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On February 16, 2006, a report by the consulting firm
Deloitte titled ‘The Football Money League’ stated that the premier Spanish
Football Club, Real Madrid Club de Fútbol (Real Madrid) had toppled Manchester
United Football Club (Manchester United) to become the world’s richest football
club for the 2004-05 football season. Real Madrid’s revenues were £186.2 million
when compared to Manchester United’s revenues of £166.4 million for 2004-05.
Manchester United had held the title as the world’s richest football club in the
world for eight consecutive years.
Deloitte’s rankings were purely based on the income generated by clubs in a
season. Dan Jones, a partner of the Sports Business Group at Deloitte, said,
“Real Madrid’s top spot in the Deloitte Football Money League represents a
remarkable transformation in the club’s revenue generating capacity. The club’s
annual revenue has doubled during the past five seasons, primarily driven by
commercial revenue streams. Growth for most other clubs in the table has tended
to come more from broadcasting and match day income, here Real Madrid has broken
the mould1.”
But, just within a week of Real Madrid getting the tag of the ‘world’s richest
football club’, Florentino Perez (Perez), Real Madrid’s president, resigned.
Perez was widely credited with having turned around the fortunes of Real Madrid,
from a football club in debts to a hugely profitable one, filled with a host of
world-famous football superstars, more popularly known as the ‘Galacticos’.
Perez was the key man behind the club’s ‘Galacticos’ strategy. The resignation
created a sensation in the football world. Real Madrid’s board appointed
Fernando Martin Alvarez (Alvarez) as the new president of the club.
Perez said he was resigning because he was unsuccessful in creating team spirit
within the Real Madrid football team. He further said that the ‘Galacticos’ he
brought in to the team were not performing properly as a team and were
‘confused.’ The ‘Galacticos’ were accused of not working in tandem with team
spirit and were putting their interest first. Perez further compared his
‘Galacticos’ to spoilt children and blamed himself as the parent who gave
everything they wanted, thus spoiling them.
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Real Madrid had not won any major trophy in 2004 and 2005
and started badly in 2006, like the 1-0 defeat at home against Arsenal in the
UEFA Champions League and the 2-1 loss in a Spanish Football League game to
lowly-ranked Mallorca. Real Madrid was still ten points behind arch-rival
Barcelona, the group leader in the Spanish Premier League rankings. Though Real
Madrid flourished off the football field by achieving commercial success, it
failed to deliver on the field, which led to Perez’s exit.
To download this micro case study (No. MCBEN0001 ) click on the
button below, and select the case from the list of
available micro cases:
1
Dawn Smith, “Real Madrid top of Deloitte Football Money League,”
http://www.businesszone.co.uk, February 16, 2006. |
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