Real Madrid’s relentlessly optimistic financial results beg closer scrutiny

Despite all the newly arrived clubs whose deep pockets are changing European football’s landscape, it is still Real Madrid whose actions and largesse provoke stronger criticism. Younger and older fans alike may struggle to reconcile the club’s habit for preening itself as an institution of history and tradition with its routine practices of amputating managers’ careers, accumulating trophies through spending near-grotesque levels of cash on players and capitalising on close ties with government institutions in Spain that border on incestuous. This is a club that wiped nearly 206 million euros of debt off at a single stroke by somehow convincing Madrid’s city council to spend such a lavish sum on purchasing their training ground, and that once again called on Spanish banks to secure £157 million of public money at unusually low interest rates in a time of recession to acquire Cristiano Ronaldo and Kaka in 2009.  It would not be too far-fetched to claim that, given the amount of public money that Madrid have pilfered with the assistance of Spanish banks in a fifteen-year period, they are directly responsible for a significant part of the economic woes of the people who pledge them their support.

However, while the Glazers’ reliance on English banks to bankroll their takeover of Manchester United has seen the club fall into a logical, cause-and-effect based spiral of debt and struggles to refinance the debt, Madrid’s comparable levels of borrowing have not brought them the same problems. Rather, a club who reportedly took out 300 million Euros’ worth of bank loans at the start of Florentino Perez’s second spell as president have gone from strength to strength, proudly announcing a record turnover of 514 million Euros for last year and that their debt has been cut to 124.7 million Euros. Indeed, despite assembling a team that cost roughly 300 million Euros and having to deal with interest payments, there has not been a single financial year in which Madrid have failed to either increase their revenue or announce impressive profits. The latest revenue sums are, as the club’s website boastfully states, “the biggest of any sporting institution in the world” while Madrid have managed to continue reaping in more money than Manchester United and Barcelona even during a period that has seen them fail to claim the Champions League for ten years. We are constantly told that they have an enormous fan base spanning the world (and, in the eyes of Perez, probably any alien worlds as well), but anyone living in South and Southeast Asia will confirm that there are far more Barcelona shirts with Messi on them than Madrid ones with Ronaldo going around. In the Middle East, where Spanish football is more popular than the Premier League, their fan base is pretty much equally split with Barcelona. So too is their TV rights deal with Mediapro, which earns each club roughly 160 million euros a season.

So, if the allure of their players, their on-pitch successes and commercial draw has not been stronger than Manchester United’s or Barcelona’s at any point over the last six seasons, how is it that they are constantly in a position to declare themselves the most lucrative football club and best-performing sporting institution in the world? One suspects that the continued affiliation of Real Madrid with the Spanish government has seen them secure advantageous terms on everything from sponsorship deals, to loan arrangements, interest rates, and payment deadlines. If this did not have such a draining effect on the Spanish economy and its unemployed masses, it would not appear to so much resemble corruption. Yet as it stands, Madrid’s reliance on money to stay competitive is far more damning than that of clubs owned by sugar daddies whose extravagant expenditure was not sourced directly from a public who couldn’t afford it.

As they begin to implement Financial Fair Play rules in full force, it would be an oversight on UEFA’s part not to examine the sponsorship deals and commercial arrangements Real Madrid have secured, and adjudge whether the money accrued is the result of their apparently Midas-like business touch or more dubious special relationships with public institutions that have been in place since the dictator Franco anointed them his club and began lavishing them with his patronage. It is these murky foundations on which the “history” of Real Madrid, and its first five Champions League titles was built, and it is this same culture that has continued to prop up the club’s status today despite a relative lack of on-pitch success.

Ferguson driven silly by City’s relentless spending…

The most surprising aspect of Manchester United’s capture of Robin van Persie is the amount they have stumped up for his services. United have been squeezed both by Arsenal, who forced them to increase their original bid of £15 million by 9 million to £24 million before selling, and the player himself, who stands to enjoy a £50 million reward if he stays the length of his contract and millions more in bonuses should United win trophies during his time with them. For a club saddled with frightening amounts of debt, and a manager acutely aware that the largest weaknesses in his team remain in midfield, the glamour of such a move cannot entirely put to bed questions it prompts of Ferguson’s management. Is it possible that City, in the way they riled him last year through the 6-2 annihilation at Old Trafford, and tortured him with the illusion of a close-fought race before confirming the brutal truth of their superiority in the dying seconds of last season, have clouded his judgement? Reports are circling that Ferguson is planning a final stand against the new might of City over the next two years, and that the pursuit of van Persie was part of a strategy to bequeath a legacy worthy of Manchester United to his club. However, at the risk of sounding condescending, the modern-day manager has more to worry about than winning trophies at any cost, and should Ferguson’s incredulous outlay on an injury-prone player be a contributing factor to United’s continuing slide into financial trouble in the future, then his impact on the club will be up for review.

Besides, the neutral always associated Ferguson’s stature as a manager with his ability to address every one of the great challenges of their profession: from balancing the books to developing youngsters, from playing an entertaining style of football to winning trophies with tactical acumen. In his apparent desperation, it is doubtful he has even gotten that last part right: overloading his team with strikers and comparing them to the 1999 vintage overlooks the fact that his trophy-winning team were anchored by a dynamic, powerful midfield that is missing today. If reports linking Ferguson to Kaka are to be believed, then that would reassure that he has not completely lost sight of how to tackle a City team that is strong in every area of the pitch, but still doesn’t clear him of the charge of being financially negligent and strategically short-sighted. Kaka and Van Persie will both need replacing by the time Ferguson is believed to be pulling up sticks, and the perils of leaving a team’s long-term future in the vicelike grip of senior players can be seen at Chelsea, where Jose Mourinho did the same thing and cast a shadow over the club that was not fully redeemed by their negative triumph in the Champions League.

Fans are in thrall to the win-at-all costs mentality that Mourinho has spread in the game, and Ferguson’s embracing of the same approach has reduced his appeal to the neutral. Watching Manchester United sweep all before them in the most unlikeliest of fashions in 1999, through thrilling attacking play and script-defying comebacks, was a transforming experience that sparked my love of football, but Ferguson has flattered to deceive since then. His 2008 crop that repeated Champions League success owed too much to the individual talents of Cristiano Ronaldo to really extend his reputation beyond being a pure winner in the same way to a creator of great teams thrilling to the mind and soul. Some pinpoint conceding goals like a hole-filled boat against Real Madrid at home in 2003 as the moment when Ferguson sacrificed his pure attacking instincts in favour of a more pragmatic, trophy-sure approach to playing the game. Since that concession, he has also struggled under financial constraints to replicate his successes with the kind of young players he was once famed for developing. Even though fans point to Tom Cleverly and Chris Smalling, there can be no doubt that Ferguson has changed as a manager to keep up with those who splurge to win and has sacrificed some of what made him previously stand out from the managerial crowd in the process.

Robin van Persie might bring him goals and confirm his place in the pantheon of great sporting managers, but one cannot help but feel the achievements that made Ferguson a sporting icon stood for more than just winning while paying scant attention to the collateral damage.