear in a Wikileaks document where the Agua Caliente racetrack was described as being “secure havens for organized crime on the border”; and two of his former bodyguards were convicted of assassinating a journalist. Although he has escaped any significant jail time, as a result of some of his activities, Rhon’s travel visa to the United States was voided in 2009.

Despite the cloud of controversy, the last few years have shown that Rhon and the rest of the ownership group are dedicated to providing fans with a superb product. After promotion to the top division in Mexico’s Liga MX to start the 2011-2012 season , the Xolos spent over $3.5 million to bring in some prominent names. They also announced a series of capacity upgrades to the Estadio Caliente, a brand new stadium constructed in 2007 to host the team. The commitment paid off, and the Xolos captured the 2012 Apertura championship by defeating a well-established Toluca team.

While the meteoric rise to the top of Mexican soccer has been entertaining to watch, the most intriguing aspect has been the business model Rhon has pioneered. The strategy provides an incredible case study in branding and marketing. Club Tijuana found an incredible gap in the market and exploited it brilliantly.

Soccer is king in Mexico. The number of Mexicans and Mexican-Americans in the United States continues to grow, and many pine for the taste of home and excitement that the Liga MX provides. However, the closest Liga MX team to fans in California is over 1,000 miles away if you exclude Tijuana. Outside of the Xolos, it’s virtually impossible to attend Liga MX games unless you make the commitment to fly to Nuevo Leon or Torreon on a regular basis. In essence, Club Tijuana has a geographic monopoly. Instead of resting on the fact that they are the only Mexican soccer team within reasonable distance and attracting only the citizens of Tijuana, the Xolos have built an identity designed to herd in the younger generation throughout California, Arizona, New Mexico, Texas, and parts of southern Nevada. These young fans often relate with both Mexican and American culture. Accordingly, the team’s roster is filled with a mixture of former Mexican national team players such as Fernando Arce and several prominent Mexican-Americans playing for the U.S. national team such as Edgar Castillo. The Xolos are the only Liga MX team with an English version of their website. In addition, the team runs an English Twitter account and boasts the only official Liga MX team store in the United States. Most importantly, promotional campaigns stress that the Xolos are a team without borders, the perfect mesh of Mexican-American culture that highlights the increasing diversity in the United States.

As an avid sports fan and business student, I felt compelled to trek to Tijuana to see the Xolos play and get a sense of why Club Tijuana has been such a success. From Los Angeles, the drive to the border is slightly over 2 hours. Park at a gas station 0.5 miles from the border in Otay Mesa, and it’s a quick walk across a bridge to enter Mexico. A taxi ride for $10 allows you to arrive at the Estadio Caliente, which sits in a compound that also hosts a gambling hall. Along the way, you see a bevy of jerseys, bars flying flags, and cars with bumper stickers indicating their support.

Inside the stadium, you begin to see why the Xolos sell out every game, and tickets are extremely hard to come by. First, the atmosphere is perfect. Because Estadio Caliente is small, there is not a bad seat in the house. Fans get an intimate experience and are right on top of the action. Behind the goal, a dedicated group of fans waves flags and plays the team’s anthem throughout the entire game. In addition, the concession stands accept American dollars. Not only does this provide convenience for the customer but it also allows the vendors to earn more money by charging slightly higher foreign exchange rates than posted by the financial markets.

After the game, a discussion with our cab driver revealed a few amazing things. First, roughly 80 percent of the fans on any give game day are from the United States. Rhon’s desire to tap into the American market has been wildly successful. The fan base, which tends to be younger, has bought into the marketing campaign. Furthermore, the Xolos have single-handedly revived the tourism industry of Tijuana. The team has pumped a vast amount of money into the local economy and provided many jobs for stadium personnel as well as construction workers. Before heading down to TJ, I did an enormous amount of research. I had heard countless stories about the lawlessness and perceived danger in visiting the border town. Many Americans stopped going to Tijuana starting around 2007, and tourism dropped off roughly 50 percent from 2007 to 2009. At the height of the drug war, Tijuana averaged one murder per day and three Americans were kidnapped per month. However, I never felt an ounce of danger traveling through the city. Though Rhon has been linked to organized crime, it is certainly in his best interest to provide a safe atmosphere given that the majority of his customer base is from America. Like the city, the stadium was extremely safe, and I did not spot one single instance of fan misconduct.

The cab driver also noted that many older folks head to Estadio Caliente to support the team they grew up watching in a different part of Mexico. However, these fans often end up buying Xolos jerseys and changing allegiances due to the infectious nature of the atmosphere inside the stadium. As I looked down at the jersey I had purchased, it all made sense to me. The Xolos offered a bridge between young and old, Mexican and American culture. They not only represent soccer, but a way of life. Few sports teams are able to transcend international borders and cultures, but Rhon’s whole strategy have created an unbelievable brand capable of challenging how sports teams interact with their fan bases. Moving forward, it will be interesting to see if other sports franchises can find such lucrative opportunities and exploit them. MLS, the professional soccer league in the United States, continues to struggle in its quest for relevance. Perhaps they should pull a page out of the Xolos book.

One thought on “Xoloitzcuintles and The Beautiful Business Model

  1. I think so many American sports fans dream of going to view a sold out soccer game in some foreign country where “football” is king. It’s incredible that you found a way to get a taste of that cultural and sporting experience so close to home! I had never heard of Xolos before but will be sure to look them up. It facinates me that you said 80% of fans were coming from across America. A few things strike me about that. First off, it encourages me that even if its just for a sporting even Tijuana is becoming a somewhat safe destination for Americans again. Secondly I am honestly surprised that such soccer support is in this state. I suppose that should not be surprising with the success of the LA Galaxy, but I am still always surprised and pleased to see promising statistics about rising interest in the sport.

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