With the transfer window about to shut on Wednesday Manchester City will have paid out nearly 93 million Euros in transfer fees and you have to wonder are they following Real Madrid’s renowned “Galacticos” strategy that was so successful in turning a club that was losing 86.5 million euros in 2000 to making a profit of 30 million euros, a 135 percent increase in operating profit in five years?
A football club is a business and just like any other business will only survives on the basic principle of making a profit. A well-run and profitable football club is a great asset to its community. It helps the region’s economy by providing employment.
Success is based on three factors, financial performance, brand popularity and results on the pitch.
Critics questioned Florentino Perez's transfer policy at Real Madrid as they feared it would lead the club into massive debt however between 2000 to 2005 the club was actually making higher profits. Despite high player costs, profit rose because the club increased merchandise and ticket sales.
Secondly, the arrival of these superstars, or Galacticos, helped boost the club’s popularity worldwide. Real Madrid has always been a prominent brand in Spain and Europe. But in Asia during the early 2000s, football was dominated by Manchester United.
The signings of Zidane, Figo and Beckham made Real Madrid into a global brand. By 2006 the club generated 88 million euros in revenue just from broadcasting rights, which in the end made up 32 percent of its total revenue. That figure was 15 million euros more than Manchester United’s broadcasting revenue.
The Asian market is massive and it will not go unnoticed by the hierarchy at Manchester City that winning the Premier League and Champions League will close the Commercial gap with its local rivals.