More Money than Sense

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The battle was as bitter and passionate as any Cup final. After a flurry of promises, denials and backroom deals, Spanish football club Real Madrid last week snatched star Portuguese player Luis Filipe Madeira — better known to soccer fans as plain Figo — from its archrival Barcelona, releasing a torrent of wrath from the Barça faithful. Newly-elected Barça president Joan Gaspart thundered that the deal was "immoral." But if the accusations of treason and the veiled threats of revenge that followed Figo's defection seemed excessive, they were trifling compared to the price Real Madrid paid for him: a world record $56 million.

In the upward commercial spiral of modern football, it is not only player salaries that are soaring. In Europe's wealthier leagues, particularly in Spain, Italy and England, the transfer market — when a club secures the services of a player from another team — is also going haywire, fueled by clubs flush with broadcasting fees and other revenues. Since 1999, 11 players have moved between clubs for price tags of $23 million or more, and the numbers look likely to keep on climbing. Just two weeks before Figo flew the Barça coop, Italian club Lazio forked out $55 million to sister Italian side Parma for Argentine striker Hernan Crespo. AC Milan's reported $60 million offer for Manchester United's David Beckham earlier this month may have been turned down, but last week the Italian side managed to snap up Real Madrid midfielder Fernando Redondo for $20 million. And Barça — its coffers full from the Figo transfer — paid $32 million in total for Arsenal's Emmanuel Petit and Marc Overmars.

The opportunity to bleed its archrival aside, Figo's arrival is a coup for Real Madrid. One of Barcelona's prime movers on the field, he had a fine tournament for Portugal at the recent Euro 2000 championships, and is a national hero at home. A man with a significantly smaller income, Portugal's Nobel prizewinner Jose Saramago, once said he was proud to describe himself as "the Figo of literature."

During the recent election campaign for the presidency of Real Madrid, successful candidate Florentino Perez vowed to deliver Figo to the club or bear the $8.5 million cost of paying the annual subscription of all club members for one year.

But how can such transfer prices be justified? "A lot of it is what somebody else is willing to pay," says Jason Zillwood, a London-based senior manager at Deloitte & Touche, which publishes financial analyses of the English and European leagues. "When you get into the realms of Figo and Crespo you think of a number and multiply by 10." Performance is vital, of course, but players may also be sought for their ability to generate revenue away from the pitch. The right player, says Zillwood, can boost ticket sales and merchandise, and broaden a club's appeal, meaning it can demand more from broadcasters and sponsors. Other players are purchased with an eye on future transfer fees: "That's an investment that gives you some potential," says London-based Darren Venn, a consultant at leisure group Enic, which runs various clubs including Italy's Vicenza — a side which bought winger Gabriele Ambrosetti for $1 million and last year sold him to English club Chelsea for $5 million. "We sign players for onward sale."

Real Madrid, however, has taken steps to ensure that Figo won't be going anywhere. Included in his six-year contract, which gives him an annual salary of $4 million, is a $165 million buyout clause — a dowry to cool the ardor of most suitors. Real Madrid's star signing is also covered by insurance policies to safeguard the club's investment.

It is a source of frustration in many countries that clubs import much of their talent rather than cultivate it at home. In the 1998/1999 season, English Premier League clubs spent $410 million in player trading — up 20% from the previous season — about half of it on players from abroad. Such statistics, coupled with England's inglorious showing at Euro 2000, spurred the U.K. government to unveil a $243 million investment plan for grassroots football last week.

Still, while locally cultivated talent is cheaper in theory, not everybody gets the equation right all the time. French club Paris Saint-Germain sold home-grown striker Nicolas Anelka to English side Arsenal for about $700,000 three years ago. Now, after his tumultuous stints at Arsenal and Real Madrid, PSG has brought Anelka home — for $34 million. Getting your own back might be nice, but it can sure be expensive. — With reporting by Bruce Crumley/ Paris, Jane Walker/Madrid and other bureaus