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Volume 6 No. 212
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Real Madrid Welcomes Gareth Bale Following Record $132M Transfer From Tottenham

The transfer window's "longest-running saga finally ended on Sunday" when EPL Tottenham Hotspur forward Gareth Bale joined Real Madrid for a "world transfer record fee" of €100M ($132M), according to Mike Collett of REUTERS. To the "relief of almost everyone involved," Tottenham, Real Madrid, Bale and Tottenham Chair Daniel Levy issued statements saying that the deal was done, "with just the formality of a medical in Madrid to come on Monday, transfer deadline day." The fee eclipses the previous record of €94M that Real Madrid paid for Cristiano Ronaldo from ManU in '09. For that money, Real Madrid is "buying an outstanding young player who won games for Spurs almost single-handedly last season" (REUTERS, 9/1). In London, Roger Blitz reported "the record-breaking deal caps a summer transfer spending spree by Europe's top clubs, remarkable even by the extravagant standards of recent years." Premier League clubs have eclipsed the record £500M of '08, and the figure was expected to "continue to climb" before the transfer window closed late Monday night (FINANCIAL TIMES, 9/1).

BALE WELCOMED: REUTERS' Iain Rogers reported thousands of Real Madrid fans "flocked to the Bernabeu" to welcome Bale. Bale passed a medical at a clinic in Madrid on Monday morning before signing his contract and "being presented to excited fans inside the giant arena." Wearing a "sharp black suit, white shirt and black tie, Bale listened to a translation" as Real Madrid President Florentino Perez introduced Bale "on the VIP tribune and described him as an 'exceptional footballer.'" Bale, who was "accompanied by members of his family, then sprung a surprise by making a brief statement in Spanish." He told fans that signing for the club was "a dream come true" and that he "hoped to help them win the 'decima,'" or 10th European title. He quickly changed into Real's all-white kit, "including his new number 11 shirt, and took to the pitch, before throwing and kicking balls into the crowd" (REUTERS, 9/2). In London, Sid Lowe reported "this was a big event but did not have the choreographed charm of David Beckham's presentation, nor was it the bombastic occasion that Cristiano Ronaldo's arrival had been, when 80,000 turned out and he paraded a walkway across the pitch." It was "better that way" (GUARDIAN, 9/2). Also in London, David Hytner reported Real Madrid's Twitter account welcomed Bale to the club with a picture of the footballer and the hashtag "welcome" (GUARDIAN, 9/2).

FINANCIAL GAP GROWING: BLOOMBERG's Alex Duff reported Real Madrid is fueling European football's $2.2B transfer market with its purchase of Bale, "upsetting authorities who want to rein in spending." Barcelona University Accounting Professor Jose Maria Gay said that while Real will adhere to UEFA's FFP regulations by spreading out the cost of Bale's fee over the six years of his contract, the trade "hurts UEFA's plan to make the sport more sustainable." Gay: "The gap between the richest teams and the rest in soccer is widening. It hardly seems fair play." Transfer spending rose 7% to €1.65B ($2.2B) before Bale's move. At that level, "the value of transfers in Europe's five biggest leagues in July and August will rise" at least 13% from a year earlier. Real Madrid "typically has an annual net income" of €25M ($33M), which will "allow it to absorb Bale's fee over the length of his contract without being banned." Real took out a six-year, €152M ($200M) loan to sign Ronaldo and Kaka in '09, and will not "have any difficulty getting bank credit to finance Bale's signing." Former HSBC banker Eugenio Martinez, who "sought to stand against Perez in a 2009 presidential election," said that Real fans and execs "will have to wait to find out if the investment in Bale, who scored 55 goals in 203 appearances" for Tottenham since May '07, works out "in footballing and financial terms." Martinez said in an email, "There's no doubt Bale is an extraordinary player. Only time will tell if he's expensive or cheap" (BLOOMBERG, 9/1). BLOOMBERG's Hegarty & Duff also reported Real has used its star players to "bolster revenue from sponsorships and replica jerseys," becoming football’s biggest club by sales in '05. Real Madrid's website said that the team had sales of €514M ($678.2M) for the year through June '12, "more than any other sports team." Deloitte said that Tottenham was the 13th biggest football team by sales in '11-12, with €178M ($235M) of revenue. Bale’s sale will help Tottenham to offset more than £100M ($156M) of signings since last season. The team added players including Argentine winger Erik Lamela, Spanish striker Roberto Soldado, Brazilian midfielder Paulinho, Belgian winger Nacer Chadli and Danish midfielder Christian Eriksen. The additions "helped persuade Levy to let Bale go," even if it was with "great reluctance." Tottenham also "faces the cost of a planned 56,000-seat stadium." The project could "boost matchday revenue and help narrow the financial gap on the richest English clubs," ManU, Chelsea, Arsenal and Man City (BLOOMBERG, 9/2).

RECORD SUMMER SPENDING: In London, Blitz reported in a separate piece "even by football's profligate standards, this has been a summer of frenzied transfer megadeals to defy economic reality and plain common sense." This was "meant to be the start of a new era of good housekeeping in football." Financial controls introduced by UEFA and the Premier League are "supposed to cut debt by forcing clubs to spend only what they earn." Instead, the "most bemusing aspect of this summer transfer period has been Arsenal, Europe’s most financially secure club, being pilloried by its own fans for its failure to 'spend some f***ing money,' as the placards at the club’s first home game of the season put it." Last season, the 20 Premier League clubs shared £1.06B in broadcast income, with champions ManU picking up £60.8M. This season, "the first of the new three-year deal," clubs can expect to share £1.6B ($2.5B), with the winner’s slice hitting £100M. All this leads wealthy club owners to "abandon the path of moderation they promised to pursue." Man City Owner Sheikh Mansour bin Zayed bin Sultan al-Nahyan of the Abu Dhabi royal family has spent almost £100M, while Chelsea Owner Roman Abramovich has paid out £65M ($101M). Such behavior "is the natural outcome" of what football agent John Smith calls the "cajillionaires" taking over the game (FINANCIAL TIMES, 8/30).