by Simon Wright

Created on: July 21, 2009

In June 2009, Real Madrid announced that they had agreed the 80 million transfer of Portuguese international Cristiano Ronaldo, from Manchester United. It was a world record sum for a football (soccer) player transfer and caused shock in some quarters. In the aftermath, most observers felt that Real had paid over the odds and that Manchester United were the real winners from this piece of transfer activity. Indeed, the transfer provoked quite a reaction amongst sports fans, with many feeling that it is obscene for that huge sum of money to be spent on just one football player.

Not everyone felt that the sum was outrageous, however. Obviously, Real must feel that Ronaldo was worth the outlay, in their quest to wrestle Spanish supremacy and Champions League supremacy from their great rivals, Barcelona. Additionally, former Manchester United player, Roy Keane, felt that 80 million for Ronaldo was "cheap". Of course, Keane has a reputation for paying way over the odds for decidedly average players, so maybe by his standards 80 million for a genuinely world class player does represent value.

It's easy to poke fun at Roy Keane's comment but is it possible that Ronaldo will justify this huge outlay? Well, research undertaken by Coventry University prior to the 2008 Champions League final suggested that winning the Champions League could be worth $166m (equivalent to 101m) to the winning team, once you factor in sponsorship, TV contracts, ticket sale growth, and the higher player values that result from the enhanced profile that comes with being European champions. Even without winning the Champions League, Ronaldo is a very marketable brand and Real will presumably hope to recoup part of the transfer fee on shirt sales. David Beckham has shown that image rights and associated revenue streams can sometimes be more important than on-field ability, but with Ronaldo you get the added benefit of a young player who can score 30 or 40 goals per season.

I think it is plausible that the signing of Ronaldo will herald a period of great success for Real Madrid that may help the famous Spanish club to generate significant sums of money. We must remember, though, that they have also spent huge sums on Kaka and Benzema, so it's got to be doubtful that they will recoup all of their money. The history of Real Madrid and their spending patterns, however, suggests that balancing the books is not often high on their agenda.

My personal view is that 80m is too high for one player, especially in an era when football clubs are going to the wall and when the credit crunch has hurt so many individuals and businesses. The pressures for success, however, mean that there will always be clubs that are prepared to pay away over the odds, in an attempt to buy instant success. Real Madrid are by no means the only culprits. In England, we've got the current spectacle of Manchester City buying up every striker that's available without any concern over their spending, and Chelsea are another example of a club with very deep pockets thanks to a billionaire owner.

The chances are that Ronaldo's world record fee will be broken again in the next few years. The only way I can see to prevent this would be if the football clubs and authorities were to agree a cap on transfer fees. There are too many vested interests, however, who would be opposed to this, so the escalating scale of football spending is likely to continue unabated.

Sources:

http://www.sportsbusinessdaily.com/article/121020

Learn more about this author, Simon Wright.
Click here to send this author comments or questions.