Real Madrid: Money Masters of Football

The recent transfer activity has meant there has been alot more attention paid to the Spanish clubs and especially Real Madrid. A world record transfer fee to purchase Kaka from Ac Milan was eclipsed shortly after as Cristiano Ronaldo moved from Manchester United to Real for a new world record fee of £80 million in the space of just a few weeks. Real have since added the young French striker Karim Benzema for around a measly £30 million ad are expected to add a few more players before the end of the transfer window at the end of August. This is not of course the first time Real Madrid have broken the transfer record for a player. They bought Luis Figo in 2000 and followed that with the purchase of Zinedine Zidane the following year for over £45 million.

One question that comes to mind is how can they afford such ludicrous sums of money for a player that can kick around a football when the whole world seems to be in some sort of economic downturn/recession.

There are a few things that can go some way towards explaining how and why they can. Firstly they have re- appointed the president again that bought the ‘galacticos’ players Figo and Zidane who is Fiorentino Perez. It was under Mr Perez’s first reign (2000-2006) that the club initially aimed at becoming the world’s richest and best known football brand.

The strategy employed by Real Madrid has not always bought success on the pitch but they seem to be able to make the money off the pitch. Growing match-day revenues, increasingly shrewd and global marketing, healthy commercial income, and a money spinning domestic TV deal, have all taken the club to the top of Deloitte’s Football Money League this year.

They have topped it for the past four straight years, despite being overshadowed in the Champions League by their bitter rivals Barcelona this season. The club had a revenue lead of 41m euros (£32.5m) over Manchester United, in second place according to deloite’s survey.

Having the best players also makes the club very attractive to the top sponsors such as adidas,coca cola, audi and bwin.com which curently sponsor them.

Another point is the fact that Real, like Barcelona, are not required like the majority of Spanish football clubs to become publicly listed companies.

Unlike the majority of European football clubs, Real Madrid and Barcelona are owned by its thousands of members, known as “socios”, who elect the president.

That leaves them free of all the problems encountered with takeovers and potential debt issues that being a listed company could involve.

In its report Deloitte said it would be difficult to see anyone topping Real Madrid at the top of the money league next year, but added “it will be interesting to see how the club copes with the loss of the Brand Beckham effect.” Real seemed to have plugged that gap with the purchase of Kaka, and Ronaldo.

So that is how they can seem to afford the players but is it really good for the game? The answer is probably not. It just widens the divide between the haves and have nots. There are quite a few clubs in lower leagues going into administration and getting into trouble but clubs at the top still manage to get the top players and will continue to so-money does talk! Obviously its great to see some of the top players playing together and seeing how they perform and especially good for Real Madrid and it’s fans (whose number will grow am sure with these signings) but it is not good for the game as a whole.