La Liga: Real Madrid's change in transfer policy helping club to reap financial dividends

Recently, Real Madrid home-grown fan favourite Alvaro Morata moved from the reigning European champions to Chelsea for an alleged transfer fee of €58 million. It was a significant transfer fee, no doubt aided by the inflated transfer market and paucity of other quality striker options.

File image of Alvaro Morata. AP

File image of Alvaro Morata. AP

In the previous season at Real Madrid, Morata had played a part in 43 matches (many of them in a substitute role) and scored 20 goals, many of them towards the end of the La Liga season which were crucial in clinching them the league. However, Morata was no more interested in a mere bit-part role; ahead of him in the pecking order lay the famed “BBC” of Gareth Bale, Karim Benzema and Cristiano Ronaldo. Hence, he swapped the Spanish capital for the English one for the upcoming season.

By moving to Chelsea, he is going to ply his trade under the Antonio Conte — the manager who had put the most faith in his career by taking him to Juventus from Real Madrid in the 2014-15 season, when he was a promising youth team player turned senior pro. Truth be told, this deal was more than a year in the making with Antonio Conte making a move to Chelsea, but Real Madrid scuppered his best-laid plans by exercising their buy-back clause two seasons later.

After playing a peripheral role in the record breaking season at Real Madrid, and with a World Cup less than one year away, few were shocked by him seeking greener pastures. For Real Madrid, the sale of Alvaro Morata was extremely lucrative, and played a part in swelling the club coffers by close to €350 million in player sales over the last five seasons.

For a long time, Real Madrid were never known as a selling club. Yes, the club did sell the mercurial Robinho to Manchester City in 2008 for a hefty sum, but it was against the grain of the club’s transfer dealings after the first term of Florentino Perez between 2000 and 2006. However, this would change with Perez’s second coming.

In May of 2009, Florentino Perez announced his bid to run for the Real Madrid President once again. He was the only candidate who was able to provide the necessary bank guarantee and hence had no other challenger to the throne. Immediately, the Spanish press was abuzz with the latest gossip of top players such as Kaka, Cristiano Ronaldo, Xabi Alonso, Franck Ribery and others joining the club. This was no doubt a nod to the earlier era of Los Galacticos around the turn of the century, when Real Madrid bought an attacking superstar with every new season. The Galactico project was a success on the pitch until the 2002-03 season yielding a Champions leagues and two La Ligas in three years. However, things would unravel soon after for various reasons.

When Perez announced his bid to run for a second time, Real Madrid fans had a sense of déjà vu when Perez made similar noises in the press justified buying superstars. But how different would the outcome be?

"But as far as transfers go, there is no such thing as cheap or expensive. A hundred million euros can be cheap and €20 million can be expensive. Zidane cost €73 million and he was the cheapest player we've signed," Perez once said.

Whether an expensive signing was cheap in absolute terms is certainly debatable, but it can be said with certainty that the original Galacticos were cheap for the clubs that signed them post their Real Madrid careers (the below tables have been made with transfer figures from the transfermarktwebsite).

NameAge at incoming transferBuying fee, million GBPSelling fee, million GBP
Luis Figo2751Free (Inter Milan)
Zinedine Zidane2962.48N.A. (Retired)
Ronaldo2638.256.38 (A C Milan)
David Beckham2831.88Free (L A Galaxy)

One of the primary reasons for this was that Real Madrid bought these superstars at the peaks of their career. Granted that these were fantastic players (and would go on to have a 4-5 year stints at Real Madrid), but their resale value in their 30s would never be as eye-popping; their on-pitch showings would take a downturn along with their physical attributes as well. No wonder the team performances dipped post 2002-03.

Real Madrid seem to have recalibrated their strategy since 2009, in Florentino Perez’s second term. Yes, they have splashed big on players such as Ronaldo, Benzema and Bale. But for every big money signing, they were able to snap up players like Angel Di Maria, Mesut Ozil and others on the cheap (relatively). Readers must also note that Morata was a youth player who was sold twice, and Higuain was bought by an earlier regime, but the point remains.

NameAge at incoming transferBuying fee, million GBPSelling fee, million GBP
Angel Di Maria2228.0563.75 (Manchester United)
Mesut Ozil2215.339.95 (Arsenal)
Gonzalo Higuain1910.233.15 (Napoli)
Alvaro Morata18, 240, 25.517.00 (Juventus), 55.25 (Chelsea)
Danilo2426.7825.5 (Manchester City)

Buying younger players has had a two-fold effect. One, it has largely decreased the average age of the team and the incoming players end up spending the peak years of their career at the club. Of course, there have been players like Modric, Kaka and Alonso, but majority of the non-goalkeeper signings have been in the sub-25 bracket.

This year too, with the departure of Pepe and James Rodriguez, promising youngsters like Jesus Vallejo and Dani Ceballos have taken their place, continuing the trend.

Two, the younger age profile of incoming transfers has provided Real Madrid insurance — a financial cover in case things don’t work out as per plan. In every case discussed above, the displaced player made way when they were deemed surplus to requirements at the club. A significant transfer fee for wantaway player only serves as an excellent monetary sweetener.

It must also be noted that not every young acquisition has yielded such a profit. For every example of an Ozil, there have been some examples of missteps along the way such as Fabio Coentrao, Asier Illaramendi, Sami Khedira, Pedro Leon and others. But consider this: between the 2001-02 to 2006-07 seasons, in the first coming of the Galacticos , Real Madrid received only 86.15 million GBP in transfer fees in those five seasons. Even after considering factors such as inflation, it is still dwarfed by the present inflow.

No doubt, Real Madrid are now reaping financial dividends from their tweaked transfer policy.


Published Date: Jul 28, 2017 06:42 pm | Updated Date: Jul 29, 2017 02:24 pm


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