Online Extra: Olympique Lyonnais: Scoring Off the Field

The French team is making millions by putting its brand on everything from CDs to taxis. Its newest venture: A beauty salon

At first glance, OL Beauté looks like any other plush beauty salon. Glossy life-size photos of sexy models gaze out over the exposed brick and glass décor, while hairdressers, masseurs, and manicurists tend to their upmarket clients. Nothing out of the ordinary...except that on this bright Saturday morning in Lyons, France, the salon is filled with men. And the models on the walls are European football stars.

Welcome to the world's first football beauty salon. Aimed at image-conscious Lyonnais fans, the salon is the brainchild of Jean-Michel Aulas, president and majority owner of Olympique Lyonnais (OL), champions of the French Premier League for the past three years. Open since January, the two-story spa and salon is the latest in a string of licensing deals that bring in some $20 million to the club each year. That's 21% of its $96 million annual revenue, the highest in the French championship.

OL isn't the only European club to make an extra buck from brand merchandising, but its deals are among the most outlandish. Even Britain's Manchester United, which makes $85 million from branded products, including its own TV station and home and travel insurance, has been more conservative. Fans of the Southern French team can travel by OL Taxi, buy CDs produced by OL Musique, and drink Beaujolais wine by OL Boissons.


  "It's a great way to create value," says John Moore, football analyst at Scottish investment firm Bell Lawrie White. "So long as the companies don't screw up, and by doing so damage [the club's] brand."

There's method in President Aulas' madness. As random as OL's six licensing deals seem -- the other two are restaurant OL Café and driving school OL Conduite -- Aulas is keeping risk to a minimum by partnering with well-established businesses successful in their chosen field. The rewards for the club come in the form of brand exposure and healthy royalties, while the partner companies rake in the OL fans. "That way we stick to what we do best, and both sides win," says Aulas with a smile.

OL Beauté typifies this arrangement. The football club chose to partner with one of the most famous existing salons in Lyons -- Christine Margossian -- and, most important, kept its original décor and feel. Far from smothering the walls with football jerseys and pennants, OL's presence is felt only through the salon's new name and the classy pictures of famous players.


  Oh, and the occasional star guest or two, who regularly pop in for their own pampering. That's enough to draw in droves of male customers, who now make up 80% of the salon's clientele, according to OL Marketing Director Matthieu Malkani-Giraud. Since rebranding in January, Margossian's customer base has leapt by 50% and sales are up by 40%. The salon's mascots and regular clients, the two smouldering men who pout from the posters, are OL players Ghanaian Mickaël Essien and Juninho, who also represents the Brazilian national team.

"Football is getting sexier -- just look at metrosexual players like David Beckham -- so this is a fantastic brand stretch," enthuses Lauren Henderson, a London-based analyst at consultancy FutureBrand.

On the day BusinessWeek drops in, the slightly less glamorous Aulas himself is in for a haircut, much to the delight of the other customers. In between talking to a teenager about his vintage jersey, Aulas explains how it all started back in 1998. "I was inspired by England's Premier League, which does this sort of thing very well. I figured if we wanted to compete with bigger teams, we needed to use their method both on and off the pitch."


  But French law has forced the club to be more ingenious than its other European counterparts, he adds. Unlike the British and Italians, French clubs are currently banned from listing on the stock exchanges. So the licensing royalties from deals like OL Beauté help give the club enough liquidity to compete with other teams on a level playing field. "It's still sometimes like running a 100-meter race against them, except that we're the only ones with a leg tied up and a 200-kilo [440-pound] backpack," laments Malkani-Giraud.

Aulas is one of the key figures campaigning to change the law. He recently had dinner with French Sports Minister Jean-François Lamour following a European Commission ruling that said the French government must change its rules and allow sports clubs to float. He expects Lamour to reply to the commission this month with a favorable solution to Gaul's football woes.

For the moment though, OL is pushing ahead with its licensing deals. By yearend, the club plans to go into the drugstore business to sell products, including an OL-branded gel that tones men's abs. It should add extra muscle to the club's balance sheet, too.

By Rachel Tiplady in Paris and Adeline Bonnet in Lyons

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