Thread on main board: Real never overpays

[Guest]

I just had to respond to the hate over there with some facts. Of course, it gets ignored because it ruins their feeding frenzy lol. Here's my post:

Real never overpays according to our own business model. We always turn a profit.

Why is that you wonder? We have a true businessman running the organization. So our marketing/merchandising, football operations and media rights are the most dominant in the world. Because of that, a player that's worth 10 million to every other club is worth 20 to us because we make much more money on him at Madrid.

Just pure capitalism and it's beautiful.

Our problem is not the business side as we're clearly the best. Our issue was that the team was being managed by the players and the president/directors. The manager was just a figurehead in the last several years with little authority. Now that's changed with Mou.

We're also buying players who are very young now and with a lot of upside as opposed to our stupid "galacticos" vision of the past.

Watch out.

[theaguia]

there was nice article on swiss ramble about our business structure, it was quite nice

[Guest]

Probably a bit much... but i had to explain how you still make money on a poor field performing transfer:

When you amortize the cost of a player against the revenue generated by that player, we always wind up ahead. It's an IRR calculation (Internal Rate of Return). I won't bore you with the details as it's finance.

What it comes down to is that each player is allocated a percentage of the revenues driven to the club by football operations... that includes media, merchandising, ticket sales, etc. Then you plug in the costs. You project that over 5 years and you also put in an assumed terminal value, which for players is sales fee.

You also need to factor in increases to goodwill value, which is the value over and beyond it's hard assets... but again, that's a much more involved discussion.

What it comes down to is that, with almost no exceptions, Madrid makes money on a player regardless of how he perform on the football field. Just in media and marketing/merchandising revenue, we're ahead of the game before the player even plays a single second.

In the very rare case where we lose money on an individual player, that loss is recovered and then some with the gains on other players.

We sell our brand as a package as opposed to individual parts. The best correlation i can make is to movie library licensing by the movie studios like Universal, Warner Bros, etc. They never license a single movie to TV networks... you can either license a full library or a half library. You also pay more or less depending on the windows you choose (theatrical, pay TV, network TV, etc.). Basically, you force your clients to pay for your crap and your prizes as part of a package.

[Turok_TTZ]

yep. everyone is whining becuz they arent us. they wish they cud do our business model. but only we can do it, as we are real madrid and everyone else is dependent on their sugar daddies, sucking on his stick.

[The Madrid One]

we are real madrid, the sexiest and most prolific club in the fu.ck.ing world, with the best players and the best merchandising, it explains for it self.

if we had a true philospohy other than buy and shoot, those losers would critisize as much.

hope mourinho kills any galactico remembrance

[Onyx]

Yeh we should sign the best players who are good on the pitch, our primary intention shouldn't be to buy players who can make money for the club off the pitch.

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