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Saturday, June 13, 2009

Real Madrid's business model

As a Real Madrid fan (self-proclaimed), i cant help defending the club when people talk bad about it (even though kadang2 menegakkan benang yg basah). The talk now is the so called 'madness' spending spree buying ronaldo & kaka (total around euro 150m or so). many more to come mind you. Here are my amateurish arguments (what little i know - escape clause):

1) yes the world finances are unprecedented in trouble. credit crunch, shadow banking and all that. but football (big 5 euro leagues) are among the few industries that has seen an increase in revenue (10%, total of euro 7.7bil) based on Deloitte's.

2) Real Madrid finances does not depend on billionaires (e.g chelsea abrahamovic, man u glazers, liverpool gilette, arsenal russian oilmen) but its own revenue-generating ability (not bad for a non-profit organization). Anyways, if a bank has confidence in giving you loans nowadays that means its feasible (of course they do their homework). Shows good management and market confidence in a way. Perez claims the money is from the club and not his pocket which is a rare thing today.

3) Management is democratic. election every 4 years by the 70000 odd members. members must pay the annual fees $191 and be a season ticket holder. (please forgive the election rigging of 2008 dec elections - damn calderon). So when management mismanaged it can be overthrown. Therefore actions taken are on the consensus (so called lah). Thats why its a very stable organization unlike certain clubs that follows dilly dally its new owners.

4) Its been proven right. just look the revenue has double since 2002. coming up to more than euro350m annually and about euro 70m profit.

5) Real Madrid have 3 major revenues category. below is the chart from delloite.


6)Matchday revenue/attendance is the 3rd highest in europe and not much room for growth as i understand as nearly 80-90% seats are sold before the first kick of the season.

7) Merchandise. yet again proven to work. Beckham case, t-shirt sales in japan itself dah cover its transfer fee. i wouldddd LOVVEE to have a Kaka jersey. Ronaldo not that much. 50% of the players rights also go to the club. sponsors lagi such as addidas, bwin and others.

8)The real carrot is in the Tv rights especially the emerging markets. the team that has the most marketable players and supporters will get the best TV deals. Another point,for example Asia has many Man U followers (some ronaldo's followers). what better way to steal their fans (especially yg follow stars) by buying its star players.

9) One time a commercial director said real madrid wants to be like a hollywood film. get audience addicted stars (tom cruise, angela jollie) to attract ppl to watch the movie comparing it to getting galacticos to play with them.

10) Many financial experts have not mention real madrid spending is 'madness' but contrary instead stating it as smart business model. its the non-financial ppl that are saying bad things (which i understand.. because its just too much money and makes the football industry shaky).

so.. thats my supporting argument on the matter. please feel free to argue and say your take on it.

ps.. i think this a classic example of "spend big, win big" and "the rich gets richer and the poor get poorer".

9 comments:

Bozord said...

Saje nak letak posting ni. i hope you all dont mind. i wish others will also write more about their clubs too.

m afnanz said...

cipets...terpaks ahrap kat oshea, fletcher, pangil balik chadwick, wes brown stirker...

shahrul said...

Aku tak sabar nak beli baju Real Madrid "RONALDO 9"...hahahaha...

Bozord said...

panggil balik pachici forlan ah!!! top scorer europe tu. time kat man u boleh bilang satu tangan gol dia.

kalau tak sabar nak beli jersey ronaldo.. aku cadangkan kau beli minyak rambut dia dulu.

still wishing dia kantoi medical hernia, ferrari masuk longkang, dapat aids dari paris hilton

shahrul said...

Dude, Madrid mengakibatkan Players OVERPRICED! Lepas ni Ribery plak 50M and Villa 35M and Ibrahimovic 80M lagi...so i think it is not all GOOD! Inflasi Sifar Wawasan Kita! But MODEL tu mmg lah berkesan..no doubt..

Bo the Nerd said...

well, they are overpriced for those u cannot afford these players...like...Liverpool maybe..hehe...

Bozord said...

let the market rule (sounds very capitalist). market football is still well regulated and formulated and takde kesan abuse lagi. tak lama lagi turun lah harga tu. aku rase torres tahun depan 20million je kot. Oshea lak 2 ringgit je.

m afnanz said...

oshea priceless...ahli ke-6 wes life..ke-7 is wes brown

kenwooi said...

real madrid so rich... hmm..

kenwooi.com