Soccer's Billion-Dollar Players

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Fabrice Coffrini / AFP / Getty

Portuguese forward Cristiano Ronaldo.

The world economy may be slowing, but you wouldn't know it to look at the giddily bullish market for the services of the world's leading soccer players. The top clubs in England, Spain and Italy are primed to spend billions of dollars in the remaining four weeks of this summer's "transfer window," during which teams are allowed to trade consenting players. And in a game with no salary caps, the players — who not only get to negotiate a more lucrative deal with their new clubs but also get 10% of their transfer fee (the remainder going to the team from which they're being bought) — are the prime beneficiaries of soccer's rampant inflation. Right now, some $400 million is chasing the signatures of just three players — Manchester United's free-scoring Portuguese midfielder Cristiano Ronaldo (a $120 million target of Spain's Real Madrid); Brazilian forward Robinho, for whom English club Chelsea are reportedly willing to pay Real $80 million; and A.C. Milan's brilliant Brazilian playmaker Kaká, sought by Chelsea for a whopping $160 million. But dozens of lesser trades have seen players change clubs for sums unthinkable a few short years ago. And the ballooning wage bill of the English Premiership, which by virtue of having the world's largest TV audience is also its most lucrative soccer league, would have analysts in any other industry muttering anxiously.

The European soccer economy is quite different from that of American sports with its carefully regulated trades and salary caps. The right to contract players can be bought and sold. And for a match-winner like Ronaldo, the driving force of a United team that finished last season as champions of both England and Europe, it's a seller's market. The Manchester club have the Portuguese star on contract for four more years (after which, if he's not sold, he becomes a free agent) at a weekly wage of $240,000. Real Madrid wants to pay $120 million (of which Ronaldo would keep $12 million, the rest going into the coffers of Manchester United) to sign him — and to persuade the player to make the deal, it will raise his salary to $400,000 a week. And the mutinous grumbling of at least one of his prospective Madrid teammates is a reminder of the trickle-down economics of soccer's wage inflation: it's a team game, in which success on the field requires harmony in the dressing room; so the more clubs pay their superstars, the more they'll ultimately have to pay their regular stars.

The clubs with the biggest war chests — Real, United, Chelsea and Milan — use them to buy the players who'll ensure their continued dominance, concentrating talent in a handful of top clubs in each country, while those lower down the pecking order struggle to hold on to their best players. Even such legendary clubs as Arsenal and Liverpool in England, both of which reached the final four of last season's élite European Champion's League, are unable to match the financial muscle of Chelsea or Real Madrid, lowering their prospects for success.

Europe's soccer clubs have three main sources of revenue:

• A share of the television rights: in the English Premiership, this guarantees even the bottom clubs $50 million a year, and a lot more for those in its top tier. The clubs that finish highest in all of Europe's domestic leagues also get to play midweek games in the European Champion's League, qualification for which is worth a further $20 million at least.

• Ticket sales for home games, which means that stadium size matters: it is no coincidence that Manchester United, which seats 76,000 at its Old Trafford ground, is the richest of the English clubs — Liverpool's Anfield stadium holds only 45,000, by comparison, which at ticket prices averaging around $80 means that United generates as much as $50 million more than Liverpool in annual ticket sales. High rollers like Real Madrid and A.C. Milan, not surprisingly, play in stadiums that hold upwards of 80,000 fans.

• Commercial income such as sponsorships and worldwide sales of replica shirts and other branded merchandise: a couple of years ago, Real Madrid surpassed the earnings of Manchester United, in part because the Spanish club earned 42% of its revenues from commercial income, compared with Manchester United's 27% from the same source. The drive to raise commercial revenues has prompted Real Madrid to seek celebrity stars such as David Beckham (and now Ronaldo), knowing that their presence on the team can sell hundreds of millions of dollars' worth of replica shirts.

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