Friday, June 12, 2009
Is Real Madrid playing the "too big to fail" game?
That's what co-blogger Stefan Szymanski implies in this article (towards the end): "Real’s really too big to disappear, whatever debt they can incur... No bank would ever be allowed to be the bank that sank Real Madrid." Interesting... I don't know what La Liga's rules may be with regard to points deduction for clubs going in to bankruptcy. But even if they did, their history would likely be sufficient to restore them to the top, regardless. Certainly, foreign creditors wouldn't hesitate to pull the plug on Real if that was in their (the creditors') interest.
Another thought-provoking quote in the article is the opinion of Simon Chadwick:
Another thought-provoking quote in the article is the opinion of Simon Chadwick:
"Real Madrid is effectively injecting inflation into the transfer market," Simon Chadwick, a professor at England’s Coventry University, said in an interview. "What we’re going to see is transfer-fee inflation over the next few months up to the start of the season. That’s a serious issue, because it’s something that (soccer) really can’t afford when many clubs have major financial concerns."While AC Milan and Manchester United have certainly benefited from Real's profligacy, I would be surprised if this is sufficient pump-priming to inflate transfer fees this summer. Manchester City's oil-fueled ambitions may be a factor though. Time will tell.
Labels: labor markets, soccer, transfer fees
Thursday, June 11, 2009
Real Madrid sets record transfer fee
The BBC reports that Manchester United has accepted an offer of £80 m ($131m US) from Real Madrid for the services of Ronaldo. This is on the heels of Kaka moving to Madrid from AC Milan for a reported £56m earlier this week. The combined annual wage bill of Kaka and Ronaldo will top £25m as well. The record spending seems incongruous to me, with the Spanish economy in shambles (the unemployment rate is over 17%, twice the EU average) and one major Spanish club, Valencia on the verge of bankruptcy. Regardless, Next season's clashes with Barcelona in El Clasico should be interesting.
Update: CNN's headline to its report is "Real Madrid defy economic gloom to buy success." There is interesting discussion and speculation on whether they'll receive an immediate return on their investment.
Update: CNN's headline to its report is "Real Madrid defy economic gloom to buy success." There is interesting discussion and speculation on whether they'll receive an immediate return on their investment.
Labels: labor markets, soccer, transfer fees
