The FT’s Lex column takes a sceptical look at the Pink Un’s interview with Real Madrid supremo Florentino Pérez a few pages away.
What’s the biggest prize in football? Many fans would point
to the golden trophy awaiting the winners of the World Cup, which kicks off
next week. Real Madrid president Florentino Pérez, however, reckons there’s an
even more prestigious honour: owning a piece of his club. Pérez wants the
fan-owned club to sell a stake to outside investors for the first time.
But, to allay fears among existing members, he insists any
new owners won’t actually have real ownership. “It would be like a
sponsorship,” he said in an interview with the FT this week.
In some respects, Pérez — the architect of Real Madrid’s
so-called Galácticos strategy of signing the world’s most famous players — is
in tune with the times. Investors in Elon Musk’s rockets-meet-social-media
conglomerate SpaceX have practically no say over governance, but the excitement
surrounding its impending flotation suggests there are plenty of people happy
to give up control to a leader with a galactic vision.
Pérez and Musk also
share a penchant for astronomical valuations. A mooted €10bn price tag would be
about nine times Real Madrid’s annual revenue. That compares with the roughly five
times that Apollo Global Management recently paid for crosstown rival Atlético
Madrid. Italian champions Juventus trade for less than three times
revenue.
True, Real Madrid has the highest revenue in the industry
and a history of profitability that is unusual among top clubs, but it also now
has quite a lot of debt to pay off. Its financial statements rather
optimistically declare it has almost no net debt — but that is only true if the
considerable loans that funded its massive stadium renovation are left out.
Its budget for the
2025-26 season assumed almost three-quarters of its operating profit would go
on interest payments. But Pérez doesn’t really expect investors to pay
attention to boring things such as financials. His supporters have likened it
to buying a work of art — sure, it is nice when the value rises, but that
shouldn’t be the main reason to get involved.
Stablecoin company Tether tried to buy Juventus because its
chief executive is a big fan; there must be at least a few image-conscious
billionaires among Real Madrid’s estimated 1bn Madridistas. Spanish press has
suggested LVMH boss Bernard Arnault is one of them.
One group best
keeping a safe distance is private equity billionaires. Firms such as Apollo,
Clearlake and RedBird have been battling to prove that football clubs can be a
legitimate asset class, not just a vanity project. Making the sums add up is
doable, sometimes, but Pérez has made it very clear that in Real Madrid’s case
an investment is mainly about having fun and making contacts. Joining the
world’s biggest club might be tempting, but for any firm that aims to be a
responsible steward of pensioners’ funds, it would be an own goal.
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