A couple of pieces on Cristiano Ronaldo’s world record transfer from Manchester United to Real Madrid highlight the unique realities of the business of football. Simon Kuper argues that this is another example why transfers don’t add value. By contrast, Gideon Rachman says that the galacticos business model is more complicated than at first glance and may actually work (read the piece where Gideon explains the theory much more coherently than I have).
I agree with both of them in parts. First, in the case of sports, your people really are your most valuable asset. Not only does their ability make the difference between winning and losing, but in the age of the global celebrity, their potential to become commerical and marketing products is key to determining their value to the organisation.
Second, there is a big issue of leadership here. Florentino Perez was only re-elected as the club’s president on May 31 but he has already had a massive impact, buying the Brazilian Kaka from AC Milan on Tuesday and now Ronaldo. Not bad work after less than two weeks in the post.
On the Manchester United side, meanwhile, let’s not forget the leadership of Sir Alex Ferguson. Famed for his ability to dismantle and re-invent winning teams, it is unlikely that he will have sold Ronaldo without having a plan for how to use the money to buy someone else and/or shifting the rest of his remaining personnel to fill the void and, he will no doubt think, make the organisation even stronger than it is currently. After all, despite winning the English Premier League this season, they were totally outclassed in the final of the Champions League by a rampant Barcelona.
Finally, while Simon rightly points out that Madrid bought at the height of the market – Ronaldo is currently in his prime, which means that he may well cost more than at almost any time in his career – for Manchester United, this is a good business. They bought him for £12.24m after the 2002-2003 season and have now sold him for £80m.
It may be irrational, but from a managment point of view it is certainly fascinating.
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