The famous Dutch player Rinus Michels once said "Football is business and business is business." We all know how much football has become a sport in which the management is just as important as the players. With the new trend of spending millions on football players, money is becoming as good as goals.
Florentino Perez will surely go down in history as the man who not only changed Real Madrid but the financial side of football. When he took charge of Real Madrid, Los Blancos were in a heap of debt and found their training facilities in dire need of renovation. Perez sold four of Real's corporations and ceded some of the training facilities to the city of Madrid. This wiped out the debt and paved the way for the "galactico" signings of Zidane, Beckham, Figo and Ronaldo. His star signings coupled with an excellent marketing strategy has seen Real become the most valuable sports brand in the world.
With Barcelona, Athletic Bilbao and Osasuna, Real Madrid are a registered association. They aren't owned by a single owner like most football clubs, instead they are owned by their fans. These fans who have purchased membership to the club, elect a President who oversees the club. Neither the President nor the members are permitted to invest their own money into the clubs. So this basically means any money that Real Madrid spend is produced by its own revenue. Due to this set-up Real Madrid will never be in danger of violating FFP rules which are currently posing problems for clubs such as Man City, Chelsea and PSG.
Real Madrid registers an annual revenue of €520.9 million, this is all generated by shirt sales, TV rights and sponsorships. Unlike City or Chelsea the transfers aren't funded by Russian or Arab oil money, instead it is the product of the club's hard work. To criticize Real for excessive spending is like to criticize a millionaire for buying a Ferrari. It's his hard earned money and he can do whatever he pleases with it.
Out of €520.9 million generated last year, €140 million of that was produced by shirt sales. Out of the €140 million, 71% or €100 million was solely earned of Cristiano Ronaldo's shrit. It has been well documented that Real re-earn their galactico transfer fees in a matter of months solely with shirt sales. Ronaldo's transfer fee was returned in 7 months while Bale took 11 months to re-earn his record breaking fee.
Shirt sales are a major source of revenue, and Perez of all people knows that. With football being as big as it is in Colombia, the signing of James has opened a new market in South America. According to Colombian TV, Real Madrid has already sold 40,000 of his shirts and it hasn't even been 12 hours since the signing was made official. With Falcao's increasing age and James' exceptional performance in Brazil, it might be time for James to take his role as the leader of Colombian football.
When evaluating a player's marketability, many factors have to be considered. Looks, language and most importantly exposure. James' physical appearance is clearly not an issue judging from the hoards of beautiful Colombian women screaming his name. James unlike players such as Modric and Bale is a natural Spanish speaker and judging from his first press conference will get along well with the Spanish media. Also unlike his Croatian and Welsh team-mates James belongs to a nation that should comfortably qualify for future World Cups. That in itself is major plus for his marketability , as the World Cup is simply on a level of its own. People that don't even follow football look the World Cup, simply because it's the World Cup. After becoming the star of Brazil 2014, James will surely be looking forward to making further statements in Russia and Qatar.
Then we get to the financial side of the transfer. James cost Madrid €70 million which they are likely to make back with the imminent sale of Di Maria. The Colombian starlet is set to make €6 million per year which is around the same amount that Di Maria makes. If we strictly look at the numbers here, it doesn't look like Real will lose much with this deal. Then comes the matter of the image rights percentage. Often when discussing contracts, this topic sparks great debate. It has been reported that Ronaldo only agreed to an extension when he was promised 100% of his image rights. With James set to become the new face of Colombian football as well as the newest Galactico, it was imperative that Real secure at least some of his image rights. Perez being the business tycoon that he is, managed to get 40% of James' rights which is an unprecedented amount for a signing of this magnitude.
Whether he can integrate himself into the side, is another issue. From a strictly financial standpoint, this transfer is an excellent piece of business for Real Madrid.