Real Madrid’s Transfer Policy: A Mockery Against Spain’s Economic Crisis

 Late Capitalism saw a new framework of media interrelationship. With the end of World War II (1945), products of Late Capitalism such as television, internet etc., have made possible for the world to come closer and are an indispensable part of our lives till date. The ideas of culture have changed and now operate in a different level. Spain is known world-wide like many powerful European countries. However in recent years, Spain is known particularly in the realm of sports notably football for producing the kind of rich and entertaining football all around the world. It has some greatest star players such as Lionel Messi and Christiano Ronaldo. Spain have two giant football clubs viz., Barcelona and Real Madrid and have their fan base all around the world. Fans worship these two clubs no matter where they are.

The history of the transfer market 
  
 However, on 1st September, 2013, Real Madrid signed Gareth Bale from Tottenham Hotspurs for a staggering 100 million euros for a single player which raised questions all over the world. From a strictly sporting point of view it has less to do with promoting the healthy value of sports and more to do with pure business. It is normal even for a typical football fans to raise questions against such hefty transfer activity: Is Spain really under recession? Does it really make sense when the country is under economic crisis? How can Real Madrid afford to pay such a heavy amount? These are of course some of the key questions which remain unanswered.

         
Karl Marx in his book “The German Ideology” rightly says that “the ideas of the ruling class in every epoch are the ruling ideas...the class which is the ruling force in society is at the same time its ruling intellectual force. The class which has the means of material production at its disposal has control at the same time over the means of mental production, so that thereby, generally speaking, the ideas of those who lack the means of mental production are subject to it...” This theory can be applied even to a club like Real Madrid. Spending 100 million euros on a single player directly or indirectly makes a mockery of the country’s economic crisis. Spain is one of the fourth biggest economies in Europe but has declined. Now unemployment stands at 26.3% approximately. Real Madrid has in their hands the “means of material production” and thus pays no heed to the country’s economic crisis. People who usually attend football matches comprise of mostly young people. And more than 50% of young people are unemployed. Barcelona’s manager Gerardo Martino was against the 100 million euros spent on a single player. He says “Bale’s (Gareth Bale) a very good player, but the numbers are a lack of respect to the world in general.” In fact Martino is right with regards to the economic crisis. With the club’s heavy investment, there is a difficulty of realization.

            
What is more surprising is that ICN.Com Financial Market revealed that Spanish professional football clubs have combined debts of about 4.1 billion euros wherein Real Madrid is also included. It is quite logical that more spending will ultimately means more demand from the spectators or viewers. Tickets prices will soar up which will thereby make the spectators totally helpless. It is well known that “soccer in Spain has always been considered a social asset by fans and authorities, rather than a business,” according to the reports in Spain. But things have taken a different turn lately.

         
Florentino Perez, the president of Real Madrid is the spearhead behind all transfer dealings. In terms of finance, Real Madrid is the richest club in the world with more than 500 million euros annual revenue. Perez relies on this high revenue generated by the club. Although it seems strange to align football with economics but the amount of money spent by the club is totally ridiculous and is a mockery against the world economy. This year Real Madrid signed players viz., Isco for 30 million euros, Illarramendi for 38 million euros Dani Carvajal for 6.5 million euros and Casemiro for 6 million euros. But above all it was Gareth Bale the 100 million man. The clubs have high ambitions to win all major trophies but at the expense of the supporters.

         
Real Madrid has huge debt. On 8th October 2013, AS.com released the latest Madrid’s debt. Madrid’s latest debt is 541 million euros. AS.com was quoted as “El Madrid Debe 541 millones.” Carlos Mendoza the President for Madrid’s Values voiced his disappointment about the club’s spending spree. He criticised the club’s economic management. Mendoza is absolutely right because the economic management is totally off the limit when it comes to term with the world’s economy. It is also a huge risk against the club. When asked by a reporter whether the club can cope with such huge debt, Carlos Mendoza replied by saying “The club’s turnover is very high. We’re the club with the highest income level in the world, but we are also number one in cost.” Arsene Wenger manager of Arsenal also said that “It makes a joke of the financial fair play regulations.” Florentino Perez is well known about his craftiness in the transfer market of football.

In 2009, Real Madrid signed Christiano Ronaldo for 80 million euros. However, the club’s account revealed that they made 90 million euros through merchandise sales after signing Ronaldo. Now Perez is of the view that they can make the same money as they did with Christiano Ronaldo. Perez’s idea of extracting the money back through merchandise sales can be aligned with Theodor Adorno’s essay “Free Time.” In his essay Adorno talks about how “utterly unfree” people are. Millions of people have hobbies of supporting a club or collecting club materials such as shirts, boots, banners etc. Now there is commercialisation of leisure activity for profit. People are hypnotised by their love for the club that they will go to any extend to get a shirt or banner no matter how costly it might be. In India professional football jerseys starts at Rs.2500. But many people even in India have no regret of throwing their money and grabbing a jersey despite struggling to make both ends meet. It can be seen that people or organisations who have economic capital defines the general lifestyle of the people directly or indirectly.  

        
 In 2003 Real Madrid also bought David Beckham for 35.1 million euros. The merchandises sold through his name were more than 1 billion world-wide. What made the people buy David Beckham’s jerseys? Logically it can be argued that people who don’t have enough economic capital might also have gone to purchase the costly club’s merchandises.

With modern technology, advertisements are everywhere where people are dragged in to go for club’s merchandises. We as supporters of the club are made to feel as if we are not true supporters if we don’t have at least one jersey. Now the club knows all about the idea of selling the club’s merchandises. They know that people will buy no matter how costly it might be. The same goes with the ticket prices. Long-time back football was about playing beautiful football and not about business. Now it’s purely business. Poor people can’t go and witness the match no matter how much they love it. Even broadcasters charge ridiculous amount of money to be telecast on television.

As an avid football fans, it is indeed quite disturbing to see so many big clubs under huge debts. Serie A, the Italian league was the wealthiest league many years back. But the league notably Inter Milan and AC Milan crashed financially. The reason is that they were not in equilibrium with the country’s economy. So what made the clubs fall so suddenly? Thousands of fans are unaware about the clubs’ debt over shadowed by the appealing and attractive football. The UEFA headed by Michel Platini introduced a Financial Fair Play (FFP) regulation to stop the clubs from spending lavishly and also to be in equilibrium with the crisis of the world economy. However, there are issues which are unresolved. It is useless to see that even after the implementation of Financial Fair Play regulation; many giant clubs signed so many expensive players. It is also surprising that Barcelona also have a debt of more than 500 million euros.

It is in fact inherently wrong. And it is none other than the supporters who are the worst victims. They love their clubs but are made to pay ridiculous sum of money to watch their team perform on the pitch. The clubs should understand that they have to go along with the current economic situation. It clearly shows that they are totally oblivious of the economic crisis. Many giant clubs are money-grabbers. Leaving aside Spain, it is no surprising to see that even fans in England have come together to protest against the high ticket prices. On 19th June 2013, fans of Manchester United, Arsenal, Liverpool and Tottenham gathered together to protest against the excessive ticket prices. The banner read as “OUR GAME RUINED BY GREED” and shouts of “You greedy bastards, enough is enough.” One fan commented via “The Guardian Sport” saying “Just because attendances are going up doesn’t mean fans are happy with the prices. Football is turning into a business-class sport rather than a dad and a lad thing.” One of the leading football broadcaster Sky Sports was also targeted. “We hate Sky Sports and we hate Sky Sports” protested the angry crowd. In order to avoid all these, the clubs should adopt the strength of a balance sheet by spending less and also demand less from the fans.

What is appalling is that, with the on-going economic crisis, many major clubs are in danger. The question is will the major football leagues collapse in the future if the economic crisis continues? As a die-hard football fan, it is logical to ponder about this. There is indeed a possibility that the major soccer leagues might collapse. The reason behind this is that almost all the clubs are being run through the expense of the fans. So with the economic crisis, people will curb their spending. That will ultimately lead to empty stadiums and less income for the clubs. The sale of clubs’ merchandises will fall. The clubs’ economic revenue will ultimately fall.  Club like Real Madrid have the highest level of income. At the same time they are number one in expenditures. And the costs will continue and rise with the acquisition of new player like Gareth Bale. And a hint of this can be seen even now. The club’s income isn’t growing because of the country’s economic backdrop. And if the crisis continues, the future is dark even for a club like Real Madrid. They have economic capital and are extremely powerful. However with the country’s economic crisis there is no guarantee that they can continue spending as that will only lead the club to bankruptcy.

What the club need to do is adopt an efficient strategy, because if the debt keeps rising, at the end of the day the club will ultimately fall. It is not only the problem with Real Madrid or Barcelona. Top clubs like Valencia, Athletico Madrid, and Malaga are also under huge debts. Union of European Football Associations (UEFA) has implemented the new rule wherein the clubs will not be allowed to spend lavishly on players for healthy sports value and to avoid the clubs from bankruptcy. However UEFA must adopt more rigorous steps to control and supervise bigger clubs like Real Madrid and Barcelona.

Football is arguably one of the richest and most entertaining games in the world. Even people who don’t play football follow it with great pride. This is one of the key reason why clubs spend lavishly on buying players regardless of whether the world is in crisis or not. And looking at the present situation there are no indications that this mode of spending lavishly will diminish in the foreseeable future. Billions of people all around the world follow football and is one of the hallmarks of late capitalism. We must investigate to the extent of how clubs should spend their money for a brighter future of football. The clubs should realise that the game is about the beautiful and rich sports culture which should not be about business transactions but should be about football culture. Poor planning and the clubs’ monopoly control to charge exorbitant money will leave the rich football culture in limbo. Instead of attempting to bring down the huge investment, all the major clubs still shell out huge sum of money. This makes it difficult to be in equilibrium with the economic setup.

 In fact Spain and other major leagues should follow the example of German league “Bundesliga.” There is no economic crisis in Germany. Yet all the clubs embark on spending money with proper planning. The ticket prices are reasonably low and the football stadiums are always intact. It is very much in compliance with the Financial Fair Play regulations. It is also doing a terrific work of combining competitiveness in the league which makes it more interesting. The average cheapest ticket price in the German league Bundesliga is 10.33 pounds compared to almost 30 pounds the cheapest match day ticket in England. It is unthinkable that the clubs makes heavy investment on players and increase ticket prices instead of maintaining a state of equilibrium. Steps should be taken to analyze the long term-affects of the commercialisation of football on the late capitalist economy. This whole process of huge investments by the clubs and thereby the increase of ticket price and clubs’ merchandises highlights the parasitic nature of monopoly capitalism. And the investment of 100 million euros on a single player still lingers.

  

Spain has emerged from two years recession with the economy growing 0.1 percent according to the latest news dated 23 October 2013. Although there has been the economic turnaround, there are doubts as to whether this will last for long. “I still see an economy that is very vulnerable to any perturbation, whether internal or external,” Javier Diaz-Giménez, professor of economics told New York Times.

In the end, the question is whether UEFA will charge Real Madrid and Barcelona against their strategy of spending lavishly. It is unlikely because UEFA obtain money from TV rights. So charging these two clubs will enrage the fans and thereby reduce their income. This speaks volume about business in football. Will this continue? Yes it is very likely.