Real mad-rid star players out of their clubs.
Enter Florentino Perez, the return of the Spanish Darth Raider cast football Storm over clubs around the world especially EPl clubs as he aims to shatter the global dominance of the English Premier League, after successfully luring ace striker Cristiano Ronaldo to his club. With £250m war chest to spark a second 'Galactico era' at the Bernabeu
Tornado originated from Madrid area made a brief touch down in Milan, currently moving swiftly to England damaging local football club and uprooting their property
Real Madrid has the financial muscle to sign these big names in one swoop thanks to Perez who introduced the first crop of 'galacticos' to the Bernebeu nearly a decade ago. The first 'galacticos' era was seen as a part of the campaign he vowed to erase the club's debt and modernize the club's facilities. Real's merchandising and commercial revenues have more than trebled on the back of signing the likes of Luis Figo, Zinedine Zidane, Ronaldo and especially Beckham. Real may have spent £340m on buying players in that time, and some £540m in wages, but the investment is paying dividends.
The galactico theory is seen as "Perez's riddle", how the most expensive players in the world were actually the cheapest. "The reason is that they generate the greatest profits," Perez said. "The best players are the most profitable players in every sense."
"We married a well-known brand with top players," Calderon says. "That made something attractive for sponsors." Lovely philosophy indeed
And this has been most true in the case of Beckham (cheaper players among the other galacticos palyers), bought from United in 2003 in a deal that would only ever cost Real a maximum of £22m, Sanchez assured Perez that Beckham was worth €500m in commercial income.
It helps to have a very popular brand. According to two different studies, about 500 million people have heard of Real Madrid, and about 150 million are considered serious fans who would purchase products and watch and attend matches.
That idea really took shape about five years ago. The club at the time was underperforming financially. It was saddled with about $300 million in debt and only 5% of total revenues came from sponsorship money. That's when the club brought in professional management to run the business. They sold off club property to clear the debts, it earned Real Madrid a reported £206m and meant the club could hand money over to players and then made a conscious decision to recruit the world's best players to elevate the club's style of attractive, attacking soccer.
The key to this financial transformation has been a business model that is unlike almost any in modern professional sports.
"Real Madrid takes about 400 million (euros) a year, the fruit of three sources of income - a third from ticket sales, a third from television rights and a third from merchandising."
1.Matchday- Ticket sales
Matchday revenue has also increased significantly in the past couple of years after the reconfiguring of areas of the club's stadium to increase corporate hospitality capacity and hence revenues.
Average attendance at their home ground, (80,354--capacity Santiago Bernabéu football stadium) is the third-highest average attendance in Europe. They have been extremely aggressive in pursuing sponsorship opportunities, including overseas tours (on several occasions they have held pre-season training camps in places such as Vietnam and China).
Touring the Far East, making named Madrid jerseys ‘must-buy’ items all around the globe, negotiating towering TV rights, demanding £2.5m per friendly match .
Arrigo Sacchi, a former Real director of football, said: “We once went on a tour of Japan and China and earned £20m for it – Florentino is like King Midas.”
2.Broadcasting: Television rights
In 2006 they signed a seven-year deal with MediaPro guaranteeing £956 million for their domestic league TV rights
Real Madrid have an individual domestic TV rights contract with MediaPro that pays an
astonishing £135m a season. With Barcelona at £130m a season, It gives the two 'super clubs
more room to manoeuvre in Europe.
A relative pittance with figures of United (£52m), Liverpool (£51m), Chelsea (£48m) and Arsenal (£47m).
3.Commercial: The Real Madrid brand
Merchandise licensing, sponsorships, and other commercial sources.
Real's revenue from club merchandise, such as shirts, jumped 67 per cent in Beckham's first season alone, and climbed another 6.5 per cent in the year to June. Overall commercial income, which includes money from deals with the likes of Siemens, adidas and Pepsi, which have all grown in value with the "Beckham effect", now stands at around £80m a year.
David Beckham's four-year stay in Spain boosted sales of shirts and memorabilia by 137 per cent, according to club estimates. Forbes magazine reported that he had been the party primarily responsible for the team's huge increase in merchandise sales, a total reported to top US$600 million. It was like transfer of income from Man Utd to Real Madrid. It was within 36 hours after launch of No. 23 T-shirt of Beckham in Japan--the whole of transfer fee was gained back by Real.
He vowed the new squad would include footballers who “would turn each Real Madrid match into a fascinating rendez-vous.”This time it seems he is gambling on the increased revenue that Ronaldo, Kaka and whoever else he fancies may bring to the club.
The benefit of a unique system
Real Madrid is owned by its thousands of members, known as "socios", who elect the president. Real Madrid's 'non-profit' status means it elects a president for a term of office, who must commit a deposit of 15 percent of the club's budget. This means they do not need to generate £30 million a year just to service their debt. (So what do you need to do to get elected? To stand for election you have to be a Spanish citizen who has been a club member for at least ten years. And, crucially, you have to submit a deposit equal to 15 per cent of the club's budget, or about £50 million). (But you don't need to come up with the cash yourself, you just need a bank to vouch for you.) Once that's done, you campaign, just like in any other election, and, ultimately, it's the members who decide.
Real Madrid is run as a sort of trust, rather than a plc. Real are an institution in Spain; political and business. The banks in Spain will lend to Real and support them; so Real have financial latitude in how they can run their business. They have more constraints in terms of their financial management. It also helps that Real - from before the 1950s heyday of Di Stefano - is considered the "establishment team" and can call on close links with the government or city authorities when cash is tight.
It may still owe money, but only a fool would call in these debts and risk social and political isolation. Being the club of Castillian Spain, they have the support of institutions. It is worth noting that while they also have huge debts, it is mostly from local banks, not international institutions as is the case of United. Unlike the majority of European football clubs,
That leaves it free of all the ramifications for takeovers and potential debt issues that being a listed company could involve
The club also has the advantage of owning their own stadium, unlike their counterparts in Serie A, and earned £80m in matchday revenue in 2007-08.
Whatever debt they hold is with local banks, many of whom are under political and social pressure not to tighten the screws. Real are too big and too important to fail or to come under the kind of debt pressures that affect traditional clubs. The club's social, political and economic significance dwarfs that of any other club in the world, they play by a different set of rules.
Another benefit, one that helps attract top name players, is the fact that tax legislation allows their foreign players to pay tax at about 23% for the first five years that they are in the country.
This means that, in headline figures, if they want to pay Kaká £8 million after tax, it would cost them less than £10 million a year, whereas it would cost United £16 million (thanks to the new 50p top marginal rate introduced at the last Budget). Over five years, that's a difference of £30 million
'Fickle allegiance'
In a recent survey by branding agency FutureBrand, a third of the fans said that they supported Beckham rather than the football club, Reuters reported.
The UK media made much of David Beckham’s departure to Spanish football giants Real Madrid, suggesting that the Beckham brand had formed a key element of Manchester United’s appeal, and that the club would suffer as a result of his absence. In fact, marketing chief Draper took the initiative to measure the “Beckham effect” and argues that it only really impacted the brand in a single market: “The only area where we’ve seen a noticeable wavering of interest in the club as a result of Beckham leaving is Japan. We commissioned MORI to do a survey at the end of 2003 to examine the effect of the departure, and it showed that there had been a bit of defection in Japan as measure against the last two years. Everywhere else shows improved or static brand loyalty,” he says.
But it is not always the case:
Ronaldo's departure was thought to be bad news for the millions of Asian supporters, particularly those in Malaysia, Indonesia, South Korea and China who had been expecting to the see the 24-year-old during United's Far East tour in July.
But Taewoon Park, a journalist for the Sports Seoulnewspaper, says that Ronaldo's departure will actually be welcomed. He said: "I am convinced that Ronaldo leaving will not affect United' popularity in Korea.
"Actually, some Korean supporters are pleased about it because Ronaldo's attitude and desire to leave for Real Madrid made them so tired. Such character-collapsing team chemistry cannot be allowed in Korea, which has very strong organisational or community culture.
"Sure, Ronaldo is very popular, but he is not the single most favourite football personality. In Korea, it is Ji-sung Park. Recent research demonstrated that 75 per cent of Korean football fans selected United as their favourite European club, ahead of Real Madrid, Barcelona and AC Milan.
"The United supporters will continue to support United, just as they did when Beckham and Ruud van Nistelrooy left."
United's supporters in the region are also sanguine. "It certainly would disappoint many Man U fans here because lots of them love him and want to see him in Jakarta," said Yudi Prihartano, of an independent fans' group in Indonesia. "But there are lots of other stars in the team so it won't matter much."
Real Madrid signed one high-profile player in four successive summers from 2000 during their first galáctico period:
Luís Figo (Barcelona, £37.3 million) from 2000-05;
Zinédine Zidane (Juventus, £45.6 million) from 2001-06;
Ronaldo (Inter Milan, £33 million) from 2002-07;
David Beckham(Manchester United, £23.3 million) from 2003-07.
When possessing at least three of those four galácticos (2002-06), Real won only one significant trophy, the 2002-03 Spanish league title. With the four of them, they won nothing
It worked, for a while, until it became clear that the galácticos could not carry the weight on their own without a supporting cast of quality veterans. Real Madrid won two league titles and the 2001-02 Champions League in the first three years of the galáctico era, then nothing until 2006-07, after Pérez was forced to resign his position.
Legendary Fernando Hierro also criticised Perez for both Makélélé's departure and the manner of his departure, saying:
I think Claude has this kind of gift –“ he's been the best player in the team for years but people just don't notice him, don't notice what he does. But you ask anyone at Real Madrid during the years we were talking about and they will tell you he was the best player at Real. We all knew, the players all knew he was the most important. The loss of Makélélé was the beginning of the end for Los Galacticos... You can see that it was also the beginning of a new dawn for Chelsea. He was the base, the key and I think he is the same to Chelsea now.”
Pérez has told everyone who will listen that he has learnt from the mistakes.
-No more would he construct unbalanced teams (the other characteristic of the galáctico era, of course, was a disregard for defensive-minded players).
-No more would he rush ill-prepared youngsters into the first team.
-No more would he force his highly paid superstars to appease sponsors or embark on punishing tours to the Far East in an attempt to recoup his investment.
-No more would he sack coaches on a whim, as he did after that fateful 2002-03 season, when Vicente Del Bosque was released and Real went on to have five coaches in 2½ seasons.
With CR7, kaka David Villa, David Silva, Raul Albiol, Xabi Alonso and Franck Ribery — there is no guarantee they will win anything, but Real generated enough revenue to cover these massive transfer market investments, with more expected to come.
Increasing ticket sales, increasing bank loans and increasing the club's economic value.
They are looking to make money from these signings by maximising their future overseas TV rights.
There will be massive TV deals coming up for them overseas in the next few years, that is the big carrot.
With the developments this week Real Madrid will already have restored their profile and status to number one in these emerging markets.
And the team that has the most marketable players, and the most supporters, will get the best TV deals.
They seem to be more interested in generating more revenues than aiming to be winner in games. Until recently they are on the frame to battle with Barcelona for Mascherano, where defensive midfield is their weakest spot since the departure of Makalele.
Kaka and CR7 are 2 of the biggest names/brands in world football, madrid own about 40%-50% of their image rights. They will recoup the money spent on them in a season.
Cristiano Ronaldo is the new David Beckham, according to Real Madrid’s presiden Florentino Perez.
“Madrid should have brought Cristiano Ronaldo as Beckham’s replacement two years ago,” Perez told the Sunday Times.
“There are specific footballers who can turn out to be very profitable, because of the commercial benefits they bring the club.
“For instance, we once brought in €15m for playing two matches in Japan. That would not happen in the current climate but they did it then because we had Figo, Zidane, Ronaldo and Beckham.
Perez added: "If Cristiano Ronaldo comes in, we would have a Nike-endorsed player putting on an adidas shirt every week,”
“In the previous time, we established a model which allowed us to pay off our debts and raise our income, and we did it by investing in great players.
“They brought money in, the model worked.
Manchester United MF Cristiano Ronaldo has “lucrative endorsement contracts” with Nike, Coca-Cola and Espirito Santo, a bank based in his native Portugal, and is “understood to be weighing up offers from a number of other companies,” according to the LONDON TIMES’ Oliver Kay, who writes under the header “Ronaldo is the New Beckham.”
Among the brands that have used Beckham’s image are Adidas, Castrol, Vodafone, Marks & Spencer and Pepsi”
A new galaxy of superstars
The arrival of Kaka and Ronaldo guarantees replica shirts will fly off the shelves at the Real Madrid superstore and an increase in television and marketing fees, but those lines of credit aren't endless, especially in the current economic climate. If Perez has done his sums right maybe everything will be fine, but what if he hasn't? What if one of them breaks a leg in pre-season?
If Ronaldo sells 2 million shirts then he would have made up the transfer fee already. There is no doubt IMO that he will sell more than that amount all over the world.”
2 million shirts at 50 Euros = 100 million (give or take what Ronaldo is going to cost in Transfer Fee+Salary).
However, Real Madrid doesn’t make all those 50 Euros in profit. It would be more likely that about 20 Euros are net profit. So instead of 2 million shirts, you’d need to sell 5 million.
5 million shirts, again, not that big a deal. Except that Real only makes 20 Euros profit off shirt sales in their stores complete with the printing of CR7 on the back. Unlicensed copies make 0 Euro profit, and blank shirts sold in retail centres probably only net about 5 Euro profit to Real.
It’s not impossible that Ronaldo will pay for his transfer in shirt sales. But the breaking even point is a lot, lot higher than 2 million shirts. It’s more like 20 or 30 million, IMO, and they’ll all have to be “official” sales, since copies bring exactly nothing to Real’s coffers.
For Real, perhaps 20 to 50 million official shirts. Player signings need to be counted as how much they “increase” shirt sales. This is extremely difficult when more than one signing is made in the same season, because most fans don’t buy a shirt for each player they like that has joined the club, but just… one shirt for the club. Kaka and Ronaldo as a “duo” would need to sell about 150 million extra official shirts to pay back their transfer fees if Real made 1 euro/dollar/pound per shirt sold.
This is where the problem is: most markets for clubs are quite limited. Africa, large parts of Asia (China, India, Thailand, Indonesia), large parts of South America (Brazil, Colombia, Argentina, Ecuador) and some areas of North America and Europe (Mexico, East Europe) are very hard to sell “official” shirts because of how expensive they are, and the great ease to acquire good quality copies at a fraction of the cost. In markets where the shirts aren’t considered extremely expensive (Western Europe, Japan, USA), there’s the problem that quite a lot of people are either not interested in football enough to buy shirts, or support another club.
A core group of supporters will buy one or more official shirt/kit per season, but most supporters only buy one shirt every two or three seasons, official or not. If the total market potential for Real Madrid official kits is about 200 million (IMO generous, but why not), then if Real sell 20 million to “core supporters”, the only improvement Ronaldo/Kaka can bring is in sales to the other 180 million supporters. Since about 30 million of them would have been due to buy a new shirt since it was two or three years since they bought their last kit, they also aren’t part of the equation. All in all, it’s how well R/K manage to sell to the other 150 that’s important. Will their arrival force 100 million of them to buy a kit this year? 120? All 150? With all these people though there’s the risk of copies being more available (i.e. it’s easy to guess a lot of people around Madrid will be wanting to buy a CR9 kit, so copies of CR9 will be more available than, say. And thus sold at a lower price.), so even if all 150 million go and buy Real Madrid shirts, half (or more) could end up -willingly or not- buying copies. So the total increase in sales would be 75 million.
People are saying $80 million pounds is too much for CR7, in truth "Peanuts! They're asking peanuts," is how Real's director of marketing, Jose Angel Sanchez, memorably informed Perez of the price United were seeking for Beckham. Figo had cost £37m, Zidane had cost £47m and Ronaldo £29m, and here was Beckham, already an icon in lucrative Far East markets that Real wanted to exploit, being given away for a maximum of £22m.
Before the deal was done, Perez asked Sanchez: "So how much is Beckham worth to you?" Sanchez estimated the England captain could be worth €500m (£340m) of business. It was a no-brainer. Don’t see a reasons to why peoples are making a fuss of the $80 million pounds since last year the price is consistent.
24 Jun 2008 - Real Madrid not to pay 80 million pounds for Cristiano Ronaldo.
£22m. and £80m respectively for Beckham and Ronaldo are only sums of money quantified by their quality alone not including the future
Art of war: Respect your opponent, learn their method and surpass them.
Real Madrid success in merchandising and commercial revenues are indirectly linked to Man Utd Real Madrid end United reign as the game's biggest earner
-José María Gay believes that the Man Utd’s model has been shown to be the most profitable in the world of football, and an example for the rest of its competitors to follow. “
Real Madrid is also playing to exploit its image through means of the attraction power of its great stars,” he notes.
And follow United's lead and conquer the Asian market.
-United's global reach, particularly in the far east, is astonishing. In 2000 they opened a superstore in Singapore, with plans for similar operations in Thailand, Indonesia and Brunei. The previous year 10 million Thais entered a competition to win a trip to Old Trafford. On the day the club's new Nike strip was launched it was available in 58 countries. That reach is what Perez covets.
The difference between them, one need to win CL and League title to be the richest in the world, the other club did not have to win, and still the richest club in the world. This is due the individual tv rights Real Madrid enjoy, a difference of $80 million pounds and other EPL clubs should be thankful to United..,
-Manchester United is famous for building up a team of players who love playing for the club and will do anything to make them succeed - it just so happens that most of the players are high quality as well.
-Real Madrid is famous for building up a team of superstars and failing because they cannot gel, don't care for the team and only care about the winning element of that team.
Ferguson has a sure touch when it comes to sensing a player's era is over at Old Trafford, and he will have detected all the vital signs from Ronaldo last season that it was time to part.”
-Not fully correct…agree to certain extent…true despite Ronaldos quite obvious talent, he has expressed a desire to leave on numerous occasions in the past years. This season there has also been a noticable dip in his work rate, if not his contribution in the final third. $80m pounds is a lot of money, and it is important SAF makes some important signings and does not indulge in luxury players (Veron). But CR7 is only 24 years old and a vital players helping for United to advance to CL final despite not emulating 2007-2008 STAGGERING 42 GOALS. I don’t think Sir Alex willing to let his 2nd golden goose going going gone, he already regretting transferring his golden goose named “beck beck” as he passed the baton of the title richest football clubs from United to Real Madrid, no wonder he was more keen to sell Beckham to Barcelona . This was proven with his later statement, insistsing it was out of the question to expect the player to stay any longer, telling The Mail on Sunday; "He wanted to leave, it's as simple as that. He was going to go some time." Without the $80 million pounds, they still manage to gamble on Benzema by not renewing Tevez deal and postponing Valencia deal. There hasn’t concerete sign of United next signing, this was due to their effort to renew Tevez contract, of course they won’t show Tevez challenger for the forward role.
SAF didn't state that he "wouldn't sell 'real madrid' a virus" but that he wouldn't do business with 'that mob' referring to then president Ramon Calderon. Had Calderon still been president I think SAF would have refused to sell, though we shall never know either way!
United survived without Van Nistelrooy, they survived without Cantona, and they will survive without Ronaldo. Ferguson can invest in three quality players this summer giving a better balance to his midfield.
-Sir ALEX due respect they are shown the door. Remember Beckham, Van Nistelrooy, Stam etc. They were all really good players who had played their hearts out for Man. Utd. but made that fatal mistake and paid the price. They were expendable. Sir ALEX has had to bite his lip and squirm for two seasons before he could be bought.
The amount of support for the sale in these posts suggests Ferguson has called it right again. United fans also know he said goodbye to the likes of Eric Cantona, David Beckham, Roy Keane and Ruud van Nistelrooy and did not live to regret it. Jaap Stam was the one he does regret, but I suspect he is very comfortable with the decision he has taken over Ronaldo.
Who will fill the missing link, losing CR7 is like losing two importants players?
A player with great pace, skill, a fantastic shot, powerful and great in the air
-a winger
-a goal scorer
A deal was struck last year then that means that Sir Alex has had a year to think about a replacement and will already have his options in mind but are they avaliable this year round? Sir Alex likes to spring the odd surprise (remember the Cantona deal) and has a history of finding unknown or unfashionable players (Solskjaer, Ronaldo, Rafael)
Who will come?I wonder what the point of having large sum of money when there is no stock?
1st option: The French connection
United have successful story of United’ French Revolution from Eric to Evra.
United are now pinning their hope for glory from them once more.
I wonder what the point of having large sum of money when there is no stock?
Big Benz- goal scorer
Lyon president Jean-Michel Aulas said last week that his club will struggle to hold on to 21-year-old Benzema and club adviser Bernard Lacombe admitted: ‘I f United
want to buy Karim then what can you do?’
Lyon sporting director Bernard Lacombe said: "Nobody knows what is going to happen. What should we do if Manchester, who have a lot of cash to spend, want to sign Benzema?"–suggested their willing to sell him! Just money talks
want to buy Karim then what can you do?’
United expected to step up Benzema bid once Tevez is out of Old Trafford, especially when their target is still a fresh talent , they would not mind spend large chunk of the money on him.
Scar face- winger
Bayern president Franz Beckenbauer has admitted Ribery could be sold if he does not extend his current deal at the Allianz Arena, but Manchester United sources have hinted the fee, combined with Ribery's age, could put Ferguson off making a bid.
2nd option: The Spaniard’s david
Utd sold their beloved David to spain now They request 2 more David back from them.
3rd option: no messiah but there is Etopiah and Kum Kum
Sergio aguero
-A player with dazzling skills and highly marketable-definitely my favourite player, he is young, with $45 million pounds, United might be looking for his service.
Eto’o
- the man who killed man utd in cl final....but will have to battle Rival Man city for a huge amount of weekly fees of about $195,000 pounds
4th option: British talent
Ashley Young and Aaron Lenon
5th option: old guard return
Beckham and Ruud Van Nistelroy
Who knows sweet memories flow back once more and the heart of stone melts.
They might have played their best career and end their career in united shirt to repay their mistake and debt. Just like Sheringham playing his best career at his his last year.
other name links
Arjen Robben, Mirko Vucinic
Last resort
Spend all the transfer fund available and buy Newcastle! And you hava a huge resource, deplete their resource.
Warchest
Even with the £70m double capture of Benzema and Ribery, Ferguson would still have a massive warchest with which to plunder the transfer market - especially now that the £25m earmarked for Tevez is back in the kitty.
Gremio's Brazilian starlet Douglas Costa is a £20m target, while Wigan's Antonio Valencia is expected to sign for £16m.
Too good to be true…If this happen…no one definitely will miss CR7
Who will take over the mantle of the sacred number 7?
Ljajic? Perhaps if ribery sign on…it will be like cantona(ribery) passing the mantle to beckham.
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