Last weekend’s general assembly of Real Madrid’s socios was another triumph for club president Florentino Pérez, who announced some more bold construction plans and new measures to ensure the club remained in madrileño hands, while facing no questions about how the current economic crisis sweeping Spain might be affecting his stewardship.
The most dazzling announcement was a €250 million redevelopment of the club’s stately Estadio Santiago Bernabéu ground. Pérez put forward four different visions, from four leading international architects, of how the already outstanding stadium might look in future. Each design offers more protection from the elements for paying fans and also a new building fronting onto the Paseo de la Castellana featuring “a unique zone of great commercial quality,” Pérez said. A green light for the project could be given as soon as this month, with the work then taking place during the next three summers.
Construction was a theme of the assembly, as it has been throughout Pérez's tenure, which began controversially a decade ago when the club's previous training ground was sold to the city’s municipal authorities. This year there was also renewed talk of building a Real Madrid 'theme park' at the club’s present Valdebebas training facility, where a residence for the senior and youth squads is also planned.
Madrid’s members were also
informed that the club’s annual revenues had risen to €514
million in 2011-2012, leading to an annual profit of €24.2 million,
while over this period the club’s debt fell by 26.5 per cent to
€124.7 million. “I would like to state that these results are
spectacular, above all, given the economic circumstances we are
living in,” Pérez said.
The Real president is well placed to comment on Spain’s currently troubled economic circumstances (even if he personally does not bear much of their brunt) as he is also the president of the country’s largest construction company Grupo ACS (Actividades de Construcción y Servicios). Its general assembly also took place in September, where Pérez announced that the company’s debt now stood at €2 billion euros, and had made an annual loss of €1.2 million. Shareholders were assured however that these results were due to a once-off misguided investment in ailing Spanish utility giant Iberdrola, and the company's underlying finances remained secure.
Not everyone sees ACS's future so favourably. Last May the New York Times used the construction conglomerate’s problematic debt-funded business model as an example to highlight the serious issues facing the Spanish economy, illustrating the story with a photo of a peeved looking Pérez and saying the company's poor financial situation had lead to “a frantic campaign to sell off assets, pay down debt and further distance itself from a Spanish economy caught in a spiral of austerity and deflation.”
Pérez’s football club has not been forced to sell off any “assets”, but its transfer business in recent years has been much less spectacular than previously. In his first term as president Madrid regularly broke the world transfer record to sign galacticos Zinedine Zidane (€73.5m), Luís Figo (€60m) and David Beckham (€37.5m), while on his return to the club in the summer of 2009 Cristiano Ronaldo (€94m), Kaká (€65m) and Karim Benzema (€35m) all arrived in big money deals, which were financed by borrowing money up front and then recouping it through increased sponsorship and other revenues.
This model has so far worked pretty well, but it is striking that the number of arriving galacticos has dwindled in recent years, especially under present coach José Mourinho. Fabío Coentrão and Nuri Sahin were the biggest signings in 2011, while last summer saw just one major arrival, with €30 million spent to bring Luka Modric from Tottenham Hotspur. The club actually made a profit during the most recent transfer window, raising approximately €35 million by selling a mixture of squad players and promising youngsters. There also seemed to be an attempt to get rid of the aging and injury prone Kaká, although Pérez denied this, defending the transfer by saying: “From a financial point of view he's worked out quite well.”
The biggest talking point of Madrid’s season so far - the public ‘sadness’ of Ronaldo, Madrid’s biggest playing asset - was unsurprisingly not dwelt upon. One proposed reason for his supposed unhappiness was a lack of backing from Madrid’s boardroom, with the player unhappy that he had been left frowning empty handed on the podium as Barcelona’s Andrés Iniesta picked up the 2011/12 UEFA Best Player in Europe Award in Monte Carlo last month. Iniesta (and fellow nominee Lionel Messi) had been accompanied that night by Barca club president Sandro Rosell and sporting director Andoni Zubizarreta. Ironically (perhaps) Pérez could not attend as the ACS assembly was held the same night.
A more understandable theory put forward for Ronaldo's blue mood was that he feels undervalued at Madrid. Although he has said (via Facebook) that he is not seeking a pay rise from his current €10m a year, a rash of subsequent stories in the Madrid media showed that Samuel Eto’o, Zlatan Ibrahmovic, Wayne Rooney, Didier Drogba and worst of all Messi all now earn more. With just three years remaining on the current deal, negotiations are about to begin between Pérez and the player's agent Jorge Mendes. Mendes appears to have the stronger bargaining position given his client's importance to Real on and off the field, and reports that rival clubs such as Qatari-backed Paris St Germain or Abu Dhabi-funded Manchester City are prepared to offer Ronaldo €20m a year.
The changes wrought on the European football scene by such billionaire foreign investors did impact more directly on Madrid's assembly. After listening to the exciting stadium news and impressive financial results, socios were urged by Pérez to vote in a number of changes to the club’s statutes. The most controversial was to raise the number of years membership required for prospective presidential candidates from 15 to 20. Challengers for the post would also have to provide a personal bank guarantee of 15 per cent of the club’s annual budget (i.e. €75-80 million) from a financial institution recognised by the Banco de España, while absentee votes would be cast using the services of a legal notary not, as previously, through the universal postal system.
Pérez argued these measures were needed to
protect the club from a takeover by an outsider without its best
interests at heart.
“We think it is reasonable that those who aspire to this responsibility have been soaked in madridismo,” he said. “The more you suffer, the more you hold the colours in your heart … We want the guarantee not from a non-existent island, but from a bank with a face and eyes. If a magnate wants, he can come and present himself, but as a candidate. I do not want to think bad of anyone, not of Arab sheikhs or Russians, but this is our own thing.”
Film buffs among Pérez's supporters might have winced at the reference to “our thing” (“cosa de nuestros socios”), but the proposals also raised some more serious concerns. 20 years seems an arbitrary amount of time, the bank guarantee means only the wealthiest of the wealthy can run, while the new postal vote regulations make it more difficult for members who cannot attend the event in Madrid to cast their ballot. Taken together the changes stop potential challengers (possibly including ex-Real player Manolo Sanchís, businessmen Juan Miguel Villar-Mir and José Manuel Entrencanales or even former Spanish prime minister José María Aznar) from running in next June’s election.
One of the more irate critics of the proposal was Vicente Boluda,
interim Madrid president for a spell in 2009, who has said he would
like the post full-time.
“The changes to the statues are taking the club away from its socios,” Boluda said. “I do not understand why you need 20 years as a socio to be president. It excludes 90,000 socios. There is no motive for this requirement, except that Florentino wants to eliminate competitors for the next elections. I do not know who might oppose him, but the few possible candidacies will be killed by these statutes.” Ramón Calderón, president from 2006 to 2009, suggested that a better way for Pérez to ensure his re-election would be to mandate that all candidates' first names must begin 'Flo..'.
Both Boluda (who is one of the 90,000 he mentioned) and Calderón (who resigned as president after being accused of electoral fraud) obviously have their own interested reasons for speaking out. But their argument was echoed by other concerned socios, including Eugenio Martínez Bravo, president of supporters group ‘Plataforma Blanca'. “Florentino Pérez is tailoring the position to perpetuate himself or his associates at Madrid,” Martínez Bravo told AS.
There were fewer complaints about Madrid's slimmed-down transfer policy, or questions about why the already super-modern Bernabéu needs a facelift when money might be required elsewhere. Neither was there much analysis of how the same economic swings and roundabouts which have damaged Perez's construction company could affect his football club. All proposed motions were carried by large majorities, Marca headlined its video report ‘A Placid Assembly for Florentino’ and the main story on the event on Real’s website lead with Pérez’s dreams of delivering the longed-for décima or tenth European Cup this season.
Achieve that and Pérez's re-election will be ensured, whichever way the economic winds blow.