Real rich: Where Madrid's money comes from

* Clubs in Spain are free to negotiate separate deals rather than central contracts. Madrid signed a £700m seven-year deal with MediaPro in 2006, seeing them easily top £100m a year, double United's earnings.

* Their bids for top players are also aided by Spain's tax laws – foreign players pay tax at just 23 per cent for their first five years. In England the 50p tax means clubs have to pay more to match wages on offer in Spain.

* The club's status in Spain helps them maintain their place at the forefront of European football. All debts they hold are with local banks, rather than relying on American billionaires or Russian oil companies. These banks are pressured to allow Madrid certain unwritten privileges, such as low interest repayments on loans. Their stature and standing in the country means they are unaffected by issues that could affect smaller clubs.

* Real Madrid have finished top of the Deloitte Money League for four years. The Bernabeu enjoys the third-highest average attendance in Europe while overseas trips generate revenue through ticket and merchandise sales.

http://www.independent.co.uk/sport/f...d-1697184.html

Now that Florentino Pérez appears to have delivered on his election promise and Kaká is bound for the Bernabéu, you may be wondering just how Real Madrid's business model allows them to compete with the Premier League.

Without a Russian oligarch or Arab sheikh, where do Real find the money to outspend everyone? For a start, Real are a massive club, with possibly the biggest footballing brand name in the world. Not coincidentally, they have topped Deloitte's Money League for each of the past four seasons and they've done so despite doing poorly in the Champions League.

They have the third-highest average attendance in Europe and while their stadium revenue cannot compete with Manchester United, it still packs a punch. They have been extremely aggressive in pursuing sponsorship opportunities, including overseas tours (on several occasions they have held pre-season training camps in places such as Vietnam and China).

Anything else going for them? Oh yes. Their domestic television contract is by far the richest in the world. They are also helped greatly by tax legislation - originally intended for overseas bankers and executives - that allows their foreign players to pay tax at about 23 per cent for the first five years that they are in the country.

This means that, in headline figures, if they want to pay Kaká £8 million after tax, it would cost them less than £10 million a year, whereas it would cost United £16 million (thanks to the new 50p top marginal rate introduced at the last Budget). Over five years, that's a difference of £30 million.

Finally, there's Real's status as, effectively, a non-profit social trust. This means they do not need to generate £30 million a year just to service their debt (like United).

Whatever debt they hold (and detail here is murky) is with local banks, many of whom are under political and social pressure not to tighten the screws. Real are too big and too important to fail or to come under the kind of debt pressures that affect traditional clubs. The club's social, political and economic significance dwarfs that of any other club in the world, with the possible exception of Barcelona. In that sense, they play by a different set of rules.

Just how much is their TV contract worth? Well, according to the club, in 2006 they signed a seven-year deal with MediaPro guaranteeing €1.1 billion (now about £956 million) for their domestic league TV rights. At least, that's Real's version of events: MediaPro has never disclosed the figure and some dispute the amount. But, if it is true, they earn £135 million a season from their domestic league rights, more than twice what United receive.

How does the structure of the club differ from other leading sides? Real are one of four Spanish clubs - the others are Barcelona, Osasuna and Athletic Bilbao - who were exempted from a 1991 law forcing teams to become plcs. This means they hold regular elections to determine who will lead the club. The president then selects his board and appoints his men to key positions within the club.

So what do you need to do to get elected? To stand for election you have to be a Spanish citizen who has been a club member for at least ten years. And, crucially, you have to submit a deposit equal to 15 per cent of the club's budget, or about £50 million. (But you don't need to come up with the cash yourself, you just need a bank to vouch for you.) Once that's done, you campaign, just like in any other election, and, ultimately, it's the members who decide.

Now that Pérez has been elected, does he have to fund the club? No. In fact, he's not allowed to. He simply runs the club. Of course, Pérez is one of the wealthiest men in Europe, with wide-ranging business interests. No doubt he can leverage them to help the club, particularly when it comes to their relationship with banks and sponsors. Ultimately, though, he cannot finance the club. And, of course, he's not supposed to benefit from it financially.

Real's top five transfers

1. Kaká, from AC Milan, 2009, £56.2million. “God's Footballer†preferred Madrid to Manchester.
2. Zinédine Zidane, Juventus, 2001, £45.6million. “Zizou†shattered the world transfer record (and the hearts of Juventus fans).3. Luís Figo, Barcelona, 2000, £38 million. Signing him was Florentino Pérez's election promise.
4. Ronaldo, Inter Milan, 2002, £30 million. The “Phenomenon†was signed after his comeback from injury at the 2002 World Cup, when he helped Brazil to become world champions.
5. David Beckham, Manchester United, 2003, £25 million. “Goldenballs†snubbed Barcelona to join Real, increasing his status as a commercial juggernaut while helping them to secure a league title in 2007.

http://www.timesonline.co.uk/tol/spo...cle6426983.ece

 

Yea they would love that.On that note,what price would you put on a LFC TV season ticket..?