Thursday, July 2, 2009

Barely 24 hours since Cristiano Ronaldo officially signed as a Real Madrid player, and Kaka was unveiled to the Madrid media, Real has delivered yet another blow to Manchester United by gazumping them to the signature of Karim Benzema.

United had been monitoring Benzema for over 18 months, and had thought themselves as distant leaders for the 21-year-old's signature. But after a day of frantic negotiations where United refused to rise above their initial bid of £25m, Florentino Perez stole in through the back door and bid £30m rising to £35m.

The deciding factor was undoubtedly the fee that Madrid were more than willing to part with but the role that Zinedine Zidane on the new look board at Madrid should not be underestimated, especially as Benzema is a fellow Frenchman.

Lyon went back to United but they were reluctant to go any higher and left the negotiations admitting defeat. The deal was the one that Benzema and Lyon were looking for. The highest amount of money available, for an extremely loyal player who wanted his club to get the best deal possible.

Benzema broke into the Lyon first team at the age of 16, and over the last five years he has progressed to become one of the best young players in the world. And while the move may have given United a bloody nose to match their swollen eye after losing Ronaldo, losing Benzema may have proved to work out in their favour.

The Spanish giants have now spent an incredible £211m on transfers, when compensation for taking Pellegrini from Villarreal is taken into account. Add this to the £190m in wages that they are to pay these players in wages over their six year contracts and their spending hits an amazing £400m.

Florentino Perez's financial backers must now be looking at their patriarch and wonder where he will cast his wandering eye next, and it now seems highly likely that Franck Ribery will not be joining the latest group of Galacticos, as they would have to release at least £100m to finance the complete deal.

With that in mind, and with Real in talks with David Silva, it now appears as if Bayern might only have Manchester United and Barcelona as potential suitors.

Ribery is known to favour the move to Spain, but Alex Ferguson would surely spend the £50m that Munich are reportedly looking for. With Antonio Valencia having made the journey from Ecuador to United via Wigan, the set up of the team has changed dramatically and Ferguson is now in dire need of bringing in a player of Ribery's class, if he is to bring the best of Valencia, Rooney, and Berbatov, in their new 4-4-2 formation.

For fans of Real Madrid, this summer must seem like a never ending dream. Perez came in on the crest of a wave and has immediately restored Real as the leading power in world football without playing a match, never mind winning a trophy.

The financial outlook for Madrid is scary to say the least. Already one of the highest wage paying teams in the world they have now given their wages clerk the added task of paying four players another £190m over the next six years.

Wages in life rise naturally, it's the way of the land. Inflation means that the working man's wage must rise by that much every year if they are to afford the standard of life they want.

In sport these wage rises usually jump by huge amounts, John Barnes was the highest paid player in England in 1988, earning £10k per week. Move on ten years and the average wage for an elite player was £50k per week. Ten years on again, and that figure had reached £100k per week.

The way things are going with Real now, in six years time their highest paid players will be Ronaldo and Kaka, the Portuguese winger earning an astonishing £653,125 per week, which will have risen from £125,000 in his first year.

I guarantee that inflation will not have risen by that much in that short time span, so the average industrial wage in six years will probably have risen from around £400 per week to £500, at a very liberal inflation rate.

So it begs the question, where will Real get the money from?

Ticket prices and merchandise will definitely rise, sponsorship too. But the real place where money is made is through television revenue. But to make the maximum possible from TV, Real need to win trophies.

All Madrid have done is take the financial model that the top four teams in the Premiership use, and with a bigger fan base, bigger sponsorship deals, and bigger TV deals, Madrid have been able to take that model and expand it, extravagantly.

Whether it will work in the long run is anyone's guess.

The last Galacticos, led by Perez, only won one major trophy in five years. But their revenue went through the roof. The year before David Beckham joined, Madrid had a turnover of £211m, the year after that had risen to £400m.

For the bean counters, this era will probably be a financial success. But for the fans who measure these things by trophy hauls, the jury is still out.

The last era, was a success off the pitch, and a disaster on it.

I know which one matters to the fans, and how they measure success. Does Perez?

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