They've splashed 136m on Kaka and Ronaldo - where are Real Madrid getting their money from?
Real Madrid's £80million bid for Cristiano Ronaldo comes just days after the club paid £56m for Brazilian star Kaka. If Ronaldo joins the Spanish side, he will be the fourth record signing in sterling to move to the Bernabeu. But where does all this cash come from? Luis Figo was the first 'galactico', a £37m purchase from Barcelona in 2000. Zinedine Zidane came next, courtesy of a £47m deal with Juventus. The capture of Kaka and, in all likelihood, Ronaldo, would mean Real have spent £220m on just four players. How on earth can a side, who didn't even win their domestic title this year, possibly afford such a monumental amount of money? Barcelona's economic director, Xavier Sala-i-Martin, is equally mystified. 'I do not know where the 300m euros (£237m) that Florentino Perez (Real Madrid president) thinks he has for signings actually comes from,' he told radio station, RAC1. 'He says he will recoup it by selling replica shirts and so he will have to sell 30 million of them. That is impossible. 'How can it be that a football club has so much money to spend, bearing in mind the current economic situation in the country and the politics of credit restriction in place in all banks?' There are three key factors behind Madrid's ability to flash the cash. 1. The Real Madrid brandIt sounds ridiculous, but Perez may not be so far off the mark when it comes to selling shirts. David Beckham's four-year stay in Spain boosted sales of shirts and memorabilia by 137 per cent, according to club estimates. Last year, Real raked in £102m in commercial revenue and sponsorship and received £16.8m for reaching the first knock-out stage of the 2007-08 Champions League. Just think of the effect Kaka and Ronaldo could have on these already sizeable sums. The strength of the Real Madrid brand really cannot be underestimated. The all-white kit, the European glory and the extensive lists of top class players make Real a very marketable product. How much money would the club claw in if they actually won something? 2. Television dealsReal Madrid was the richest club in the world in terms of revenue in 2008, outstripping Manchester United by £32.5m. But roughly a third of Real's income came from television deals, with the Spanish side benefitting from La Liga's policy of clubs negotiating individual contracts with broadcasters. This means Real Madrid and Barcelona share around half of the TV pot of gold, with the smaller clubs picking up the scraps. Consequently, Real profited to the tune of £107.7m from broadcast revenue. Not only does this widen the gap between Barcelona, Real Madrid and the rest of La Liga, it gives the two 'super clubs' more room to manoeuvre in Europe. 3. A unique systemReal Madrid is run as a sort of trust, rather than a plc. It may still owe money, but only a fool would call in these debts and risk social and political isolation. 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. 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. Enter Florentino Perez, who has just begun his second term of office. It was Perez who introduced the first crop of 'galacticos' to the Bernebeu nearly a decade ago and he seems intent on doing it again. The first time around, he negated the club's considerable debt (estimated at £170m) by selling the city-centre training ground to the city council and regional government. It earned Real Madrid a reported £206m and meant the club could hand money over to players, rather than their creditors. This time it seems he is gambling on the increased revenue that Ronaldo, Kaka and whoever else he fancies may bring to the club. That's a lot of football shirts to sell.
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