General Football Discussion

[DanK]

They better hope they win something within a year or two, or they will lose out here big time.

[Blind3]

With any luck , Real Madrid's defense, not to include the incredible Casillas, will still leak a goodly share of goals.

[Mr_Holte]

Fixtures now out.

http://www.telegraaf.nl/telesport/voetb ... ml?cid=rss

[SE6Ajacied]

How about this for a good bet?

http://www.dailyrecord.co.uk/news/scott ... -21431702/

I don't think I'd dare do the same thing with Ajax, however lowly the opposition though....

[Blind3]

I think the bigger story is that a Scotsman actually voluntarily parted with 135,000 quid. Must've been ill.

[gordonvandekamp]

To follow up more on the earlier conversation of how Madrid paid for Ronaldo and Kaka:

http://www.guardian.co.uk/football/2009 ... loans-debt

I won't post the article here, but it turns out it was loans from Spanish banks (putting them further into debt). Sounds like Perez has some connections.


More importantly than that, I think we are starting to really see the impact of the purchases elsewhere in how clubs are valuing players above what they were because they know one of the big clubs like this will have to pay that much to get the player (although arguably it started with Chelsea, and then Man City last year).

Case in point being the situation of David Villa and Ribery as mentioned in the article. Valencia and Bayern will hold out because of the large fees paid for other players. I only see it getting worse.

I'm also interested to see how much Real gets this summer in transfer fees for the players they are selling. Somehow I don't think it's going to cover what they seem to think it will.

[Orange14]

More importantly than that, I think we are starting to really see the impact of the purchases elsewhere in how clubs are valuing players above what they were because they know one of the big clubs like this will have to pay that much to get the player (although arguably it started with Chelsea, and then Man City last year).

Case in point being the situation of David Villa and Ribery as mentioned in the article. Valencia and Bayern will hold out because of the large fees paid for other players. I only see it getting worse.

The Madrid bank deal is truly scandalous and I think the Spanish government may try to do something by all accounts. We will have to wait and see. of course this is really little different from what they did several years ago during Perez's first administration where they had to sell the training grounds and other assets to the city of Madrid to pay down debt.

Bayern can hold out on Ribery as they have him under contract for two or three more years and don't have to raise money. Valencia are in dire straights financially because of the new statdium they are building and do have to raise money. they missed a payrool earlier in the year because of this and everyone expects both Villa and Silva to be sold off to raise funds. There are other teams facing big problems right now including Liverpool.

[aveslacker]

More importantly than that, I think we are starting to really see the impact of the purchases elsewhere in how clubs are valuing players above what they were because they know one of the big clubs like this will have to pay that much to get the player (although arguably it started with Chelsea, and then Man City last year).

Case in point being the situation of David Villa and Ribery as mentioned in the article. Valencia and Bayern will hold out because of the large fees paid for other players. I only see it getting worse.

The Madrid bank deal is truly scandalous and I think the Spanish government may try to do something by all accounts. We will have to wait and see. of course this is really little different from what they did several years ago during Perez's first administration where they had to sell the training grounds and other assets to the city of Madrid to pay down debt.

Bayern can hold out on Ribery as they have him under contract for two or three more years and don't have to raise money. Valencia are in dire straights financially because of the new statdium they are building and do have to raise money. they missed a payrool earlier in the year because of this and everyone expects both Villa and Silva to be sold off to raise funds. There are other teams facing big problems right now including Liverpool.

Isn't Real like Barca in that they elect their presidents? This is a good argument for this system's flaws.

[Kowalczyk]

Right now Real Madrid are simply above the Spanish law and above UEFA regulations.

Will any of the two (Spain or the UEFA) have the balls to draw a line...?

I'm not counting on it.

K.

[ZoefdeHaas]

I hope they get their ass handed to them again next season.

[Tom_]

Damn, I really wish I understood all this stuff but I don't. I realise that they're playing with way too much money and it's not fair on smaller clubs, and that they owe about €1 billion. I don't understand:

(a) how they can even EXIST when they owe so much money -- surely more than the company is worth -- and

(b) how the bank deal works and why it is so dodgy.

Anyone care to explain? Imagine you're talking to a 12 year old. Or to a scientist who doesn't give a toss about money and hence doesn't understand it

[ZoefdeHaas]

I think basically Real has so much influence over the banks (maybe even the city and government) that they pretty much get any loan they want.

To cover for there debt, they have the stadium as collateral as well as other things.

Money comes in from transfers, ticket sales, and merchandise.


But still, jfngjengrmt!!!

[Kowalczyk]

Damn, I really wish I understood all this stuff but I don't. I realise that they're playing with way too much money and it's not fair on smaller clubs, and that they owe about €1 billion. I don't understand:

(a) how they can even EXIST when they owe so much money -- surely more than the company is worth -- and

(b) how the bank deal works and why it is so dodgy.

Anyone care to explain? Imagine you're talking to a 12 year old. Or to a scientist who doesn't give a toss about money and hence doesn't understand it

I didn't understand it either, but I read a few articles about it and had a very interesting conversation with one of the sports editors of the paper I work for.

Firstly, you should keep in mind that a loan is like a mortgage. I have a mortgage, which means that I have a 'debt' of approximately five times my annual income. Does this 'debt' mean that I have no money? No, it doesn't: as long as I can pay the monthly interest I can use the rest of my income to live in luxury. And in spite of the fact that I have a mortgage, I could probably loan another 25,000 euros, from another bank if necessary, to buy a new car. As long as that second bank believes I'm financially 'solid' (make enough money to pay the interest) they are free to give me another loan. As long as I pay the monthly interest I'll be fine... that is: until they tell me to start paying back and give me a deadline.

Now, what's the essential difference between me (on my financial level) and Real Madrid on their financial level?

If I have a mortgage and a 25,000 euro loan from another bank, no bank on the planet would ever give me another mortgage of 250,000 euros to buy a nice little cottage on a Greek island. They would all smile at me and say: "We're sorry Sir, but you're not that rich. We can't give you another mortgage, your income is not high enough. We're sorry. Have a nice day." And that would be end of story.

Now why don't banks ever say that to Real Madrid? Firstly, bear in mind that the financial 'business culture' in southern Europe is completely, completely different than in northern and western Europe. It's all about 'who knows who?' in those countries and the financial people of Real Madrid sure as hell 'know' the nation's major bankers. They spend an evening at a fancy restaurant - and all of a sudden "things are possible". Bankers who even considered making a stand against Real Madrid have been threatened in the past.

Secondly, football is a very emotional thing in Spain and banks are seriously afraid to lose customers if they turn Real Madrid down. Hundreds of thousands of Real fans would withdraw their savings and move to another bank. As a result of that, banks tend to look at themselves as 'sponsors' of Real Madrid, whether they want it or not: they 'donate' money, knowing they will never get it back. Their profit is the fact that their customers will now stay...

The days of general Franco are over, but Real Madrid are still very much the football club supported by The State. Real Madrid must do well, they are one of Spain's major brands in the rest of the world and they are supposed to look good. That's why every banker knows: if Real want money, you simply give it to them, you don't ask questions (and you better not hold your breath until they pay you back, 'cos they won't).

In theory, the banks of Spain could destroy Real Madrid if they wanted to. If they start demanding money back, Real Madrid will 'implode'. But they will never do that, because they're "not supposed to", because it's dangerous and... because it wouldn't be good for themselves, either. Cristiano Ronaldo wasn't bought with money. He was bought with a 'bank guarantee': the bank guarantees that they will cover the fee if necessary. Real Madrid will now start paying the bank a pretty significant amount of interest each month, which means: extra income for the bank! You loan them 160 million euros' worth of 'air' (a bank guarantee) and you get a monthly amount of actual money in return.

This is, of course, scandalous and corrupt and unfair, because it would never work this way in Holland, Germany or Sweden. Banks won't co-operate, the state won't accept it and no mercy will be shown in court. If you spend more than you make, you go out of business. But that's not how it works in Spain, or Italy, or Turkey - and definitely not for major football clubs in those countries. Spain will never do something about this. If something must be done, it will have to be done by the UEFA, but they won't do it either. Suppose they ban all clubs with a debt larger than five times' their annual turnover. Would the Champions League be more interesting, or more popular or more profitable without Real Madrid and Juventus and Manchester United...?

We're gonna have to accept it. But we can always dream of a big, fat implosion of Real Madrid.

K.

[Tom_]

Thanks Menno, that's exactly what I was looking for.

It is all incredibly unfair isn't it. I'm not suggesting Ajax should do it or anything like that, but what's to stop the board taking out a big fat bank loan based on their income? I mean, it's not just the Spanish clubs that are in debt. What about the 'big four' English clubs? Are they in a similar situation, except that they haven't stretched themselves to quite such a ridiculous amount?

And the owner of Real Madrid has absolutely nothing at stake? He doesn't have to guarantee the loans himself?

Anyway... what can you do? As far as I can see it, this is the way UEFA has implicitly suggested that football clubs carry on, and it's why I find the Champions' League so boring (unless Ajax is in it, haha).

Thanks again for typing all that out - really appreciate it.

[Kowalczyk]

I mean, it's not just the Spanish clubs that are in debt. What about the 'big four' English clubs? Are they in a similar situation, except that they haven't stretched themselves to quite such a ridiculous amount?

And the owner of Real Madrid has absolutely nothing at stake? He doesn't have to guarantee the loans himself?

The situation in England is different.

In Spain (and most other countries) football clubs are independent companies, with an elected club president. The president doesn't technically own the club and doesn't invest out of his own pocket. He's appointed to run the company, like a CEO, and is on the payrole of the club.

The major English clubs really have owners these days: 'gazillionaires' from the U.S., Russia or Iceland who buy the whole thing and - from that moment - pretty much pay for everything out of their own pockets. The 'Abramovich principle', so to say. In most cases those rich chaps operate like 'investment companies': they buy a healthy company and suck all the money out of it, so that the company has an enormous debt 'on paper' (Man Utd being the best example at the moment, I believe; their debt is unbelievable). In practice, this debt is just 'theory' (and therefore irrelevant) for as long as the rich owner stays. The moment he decides to leave the building, though, he will leave a club behind that can no longer exist and will implode almost immediately, unless some other rich bloke comes to rescue.

In many ways that's even trickier. Many English football clubs have sold themselves to rich investors, so that their fate now lies in the hands of one man (who regards his ownership as an investment, not an act of 'love' for the club).

K.

[GangstaRiB]

I mean, it's not just the Spanish clubs that are in debt. What about the 'big four' English clubs? Are they in a similar situation, except that they haven't stretched themselves to quite such a ridiculous amount?

And the owner of Real Madrid has absolutely nothing at stake? He doesn't have to guarantee the loans himself?

The situation in England is different.

In Spain (and most other countries) football clubs are independent companies, with an elected club president. The president doesn't technically own the club and doesn't invest out of his own pocket. He's appointed to run the company, like a CEO, and is on the payrole of the club.

The major English clubs really have owners these days: 'gazillionaires' from the U.S., Russia or Iceland who buy the whole thing and - from that moment - pretty much pay for everything out of their own pockets. The 'Abramovich principle', so to say. In most cases those rich chaps operate like 'investment companies': they buy a healthy company and suck all the money out of it, so that the company has an enormous debt 'on paper' (Man Utd being the best example at the moment, I believe; their debt is unbelievable). In practice, this debt is just 'theory' (and therefore irrelevant) for as long as the rich owner stays. The moment he decides to leave the building, though, he will leave a club behind that can no longer exist and will implode almost immediately, unless some other rich bloke comes to rescue.

In many ways that's even trickier. Many English football clubs have sold themselves to rich investors, so that their fate now lies in the hands of one man (who regards his ownership as an investment, not an act of 'love' for the club).

K.

Is that so, Ko? Don't forget that the premiership has HUGE commercial money (TV-rights etc etc). Sure, the owners invest in players, but the incomes are enormous.

[Kowalczyk]

Is that so, Ko? Don't forget that the premiership has HUGE commercial money (TV-rights etc etc). Sure, the owners invest in players, but the incomes are enormous.

Of course. The club generates money, but since the rich owner owns the club, it's all his money. The whole club, including all the money it makes, is his property. Of course he will try to run it like a company that makes its own money, but if he feels like it, Mr Abramovich can fire everybody, put the entire Chelsea FC (icluding its bank account) in his briefcase - and leave. It's all his.

K.

[Orange14]

Ko,

Nice summary. A couple of things to add that may or may not clarify things. Regarding Spain, look what is happening in Valencia. They don't enjoy the same benefits as Madrid and are in financial difficulty. They missed a payroll this spring and becauase of shaky financing of the new stadium are in an unsustainable position to secure new financing. Thus, it's expected that both Villa and Silva will be sold to raise money. Even the English league is not immune. The Liverpool owners (American) are in financial difficulty over here as well as with the club. I think Liverpool had a large loss this season of 40 million pounds such that they will have to sell players in order to bring anyone new to the club. This is probably why Babel is listed for transfer. The Icelandic bank baron who owned West Ham is essentially bankrupt by the financial meltdown in that country. the only owners who are solvent are those who have oil money or the Glazers who own ManU and have largely retained their wealth.

You can look at teams who mortgaged their futures on Champions League football and see where there are now. Leeds United made it to the semifinals not that long ago and now is in the third division of English football because of financial irregularties. Dortmund in the Bundesliga is another case in point of a team with great promise that was mismanaged. True, the English league gets a lot of money from television but sound management is still key. Will Newcastle make it back to the Premier league after relegation? This is a team that fills a 50,000 seat stadium every single match. Personally, I think we are going to see continued problems with a number of teams and I don't think Real Madrid will conintue to lead a charmed life.

[rjf1]

Damn, I really wish I understood all this stuff but I don't. I realise that they're playing with way too much money and it's not fair on smaller clubs, and that they owe about €1 billion. I don't understand:

(a) how they can even EXIST when they owe so much money -- surely more than the company is worth -- and

(b) how the bank deal works and why it is so dodgy.

Anyone care to explain? Imagine you're talking to a 12 year old. Or to a scientist who doesn't give a toss about money and hence doesn't understand it

(a) It's really pretty simple. When you owe such vast sums, your creditors can't afford to see you fail -- they stand to lose everything if that happens -- so they keep on backing you in the hope that somehow you will turn things around and they will recoup their money. This happens all the time in business (like the the recent US bank bailouts) -- and even on a state level -- where countries run up huge defecits and their creditors come up with ways to keep them afloat. Currently, the USA is running at a defecit in the TRILLIONS of dollars -- but none of their creditors dares call in the debt as doing so would wreck the world economy.

RJF

[DanK]

I was actually wondering what sort of insurance a player like Ronaldo would need. The club must be paying nearly as much on this as his wages.

One decent tackle could bring the club and more likely the insurance company to its knees.

[saddlerian]

One decent tackle could bring the club and more likely the insurance company to its knees.

A nice comment, Dan! It'd be "decent" tackle for any opposing team....but it'd decimate Real's income and chances of any success!

Let's hope that a certain, hard, Atletico Madrid player isn't tempted to make the "decent" tackle.....even though he'd probably be called a hero!! Go JH!!!

[Venezuelan Ajacied]

To bad Boulahrouz left Sevilla...he could have helped in that affair as well

[Venezuelan Ajacied]

Happy Fathers day everyone.....and let be the first to say this.....USA !!!!! USA !!!!! USA !!!!!.

Bye bye Italy and Egypt.

[Orange14]

Yeah, pretty much unbelievable! US needed all the stars to be in alignment and they were. Win 3-0 over Egypt and see Italy lose 3-0 to Brazil. Now it's on to play Spain in the semi=finals. A guy can still dream! Weirdest pool result I've seen in a major competition.

[ZoefdeHaas]

Really has been an interesting competition, considering the Confed Cup doesn't get much attention. Would've been more interesting had USA played Iraq