Does Real Madrid’s political elite and business model hamper their on-field success?

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In an age where most large clubs are partly funded or owned by oligarchs, billionaire tycoons or investment groups from the oil-rich Middle East, there is one club who have refused to have their heritage tainted by selling part of their club. This side is Real Madrid. Los Blancos are recognized as a registered association. This means that Real Madrid is owned by its supporters who elect the club president. This individual cannot invest his own wealth into the club, although in order to run for president in the first place, the candidate has to be able to personally account for 15% of the club budget which stands at €600 million, so each must have around €90 million in reserves ready. Also, the club can only spend what it earns, which is mainly obtained through merchandise sales, television rights and ticket sales. Unlike a public limited company, it is not possible to purchase shares in the club, but only a membership. The members of Real Madrid, called ‘socios’, form an assembly of delegates which is the highest governing body of the club. As of 2010, the club has 60,000 of these.

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It was under Florentino Pérez’s first presidency spanning the from years 2000 to 2006 that Real Madrid started its ambition of becoming the world’s richest professional football club. The club relinquished part of its training grounds to the city of Madrid in 2001, and sold the rest to four separate corporations. The sale wiped out the club’s debts, paving the way for it to buy the world’s most expensive players, such as Zinedine Zidane, Luís Figo, Ronaldo and David Beckham in the notorious ‘galactico’ system. The city had previously sought for the training grounds’ redevelopment, a move which in turn increased its value, and then bought the site. A slick business move which is was one of the first examples of Madrid entering a new era of financial importance. This move caused the European Commission to start an investigation into whether the city overpaid for the property, or to be considered as a form of state subsidy.

The sale of the training ground enabling for the construction of office buildings cleared Real Madrid’s debts of €270 million and enabled the club to embark upon a unique spending spree which brought big-name players to the club. In addition, profit from the sale was spent on a state-of-the-art training complex on the city’s outskirts. Although Pérez’s policy resulted in increased financial success from the exploitation of the club’s high marketing potential around the world; especially in Asia, it came under increasing criticism for being too focused on marketing the Real Madrid brand and not enough on the performances of the team.

After a mass exodus of some key stars and a staggered start to the 2005-2006 campaign, Perez announced on the 27^th of February 2006 that he would resign as president. His departure from the Santiago Bernabeu did not last long and on the 1^st of June 2009, Florentino Pérez regained his role as the president of Real Madrid. Pérez continued with the Galácticos policy instated in his first term, buying Kaká from Milan for a record-breaking sum of £56 million, and then breaking the record again by purchasing Cristiano Ronaldo from Manchester United for £80 million.

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The utilisation of such a policy has enabled Madrid to become the undisputed wealthiest club in world football and as Spanish football expert Guillem Balague explained: “The philosophy hasn’t failed”. He further went on to state that “Perez has produced a lot of money, which allows Real to compete at the highest level, without having to bring in foreign investment. You have to take that into consideration. Manchester City and Chelsea wouldn’t compete if it wasn’t for the foreign investment that’s come in. You have to say Real have stopped that.” As mentioned above, without the influx of seemingly endless amounts of oligarch money and middle-eastern Sheik investment, the sort of clubs discussed would not be able to compete on the top table like they do now. Madrid; whether you like it or not, can compete without foreign investment and therefore Perez’s plan must be regarded as a success. Balague summarised by saying: “If Florentino Perez became only a president, the one who dealt with the money and the commercial side of things, he would be brilliant. But he’s not as good as a director of football.”

As mentioned, the ‘galactico’ system was and still is implemented by Perez to great success in some instances but causing controversy in others. Balague provided further insight into this by providing a comparison to Disney. “The business model does work, this idea – copied from Disney – that every year they have to have a Mickey Mouse, a Goofy, that works and the finances have improved to such a point that he keeps saying he stopped foreign investors taking over the club.” The ‘Goofy’ or ‘Mickey Mouse’ in this scenario are the players such as David Beckham or Zinedine Zidane who were used as poster boys to increase Madrid’s yield of supporters from potential markets in Asia further supporting Perez’s business first policy.

This ideology coincided with the fact that the mega signings are only attack-minded players bought to fit the Madrista’s footballing ideology of free flowing attacking football. This means that; in the cold light of day, Real’s midfield is often overrun, out-muscled and out-played. Failing to replace Claude Makelele following his departure to Chelsea in 2003 has haunted Los Blancos ever since and has often meant they do not have an actual presence in front of the back four with the remaining six having a preference to attack. This theory was endorsed by former galactico Michel Salgado, who said when interviewed by the Mail Online that he believes his former side lacks a defensive midfielder. He stated: “For me that’s the main thing we need to find – the midfielders need to accept work, defend as a team as well and I think we can improve some more in possession and patience, we can be too quick sometimes.” An example of what Salgado was hinting at is the lack of use of players such as Casemiro who is very much on the periphery, being the perfect midfielder to fill the void that is currently in place. Instead, coach after coach has insisted on playing a Kroos – Modric pivot which is encumbered with all the current problems listed.

The implementation of such a policy seems quite self-explanatory when it comes to the fate of a manager who fails to fulfil not only the footballing requirements by satisfying the fans and directors with attractive football, but also the financial requirements that come with winning trophies and titles. Not since 1983 has a Madrid manager gone into a summer having won nothing and continued the next season, and that was the club legend Alfredo Di Stéfano, whose team had been runners-up in every competition. Fourteen managers have departed empty-handed since then, some of them after a matter of months. An example of particular scrutiny was José Antonio Camacho’s case – he left after just 22 days.

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The latest manager to feel the brunt of a tough season that ended without a trophy was Carlo Ancelotti. Just one season on from delivering a unique and coveted ‘la Decima’ after an injury time win over city rivals Atletico in dramatic fashion, Ancelotti could not compete domestically against the unstoppable force that the ’MSN’ trio from Barcelona had become. He eventually finished 2^nd in the La Liga, was knocked out of the Copa del Ray by Atletico, and suffered elimination from the semi-finals of the Champions League at the hands of Juventus. It seemed that after the defeat against ‘The Old Lady’ that Ancelotti was resigned to his fate, stating “I would like to stay but I know very well how things are in football”.

If money and business get in the way of manager’s success and are a dictating factor in their future, then the other segment that has a decision is how the appeasement politics work at Madrid. With Rafa in charge, Real were meant to embark on a new era, which for some was not desirable, and Rafa was dogged with claims about being the wrong man for the job throughout his 25 match reign. Out of these 25 games, 17 were victories and only three concluded in defeat, although the 4-0 humbling at the hands of Barcelona in the Clasico was more than just a defeat in a football match- it sent shock-waves up the political hierarchy at the Bernabeu. Florentino Perez had his reasons for why Benitez had to go, but one of the hidden motives would be as mentioned – his appeasement of certain groups, especially fan groups who he likes to meet and do polls with. As Guillem Balague also stated “And what Florentino is going to do now is listen to fans. So he likes to do polls with fans, he is going to meet them in little groups, in big groups, and he wants to gather the opinion of fans.” “Why? Because he wants them to say what they are going to say now, which is: ‘Get rid of Cristiano and get rid of Rafa.”

Of all the comparisons and differences that can be drawn between Spain’s two heavyweights, one of the stark differences is the transfer policy employed by the two clubs. Madrid’s notorious structure has been covered but not compared to the one implemented by the Blaugrana, who focus on buying who they need for the positions they need to fill. The epitome of this is arguably Luis Suarez, who was acquired in order to fill the void of not having an out and out striker, or Aleix Vidal, an investment for the future with Dani Alves approaching his mid-thirties. The one similarity to draw from the two clubs is that they are both sealed off from the public, you cannot buy shares in the club with the only option being to become a ‘socios’, subsequently joining the assembly of delegates. Now obviously, these two clubs are run in vastly different circumstances with a manager’s job not at risk if they do not win a certain trophy each season, and they do not operate such a ridiculous recruitment policy or thrive to be the richest club in the world regardless of the consequences. Although with it not being the main focus, Barcelona are still classed as the second richest club in world football from the fact that they win lots of trophies coincided with being very marketable, something Madrid have failed to replicate.

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What has this resulted in? Taking a look at the two clubs trophy count over the past 15 years, you can clearly see the difference. With Real having won only two Champions League trophies, five La Liga titles and a pair of Copa del Ray’s, if you compare this to Barcelona then the difference is notable. Seven La Ligas, three Copas and four Champions Leagues dwarf Real’s achievements.

Overall, it is quite evident that any on pitch progress that is sought after by Madrid’s political elite is ironically being hampered by themselves placing the business of football before the results. By implementing a bogus transfer policy that subsequently makes the team weaker with such an imbalance and finally, by placing so much pressure on the manager and not allowing them to iron out problems in the side that go against the club image, something Rafa Benitez paid the ultimate price for.

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