Is Ronaldo worth €250 million?

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Last week Mario Balotelli’s agent raised more than a few eyebrows when he claimed the troubled Italian striker was worth up to €250 million in the transfer market.

While the Manchester City forward is undoubtedly talented his temper alone means he is unlikely to be worth almost three times as much as Cristiano Ronaldo – but  even with that out of the equation is there any player currently on the face of the planet worth such an obscene figure?

Of course the finest players in the world demand the highest fees and when it comes to the very best there is no doubting that Cristiano Ronaldo and Lionel Messi are in a league of their own.

Ronaldo is currently the most expensive player on the planet having cost Real Madrid £80 million when he signed on the dotted line in 2009 from Manchester United, costing a huge £27 million more than when Zinedine Zidane made the move from Juventus to Real Madrid, the previous record fee.

Along with Figo’s move to the Bernabeu the Spanish club now hold the record for the three biggest transfer fees paid in the history of the game.

Whether that’s through shrewd business thinking that they could recoup their cash because of the commercial value of the players they were signing or because of an insane desire to spend big, driven by the Galacticos culture is a question for another day, although flamboyant president Florentino Pérez’s desire to ensure Real Madrid ‘have the best players in the world’ probably tells you which answer is the right one.

Despite their regular big name signings that have started to take place since the end of the Galaticos era in 2006, with Kaka joining around the same time as Ronaldo along with Karim Benzema, Madrid are in an incredibly healthy financial state, which is remarkable given the lack of a Russian oil baron anywhere nearby and the astronomical transfer fees they pay.

In fact Madrid are more than healthy, they lead the pack, well ahead of their European rivals.

In 2009/10 they recorded the second highest pre-tax profit generated by a European club, bettered only by Arsenal, whose figures were boosted significantly by the one-off sale of property. When put into the context of the huge losses made by Chelsea and Manchester City, who can fall back on wealthy owners, it really does make a stark comparison.

In figures released last year in Deloitte’s annual football rich list, Madrid topped the pile in terms of revenue generated (the 6th consecutive time they have done so), becoming the first team ever to record figures of over €400 million in revenue – which puts them over €40 million clear of their nearest rivals in the list, Barcelona.

This is fairly remarkable, especially when it is taken into consideration that they haven’t won the Champions League since 2002, and only claimed their first La Liga title since 2008 this season. The lack of success in the Champions League in particular has cost them millions in revenue. Chelsea earned around £50 million in winning the Champions League last season, if Ronaldo can fire Madrid to success next time round, he would have almost paid off his fee in one fell swoop.

It is clear this ability to generate revenue at a level far greater than any of the other great names in European football is driving them to the very top in the rich list (rather than say, shrewd planning and spending or on-field success) – but what are the biggest factors in their remarkable revenue – and is there a case for splashing huge fees on players and then recouping the cash through commercial ventures?

The best guess puts Ronaldo’s wages at around £250,000-per-week, so his fee of £80 million plus an estimate of £72 million in wages across his six year deal puts the cost of signing Ronaldo to Real Madrid at £152 million. That’s not to mention any signing on fees paid to Ronaldo, or any money due to him should he lave the club.

Certainly since he joined the club, Ronaldo appears to have already paid off his exorbitant transfer fee in shirt sales alone. In 2010 it was claimed more than 1.2 million Ronaldo shirts had been sold by Madrid in the Spanish capital alone since he moved to the capital, with millions more around the world, equating to an income of around £100 million, not included costs such as manufacturing the shirts and money owed to Adidas and Ronaldo himself.

Figures claim Madrid sell around a similar number of shirts a year around the world (1.2 to 1.5 million a season), a large portion of which will bear Ronaldo's name.

Since the arrival of Ronaldo at Real Madrid at the start of the 2009 season commercial income for the club has risen from £114 million in 2008 to £135 million to 2010 – which is particularly telling as that figure dropped from 2007 to 2008 by around £10 million, something which could be down the presence of a new wave of galacticos.

In truth it is hard to put an exact figure on how much Ronaldo has made for his new employers, especially when things such as shirt deals are taken into consideration.

Adidas pay around £30-40 million in order to provide Madrid with their match day shirt while their commercial sponsorship deal with betting firm Bwin brings in €15 million a season, although that is due to expire next summer and a new sponsor could be found to bring them in line with top earners such as Liverpool and Barcelona, who take home around £20 million thanks to the logo splashed across their shirts.

How much of the money Madrid bring in through shirt sponsorship is down to Ronaldo alone is open to debate. There is no doubting that Madrid as a brand themselves is enough to attract some big-hitting sponsors but the presence of the Portuguese superstar, amongst the most marketable and best-known athletes in the world, is undoubtedly persuasive when it comes to persuading the likes of Adidas to part ways with £40 million.

Add into that the matchday revenue (€148 million for 2010) created by the allure of seeing a galaxy of stars, the brightest of which is no doubt Ronaldo, and a similar figure generated by TV broadcast money and other media income, then the thinking behind paying £80 million for the 27-year-old becomes clear.

The key to Madrid’s plan in general is to generate revenue and maintain their prestige by attracting the biggest names in the world regardless of their success on the pitch – for example Kaka is unable to hold down a regular starting spot but is the most popular athlete on Twitter having racked up over 11.5 million followers (just beating Ronaldo) while the pair have over 50 million likes on Facebook.

In terms of access to the fans who generate income through their hard earned cash and the appeal of those figures to sponsors, their appeal is unprecedented. No wonder Madrid are happy to have a €65 million player on the bench.

If success is missing on the pitch – and every indication is that, under Jose Mourinho that is changing, Madrid have ensured their sound financial future by securing the biggest names, taking an initial hit and raking in the cash off the back of their star players.

Given the apparently short-term thinking behind spending so much on players – almost £180 million on Kaka, Ronaldo and Karim Benzema alone since 2009 – there is a great deal of long-term thought going into signing these players and ensuring that they pay their debt back and then some.

Financial Fair Play puts greater emphasis on generating revenue, meaning players like Ronaldo will become even more valuable to the club, Luckily for them, having players like Ronaldo on board ensures they are ahead of the curve, and if his outrageous form on the pitch continues for the next couple of seasons, his value to his club is only going to increase. Perhaps a €250 million player isn’t a million miles off after all.

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