V Krishnaswamy: The Real winners

BIZSPORT

Should David Beckham be in the footballer's equivalent of the doghouse after missing not one, but two penalties? As a result of his missed opportunities, England was scrubbed from Euro 2004 much to the anguish of its fans.

But Beckham's club side is probably not in the least bothered about his goal-front fumbles. After all, around the world, people are still buying Beckham shirts and cutouts, just as they are picking up Ronaldo watches or Zidane mugs.

Real Madrid is on its way to beating to Manchester United "" not on the soccer field, but in the balance sheets. In sheer financial terms it is now matching Man U kick for kick as the most powerful global brand in soccer world.

Recently, Real Madrid's newly re-elected president, Florentino Perez, declared that the club's marketing efforts have matched those of Manchester United. Real expects to make 138 million euros this year from its marketing efforts alone.

Four years ago, they made that amount from all sources. The rise has principally been because sales of merchandised products around the world have climbed steeply.

Speaking to the Spanish media, Perez said, "Some years ago Manchester United were the best-selling club in the world because of the simple fact that they had a marketing policy that was 10 years ahead of everyone else. This is no longer the case because right now there is nothing to match the global impact of the Real Madrid brand. We are the number one not just in football but in all sport."

During the last few years, Real and its president have concentrated on building a team with superstars appealing to people across the world. They collected Zidane, Raul, Figo and Ronaldo and last year added Beckham to that heady cocktail. This mix got them a fan base not just in Europe, but in South Asia, Japan, South America and other parts of the world.

Perez is straightforward. He says, "We have shown that investing in the best players can be profitable. Just like other business sectors we have tried to develop a good product that sells." Perez, whose re-election campaign for club presidency was based on bringing stars like Beckham to Real, spent close to 200 million euros to bring high-profile players to the club in his first four years as president.

That kind of spending raised many eyebrows, but it was made possible by the sale of the club's city-centre training ground to the Madrid local authority. It fetched the club 480 million euros, which helped buy such expensive players. But that sale is being investigated by the European Commission for a possible hidden state subsidy.

In the past few years it has become increasing clear that football clubs are powerful brands. And that has, in some cases, overshadowed on-field performances. Real did not win a title in 2003, but it is the most powerful brand in world football.

A consultancy company FutureBrand, estimated that the top 20 European clubs earned revenues of over £2.5 billion in 2002-2003. The key to these revenue figures are football's huge fan base and loyalty. Clubs are now listed on the stock exchange, so if their branding is looking offside it can seriously affect share prices.

FutureBrand had analysed the top 50 teams across Europe, under various heads. It was not just the revenues, but also factors such as the strength of their brands and loyalty of their fans.

Clubs have started academies in far-off places like China and South-East Asia, where football merchandise is a huge revenue earner. Liverpool, Arsenal and Chelsea have all been working on that revenue model to keep themselves in the marketing race.

For the past two years, Manchester United and Real Madrid have been slugging it out for the No 1 spot in terms of returns. Man U has been leader for long, but Real is slowly but steadily taking over.

The worth of a player in the team is often gauged by shirt sales and autographed souvenirs. Some years ago, when Manchester United began expanding its business, Eric Cantona, then their most famous player, had accused his team of caring more about sales and merchandising than the players.

The situation has only become worse. Results matter, but very slightly in comparison to the cash register, which when it rings sounds like sweet music. By way, do you recall who missed the penalty?