Should Cristiano Ronaldo’s transfer from Manchester United to Real Madrid go through, the Spanish giants will have spent an incredible $230 million on just two players in less than a week.
On Monday, Brazilian playmaker Kaka joined the Madrid club from AC Milan for a fee of around $100 million, while Ronaldo will cost $130 million — a world record. The new arrivals to the Santiago Bernabeu stadium are key elements in the strategy of incoming Real Madrid President Florentino Perez, who has pledged to bring success back to the club by signing the world’s top footballers whatever the cost. The reason Real surrendered their league title to arch-rivals Barcelona this season. Perez was re-elected as president recently, three years after he presided over a hugely successful time for the club known as the “Galacticos era.” During this period the team was built around a number of multi-million dollar superstars that included Luis Figo, David Beckham and Zinedine Zidane. The free-spending policy also brought the club great success commercially, most notably through Beckham’s high-profile, as it exploited the marketing potential of its brand globally. The former Manchester United midfielder’s popularity unlocked lucrative markets across Asia in particular, bringing in millions of dollars from shirt sales and other merchandise. Eventually the club’s glittering success on the pitch started to slow, prompting Perez to step down in 2006. The club cycled through a number of new coaches and the dynamic of the team changed as many of their top players either retired or moved on. Despite winning a further two titles, the club failed to make much progress in European competition and Real supporters grew increasingly unhappy with the team’s noticeably less flamboyant style in the absence of key players such as Zidane. Despite the depressed economic climate, the re-elected Perez has embarked on an eye-watering spending spree to reverse this apparent decline. “What the world considers to be an exorbitant cost, he (Perez) considers as the only way for Real Madrid to survive,” Luis Nieto, deputy editor of Spain’s AS Sports Newspaper, told CNN. “For Real Madrid to earn €100 million ($140 million) in the pre-season, he needs the best players in the world to sell t-shirts in Asia or to make a USA tour.” Watch more about the Ronaldo bid » Privately-owned by its 93,000 members, Real Madrid are one of the richest clubs in the world with an estimated annual turnover of more than $450 million. In addition to the revenue from ticket sales and lucrative sponsorship deals, Real are tied into a ground-breaking television contract with Spanish broadcast company Mediapro worth around $210 million a season.
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Crucially, they enjoy considerable support from Spanish banks. Unlike rivals such as Manchester United, who are part-financed by hedge fund companies and international banks demanding high rates of interest, Real do not face the same pressures, such is their influence in Spain. “The money comes from what’s in the bank, plus the loans the club gets, plus the income from the players that he (Perez) will sell to other teams,” added Nieto. In 2001, Perez — a property magnate — masterminded the sale of their training ground in central Madrid for a staggering $478 million. The sale helped clear the club’s massive debts at the time and paved the way for the purchase of players such as Figo and Zidane. The site is now home to four skyscrapers that dominate the city’s skyline. With the arrival of Ronaldo, the Perez policy of “speculating to accumulate” will swell the club’s coffers by $75 million a season, according to research commissioned by Weber Shandwick Sport with one of the world’s leading sport business experts. “Ronaldo can be viewed in the same bracket as Beckham when it comes to global commercial impact, if their image is controlled right and Real Madrid improve their results in the UEFA Champions League as a result of their arrival,” said Professor Simon Chadwick, Director of the Center for the International Business of Sport (CIBS) at Coventry University in England.
He added: “Becks sold a million shirts in his first six months at Real Madrid when he was just one of several ‘Galacticos’ turning out for the all-whites, alongside the likes of Zidane, Raul and the Brazilian striker Ronaldo amongst others. “Even if Real signed one or two of the other stars, there would be a real focus on Cristiano Ronaldo’s and Kaka talents on the pitch, but also their brand off it. That will pay for their transfers several times over, even with a bumper salary package.”
