Europe

Eden project shows Real are eager to broaden their footprint in 2019-20

Real Madrid presents its new player Eden Hazard at the Santiago Bernabeu stadium in Madrid June 13, 2019 

THE MOST famous football club in the world is determined to regain its position at the top of Spanish and European football, judging by their frantic activity in the current transfer window, notably the signing of Eden Hazard from Chelsea for € 100 million.

Real Madrid have been big players in the transfer market this summer. Over the past 10 years, their expenditure on new recruits exceeded over € 1 billion before this summer, with landmark transactions involving Gareth Bale (€ 100 million), Cristiano Ronaldo (€ 94 million), James (€ 76 million) and Vinícius Júnior (€ 45 million). This past couple of months, Real have already spent more than € 300 million, signing Hazard as well as Luka Jović (€ 60m, Frankfurt), Éder Militão (€ 50m, Porto), Ferland Mendy (€ 48m, Lyon) and Rodrygo Goe (€ 45m, Santos).

The club has also been linked with Paris Saint-Germain’s Neymar and Kylian Mbappe in addition to Paul Pogba of Manchester United. The futures of Bale, Isco and Asensio are still uncertain, but increasingly, it looks as though at least one of them will leave the club. Real, if they want to continue their summer spree will have to sell to raise the cash, especially if they need to break records to add a new transformational signing to the club.

Inevitably, this has all fuelled hot debate in the Spanish capital. After all, every aspect of Real’s day-to-day existence is always dissected, either in the media or in the bars and restaurants in the increasingly popular city of Madrid. The Bernabéu is one of the Spanish capital’s chief landmarks, a massive stadium that dominates the neighbourhood and attracts thousands of fans eager to embark on tours of the iconic home of Real.

As well as enjoying a pre-eminent position in the game’s hierarchy, Real Madrid is also the most valuable brand in world football. Valued at € 1.8 billion, the club is ahead of a European peer group that includes Manchester United (€ 1.65bn), Barcelona (€1.59bn), Bayern Munich (€ 1.47bn), Manchester City (€ 1.4 bn), Liverpool (€ 1.28bn), Chelsea (€ 1.1bn) and Paris Saint-Germain (€ 1bn).

Real Madrid recently returned to the top of Brand Finance’s brand valuation of football clubs by growing their value by 17%, an increase partly attributable to the club winning its fourth UEFA Champions League in 2017-18. With 2018-19 a relatively disappointing campaign for Real, it will be interesting to see how they fare in next year’s assessment from the brand valuation company.

Real Madrid is not only the most valuable football brand, but is also the sector’s strongest, ahead of Barcelona and Bayern Munich. The club may have relinquished their UEFA Champions League crown for the first since 2015 and once more was outperformed domestically by fierce rivals Barcelona, but the financial, cultural and political clout of Real Madrid still places it ahead of its rivals.

Real Madrid became the world’s first global football club, largely because of a golden period in the 1950s and early 1960s that saw them win the first five European Cups. The club also broadened its international appeal by strategically signing overseas players like Alfredo Di Stefano and Ferenc Puskas. Real Madrid became the de factodiplomatic standard bearers for post-war Spain, moving some Franco-era politicans to claim the club was “the best embassy we ever had”.

It has not all been bouquets for Real, though – the club has experienced downturns and has endured financial problems on more than one occasion. At one stage, Real Madrid had worrying debts of €270 million, which were cleared by selling the club’s training ground. This coincided with Real embarking on a path to become the world’s richest football club with a modified business model and the signing of a string of footballing superstars – the so-called “galactico” era that included the likes of Zinedine Zidane, Luis Figo, Ronaldo and David Beckham.

Real Madrid became the first football club in the world to break the € 750 million barrier in revenues in 2017-18. Their commercial monies totalled € 376 million, around 50% of their overall revenues, making them the highest generator of cash from this income stream. The club’s status means it naturally attracts high profile sponsors and partnerships. Real Madrid has two main sponsors in Emirates airline (since 2013 main sponsor) and Adidas. The club earns € 70 million and € 110 million annually from Emirates and Adidas respectively. Although La Liga’s broadcasting rights are not as lucrative as the Premier League, contributing 50% of the league’s overall income, Real Madrid’s TV revenues totalled € 238 million in 2017-18, contributing 32% of total income.

Matchday revenues totalled € 136 million, thanks to average attendances at the 81,000-capacity Bernabéu stadium of 66,000 in 2017-18. Club President Florentino Perez unveiled plans for the redevelopment of the stadium, a € 575 million project that will last four years and will make the Bernabéu one of the most modern and spectacular in the world. The club anticipates the new stadium will boost income by € 150 million per season, including expanded retail opportunities.

The Real Madrid reputation is also boosted by its Foundation, which works to promote sport and its values as well as encouraging education and a commitment to charity. The Foundation runs projects in all corners of the globe, in keeping with the club’s position as one of the world’s most popular and recognisable clubs.

Real recently announced that it will form a women’s team for the first time, reaching an agreement to buy Deportico Tacon, a Madrid-based team for € 400,000. The club will continue under its own name for 2019-20, but in 2020-21, will merge with Real. It is somewhat strange that Real have arrived at women’s football rather later compared to peers, but the timing is appropriate.

The Real Madrid brand has been enhanced by a glorious era that has seen them win four Champions Leagues,  four FIFA Club World Cups, one La Liga title and one Copa Del Rey. However, the club have lifted the La Liga crown just six times in 20 years, compared to Barcelona’s 11.

But equally important in the modern game, the club’s finances have been boosted by continual success in the UEFA Champions League, securing high levels of prize money and TV income. Early stage elimination in 2018-19 will have a profound impact on revenues for the season, and in the near future, the disruption and financial implications of their stadium programme will also become apparent. However, their aggression in the transfer market suggests Real are determined to close the gap on Barcelona in the coming season.

Photo: PA Images

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