Features

A real kick in the teeth

"A real kick in the teeth" Continued...

Issue: "Profiles in effective compassion," Sept. 26, 2009

Madrid's desire for Ronaldo was born out of politics. Real Madrid is owned by its fans, who vote to elect the club's president. During the campaigns, which can be as nasty and vicious as any election, the candidates make campaign promises. And while they may not be able to promise a strong national defense or lower taxes, they can promise to sign players, the bigger the better, financial details to be worked out later.

Ramon Calderon was running for reelection as president of Real Madrid, which had enjoyed some success in the Spanish league but was falling behind in European competition. So he promised to buy Christiano Ronaldo, the player who could change everything. And when Calderon was forced to resign after a vote-fixing scandal, the new president, Fiorentino Perez, ran on the same platform. Sign Ronaldo. Never mind the cost.

Ronaldo's desire to play for Real Madrid has several plausible motives. He claims to have supported Real Madrid as a boy and, after six seasons in England, might want a move back to the more temperate climes of the Iberian peninsula. But half a million dollars a week for six years is enough to turn anyone's head. The low Spanish tax rate means that he will be taking home close to three times what he was making at United.

But what were Man U's motives for selling? On the surface 130 million dollars is a good price for any player, but it's not like United needs the money-or does it?

When Ronaldo first came to England, English soccer was reaching a peak. The English Premier League had the most modern stadiums in Europe and the best TV contract in the world. The pound was strong, English clubs were firmly ensconced at the top of the pyramid, and they looked likely to stay there. In 2005 Malcolm Glazer, owner of the Tampa Bay Buccaneers, bought Man U in a leveraged buyout, which means he used the club's value to pay its current owners, loading the club with debt from its own purchase, effectively mortgaging it. AIG backed him, and at least some of the financing came from hedge funds that charged extremely high interest rates. This worked as long as revenues stayed high, but now AIG has collapsed, and some of Man U's revenue is apparently going to debt reduction.

On Aug. 16 Sir Alex again prowled the sidelines in his suit, champing on a stick of gum. But now he faced the world without his best weapon. Ronaldo's transfer may be the first indication of a larger power shift in European football, from England to Spain. And if warm weather, low taxes, and a strong Euro can lure soccer players, what other business will be lured?
-Daniel Olasky is a writer living in California

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