The shirt sales compatibility

[thezone]

This is an article i found in Swedish on the swedish site www.svenskafans.com its written by a guy called Johan Johansson, all cred to him. I have translated it with google and havent checked it through since it was so long so sorry for the bad translation if it is.


The goal of this column is to express my thoughts and doubts, concerns, I do not think I'm alone. I'm not looking to pick on any particular club. Madrid may simply be that more examples than other clubs because it is their president Perez is the one who "invented" the strategy.

I'm no economist, has no access to clubs' financial statements and so on. I do not sit in hindsight, but is there anybody who does, please feel free to give record to me. Take my thoughts for what they are: A layman thoughts. Figures that I specify, I have read in articles or reference books and sources are listed at the end.

EXPENSIVE IS CHEAP
Madrid president Perez out like that "The most expensive players are the ones who ultimately are the cheapest." You know the story, it buys the most expensive players, but sells so damned much jerseys that the players eventually become free. In addition, it provides into the contract to Club may be just over 50% of the player's image rights under the contract with Real Madrid. To sum earn the club simply enter the purchase price and more. But is that really true?
In 2000, Real Madrid, the most indebted football club in the world with debts of over 2.5 billion. In 2001, however, sold their training ground to the Madrid City Council for approximately four billion crowns, some believe that it was a giant overpriced and that the whole can be seen as a contribution. Anyway, Real Madrid had money in the fund after it, just over 1.5 billion.

So began the first Galacticos era of Florentino Perez as club president. The players who were bought Figo, Zidane, Ronaldo and Beckham. They bought expensive, but the phrase reads "The most expensive players are the ones who ultimately are the cheapest." But if it really is true, how does the Real Madrid 2007/2008 season was the most indebted club in La Liga, with debts of 563 million? I thought the strategy meant that the club would have more money than the 1.5 billion they had when the project Zidane y Pavones started? Zidane, Ronaldo, Beckham, Figo, etc.. It was just the players who sold lots of shirts, it was just the players they earned back the money they were purchased for and more. But it does not look like it engendered money? Instead, Real newly loan 1.6 billion to finance the purchase of Ronaldo and Kaka.

Real Madrid distinguishes itself in particular with regards to having debts, most of the big clubs in Europe are in serious debt. What distinguishes Perez is that he claims to have a strategy that gives the best players and money in your wallet, when it feels strange that the strategy does not seem to show up any money in the wallet.

But yes, Real Madrid draws in a lot of money. The audit firm Delotties list "Football Money League" is number one Real Madrid and Manchester United number two. But this list only takes into account the club's revenue, not the club's total profit. Unfortunately, I just found the information (in the book Why England Lose) on the total profits of some of the teams which was in the Premier League 06.07. Those who earned the most money in the league then were Arsenal, Watford and Reading! In the bottom of the table was Chelsea, Manchester United and Newcastle! Probably an extremely bad year for Manchester United as the authors choose to highlight, but still very true.
Manchester United are comparable to Real Madrid in the number of fans, a global attraction, and so on, but showed up the second-worst financial performance in the Premier League 06.07. With C. Ronaldo in the team! But when Ronaldo arrives at Real Madrid, a club of comparable size and number of fans, he will suddenly pay itself off?!

HOW MANY SHIRTS ARE A Zlatan?
In an article in Svenska Dagbladet is the following statement: "So now when Zlatan Ibrahimovic has signed a contract for five years with Barcelona, the club's board of directors can not help but rub their hands in anticipation of a new cash cow. Continues 'Ibracadabra', which he called in Italian and Spanish press, to make targets are Barcelona's bid paid in a year or so".
Seriously? Is it that simple then? It's just to sell shirts that have Zlatan purchase paid for itself within a year? Zlatan cost about 500 million. A shirt costs around 800 USD if you want it with Zlatan name. But all that's not the profit goes into Barcelona's wallet. There are material costs, wages for people who sew shirts, pay for staff in stores, etc. Barca. To keep things simple, we can assume that Barcelona earns 250 SEK per sold sweater (what little I found on the subject indicates that there is very high counting, half seems closer to the truth). If Barcelona earns 250 SEK per sold sweater, it would then have to sell two million Zlatan-shirts for a year. Let us say that Barcelona is actually doing it, selling two million official Zlatan-shirts a year, then purchase, the 500 million, earned? NO!
Sure, there are certainly plenty of Swedes who have a Zlatan-shirt who had never bought a Barcelona shirt if it were not for him. But first, are the buyers (the new, Swedish), a very small proportion of the total market. The first is the kind of hard to retain customers; disappears Zlatan disappear. Which should mean that there are plenty of those Icelandic (Gudjohnsen) and Belarusian (Hleb) buyers who disappeared this season. They buy no Barcelona Jersey longer for their guy is no longer on the team. Sure, Gudjohnsen and Hleb may not be comparable with Zlatan in a global attraction. But for these fans / customers who purchase sweater only to the country's biggest star playing where the attraction is probably the same. So just the main "customers" feel like a zero sum game.

The big reason that money is earned after it sold two million Zlatan-shirts is, of course, of course, Barcelona is NOT sold two million more shoes than they would have done without Zlatan. After all, the increase in total sales of two million compared to last season. The vast majority of these buyers are of course people who bought season before Etoos, Messis, Xavis or someone else's shirt, but now chooses Zlatan. No one believes in good earnest to Barcelona from nowhere get two million brand new fans who are willing to buy a shirt, only for Zlatan went there? No one believes well in all seriousness that neither of those two million who buys a shirt with Zlatan's name had not bought a shirt at all if Zlatan had gone to Barcelona? So there is a lot more shirts than two million who need to be sold. Moreover, the chance to say much that I took in too much of how much profit margin is on a sweater. If we instead assume that Barcelona earns 125 kr / sweater, they need to sell four million Zlatan Jerseys! Since it was a barter transaction between Barcelona and Inter, you can see what that four million more people need to buy Zlatan sweater than buying Etoos! How to do it, I have extremely difficult to understand.

THE STARS COMPETE WITH EACH OTHER
When Real Madrid recruiting three, four, five superstars does not mean that fans buying three, four, five shirts instead of just one as usual! When several stars recruited to the same law, they should then therefore steal market share from each other. Instead of selling two million (the figure is just an example) Ronaldo-shirts that sold only one million and one million of Kakas. For no one believes well in all seriousness that, say two million Real fans, suddenly starts to buy 3-4 times more shoes than they did last season? Just as in the example of Zlatan it's not so that a print Kaka, Ronaldo, Alonso or Benzema shirt means a shirt that would not otherwise have been sold. No, in most cases it is just that Robben, Raul, or whatever it was on last season's jersey changed to Ronaldo or Kaka.

ASIA
There is always talk about the amazing tröjförsäljningen in Asia. But how good is it? Sure, for example, Chinese people richer than they were ten years ago. But average income is only $ 2700 per year and pirate shirts of good quality are abundant. On the whole, I think the official sales are grossly overstated and the amount of copies that people wear are grossly underestimated. Very many are safe around with a copy which they believe is an original shirt. All who were inside the Local businesses around La Ramblas in Barcelona knows how much dealers will present copies of the original shirts. Each print copy gives exactly 0 SEK in Barcelona's wallet.

LACK OF COPYCATS
Is Perez and Real economists smarter than everyone else? It's been eight years since the first Galactiocos era. If it really were so that Real Madrid earned money to buy Ronaldo, Figo, Beckham, etc.. No other club would have noticed it? It's one of the world's worst kept secrets, in forums all over the world people write "We buy expensive shit, but then we sell shirts as hell and lots of advertising. We kind of profit on buying them." Why would any club trying to imitate a concept that gives the best players and money at the checkout? Incomprehensible. Why would only Pérez and his economic advisers would have understood the genius of this?

BUT WHY DOES PEREZ DO IT THEN?
Why should Real Madrid do so if it does not work, if it is not true? Real Madrid would obviously be best, to win league, win the Champions League. To get there they think (Perez) goes through to buy the best players (not necessarily wrong with the idea). Maybe they did not make money with Zidane, Figo and the boys, but the beginning of the Galacticos era, won the league as well as the Champions League. In this way, the strategy certainly worked - it gave the profits. Maybe not in money but in football.

Real Madrid are a club member and is not seen as a commercial enterprise, such as Manchester United, which needs to withdraw a certain amount of money for the Glazer family will be able to pay its costs. Banks have more patience with a member club than with a private investor.
But Real Madrid loan then? Although they are a member club then it will only loans are paid? Real Madrid loans are taken in local banks that are under the political and social pressure to act on Real Madrid's best interests. According to Stefan Szymanski, economics professor at Cass Business School in London, then Real Madrid a trump card on hand that not many other clubs have, "Real's really too big to disappear, whatever debt they can incur no bank would ever be allowed to ask the bank that sank Real Madrid ".
Real Madrid know simply that they only have to pay its debts as they themselves want to do it. No one dares to push them, no bank will go down in history as the bank reduced Real Madrid. They can afford to simply take a chance. Real win everything possible to win, it can safely stop jingles at checkout. They do not do it, it's still no one dares to recover money too abruptly.
Chelsea produced always Abramovich private little toy. It was never in the media "Abramovich bought Schevchenko of 500 million, but the money he earns back soon." At that time shevar one of the best and most famous players in the world. Abramovich buying has never been mentioned as an investment that will give your money back and more. It is true that Chelsea are not quite the same base of fans, and global attraction, but the difference would be large enough for Real Madrid makes money by buying the most expensive, while Abramovich purchase gives gigantic hole in the wallet, I find it hard to believe.
I understand that not all clubs can use this strategy. The club must be able to attract the biggest stars, have a large fan base, to be known everywhere, etc.. But there are several teams that fit this description, Barcelona, Manchester United, Liverpool, Chelsea, AC Milan, Inter and surely some others. Why Milan sell Kaka? Why did not they just loan one billion and a night of C. Ronaldo?
Why do not more clubs massive bank loans and battle stars like Kaka and Ronaldo, it's obviously a winning business? In other business, it is true that if a company launches a product / idea that makes successful competitors will copy this idea (making a success of a mobile with touch screen can go fuck that competitors follow). Sometimes it's patent on the product and you can not imitate. But what I know Perez has no patent on "The most expensive players are the ones who ultimately are the least expensive" approach. So where are all härmapor? Why is it not more of the clubs I mentioned above, which attempted the same thing?

Is really shirt sales and merchandise the Holy Grail some purport it to be? Could it not instead move the joy calculations and a bubble, where the only reason that the bubble never burst is that nobody wants to be the person who takes their abrasive needle and puncture it?
That the strategy of buying the most expensive players can bring victory in the league and Champions League Real Madrid have already proved. It is well good enough, but that "the most expensive players are the ones who ultimately are the least expensive", that Zlatans shirt sales will pay the entire bill for Barcelona? No, I think is simply not true.

Sources:
Svenska Dagbladet
Dagens Nyheter
Wikipedia - Real Madrid
Wikipedia - Florentino Pérez
Bloomberg
Blog.Foreignpolicy
Nyheter 24
Goal
Football.UK

[Bojan]

Cheers Anders. The article missed out on few things. First the companies that market themselves in football do have big budgets but they are also limited. So, naturally they are looking to splash one the most popular club. And when you think popular, Madrid is still No1 in the world.
Having said that, Madrid just negotiated a new deal with Bwin

[Hamzah]

don't forget boot sales etc.

[thezone]

I know i didnt put this one in the best place but it shoudlnt be under FC barcelona talk.
Its a general topic to all clubs realting to their economy but especially player management from an economical perspective.

[House of Flies]

don't forget boot sales etc.

lol, there was a mention of boot sales. no person would buy 3-4 boots in a season.

i think TV revenue of seeing all these stars for one team is the reason why Perez went for Galaticos part II. Shirt sales are a percent of buying superstars... majority comes from having their advertising deals paying the club for their player release and TV sales.

and Goal (movies... fuck that was a crappy movie(s))