Real Madrid’s £80m purchase of Cristiano Ronaldo from Manchester United will doubtless be portrayed, in some quarters, as meglomaniacal madness. In fact, it is part of a carefully thought-out and rather clever business strategy.
About seven years ago Florentino Perez, who has just re-assumed control of the club, built the first team of Real international superstars or Galacticos – including Zidane of France, Roberto Carlos and Ronaldo of Brazil, Beckham of England and Figo of Portugal, Critics denounced this as a team of show-boaters – the Harlem Globetrotters of football. They pointed out that Perez had sanctioned the sale of a key member of the side, the unglamorous ungalactic defensive midfielder Claude Makelele – and that Real’s fortunes declined shortly afterwards. The galacticos never won very much.
But the critics missed the point. The galaticos were part of a commercial strategy that hugely boosted Real’s income through guest appearances, the sale of merchandise and television rights. Real now have the highest revenues of any football club in the world, and they have doubled since 2002.
I once discussed the strategy with Real’s commercial director who compared football to the movie industry. Real, he argued, was a content provider – just like a Hollywood studio. So just as it was rational for a film studio to pay millions to get a box-office star like Tom Cruise in their movie, so it was rational for Real to pay huge amounts to sign Beckham or Zidane. Their celebrity could then be leveraged into higher sales. Real were already looking forward to the age of video-enabled mobile phones. Their dream was to build up a global community of Real fans. Then whenever Beckham or Zidane scored a goal, these fans would get a text message and would be able to watch the goal on their phones – for a price.
It seems to me – seven years on (I had this conversation in 2002, while researching The Economist survey of world soccer – tough assignment) that the technology is just about there. The original Galacticos have moved on – although Beckham played quite well for England last night. But a new generation of content-providers is about to arrive in form of Ronaldo and Kaka, the star of the Brazilian national side.
Related reading:
For views and opinions on the European Union from Peter Spiegel, Joshua Chaffin, Alex Barker and Stanley Pignal, follow the 