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Real Madrid spending raises eyebrows in soccer

Unprecedented spending on Cristiano Ronaldo and Kaka has Real Madrid's opponents grumbling the team is trying to buy a championship and economists warning of ruin.
/ Source: The Associated Press

Unprecedented spending on Cristiano Ronaldo and Kaka has Real Madrid's opponents grumbling the team is trying to buy a championship, economists warning of ruin and complaints that the club's $223 million moves this week are an insult to people in a country suffering severe financial hardship.

The club says high-cost players are the price of greatness and claims it will get the investment back and then some when television and marketing deals are factored in.

The deals — $92 million paid to AC Milan for Kaka and a stratospheric $131 million promised to Manchester United for Ronaldo — were the first moves made by Real Madrid's new president Florentino Perez.

Perez made a name for himself with similarly eye-popping transfers during a previous stint as head of the club earlier this decade, including tens of millions of dollars for "Galacticos" David Beckham and Zinedine Zidane.

An editorial in Spain's El Mundo newspaper Friday noted that the money spent on Ronaldo is 57 times the value of his weight in gold, a disturbing image in a country where house prices have cratered and a whopping 17.4 percent are jobless.

"Many believe that the amounts of money being spent on soccer are so disproportionate as to be unjustifiable in these moments of economic crisis when millions of people are out of work," the paper said. "A great team cannot be built with a check book."

But Santiago Segurola, the dean of Spain's sports columnists, told The Associated Press the spending can also be looked at from a different angle. He said dolling out vast sums in such a bad economy may not look good, but that doesn't mean it isn't a good business decision.

"What is more obscene, buying the two greatest players in the world whose presence is going to bring the team a lot of money in return, or spending a similar amount on mediocre players who add nothing, which is what Real Madrid has done over the past few years?" Segurola said.

Some say the outlays are more than just unseemly — they may be against the rules.

Xavier Sala i Martin, the vice president of archrival Barcelona, called on Perez to explain where he got the money, speculating that the Real Madrid president may be drawing funds from a large construction company he runs called ACS, in contravention of club rules.

"If the money doesn't come from ACS, it must come from property speculation," Sala i Martin said Thursday. "Someone must have given him money and it would be good if he explained it. How can it be that a soccer team can be given all this money, taking into account the country's financial situation and policies which restrict banks from making loans?"

While Madrid's income last year was the highest in world soccer, the club carries a debt reported to be even more.

Perez has indicated the club needs to spend $421 million before the transfer period ends on Aug. 31 to remedy the team's ills, and there are already media reports that club is about to sign Valencia's Spain striker David Villa for a fee of around $56 million.

All told, it is shaping up to be the largest offseason spending spree ever by a soccer club.

But FIFA president Sepp Blatter defended the moves Friday and Real Madrid is making no apologies — either for its soccer or fiscal sense.

The moves mean "that our product is still a good product. If this is the game of the people, they need stars," Blatter said Friday ahead of the Confederations Cup in South Africa.

Jorge Valdano, Real Madrid's club director, explained the team's philosophy Wednesday in speaking about the Kaka transfer, the day before the Ronaldo deal came to light.

"We are spending the money because it is worth it. We are spending it because we will make this money back, and make it back with interest," Valdano said. "Signing these types of players means that our sponsorship, television and sportswear contracts will rise spectacularly."

Valdano said the club hoped to make nearly $100 million each year from the Kaka purchase, in part by convincing sponsors like Coca Cola, Audi, Adidas and Telefonica, that their investment in the club will be profitable.

Real Madrid's splash out comes after one of the most demoralizing years in its long history of success. Rival Barcelona took the prestigious Champions League trophy, the Spanish league and the Spanish Copa del Rey, all in one year, becoming the first Spanish team to capture all three titles.

Valencia, which came in sixth place in the Spanish league, couldn't pay their players on time earlier this year because of financial difficulty. Several lower league teams in England have also teetered on the brink of bankruptcy.

Still, some point to Barcelona's success as evidence that money isn't enough to guarantee winning.

While Barcelona is no charity case — its budget is second-only to Real Madrid's in Spain — it has never spent money as prolifically. Seven of the starting 11 players on Barcelona's championship team came up through their youth system — including superstars like Lionel Messi, who was signed at the age of 11 without the need for a massive transfer fee.

Many of Real Madrid's stars have been purchased from other clubs.