Saturday, July 26, 2014

In Acquiring James Rodriguez Real Madrid Continue to Increase Their 'Galactico' Brand Power


Real Madrid have reportedly sold 345,000 James Rodriguez replica jerseys since purchasing the Colombian striker from AS Monaco of France last Tuesday.  

Real’s newest number 10 was bought for a staggering $120 million, however the club’s jersey sales have allowed them to recuperate a reported $35 million of the amount paid to Rodriguez’s former club, due to the amount of “James” replica shirts sold in Spain and around the world.


The trend of signing the world’s most coveted and talented players continues for the Spanish soccer giants, maintaining a model that has seen them become the world’s most valuable sports team according to Forbes, despite ample debt that in 2013 was estimated at $720 million.

Real Madrid’s debt is due in large part to the constant expensive acquisition of top talent, however, it is also the foundation of their brand and prestige.

Under the guidance of current club president Florentino Perez, Real Madrid started a commercial and tactical strategy in 2000, built around buying the most dominant players in the world. As the strategy was openly publicized, the team earned the nickname ‘Los Galacticos’ (the Galactic team) for their constant pursuit, and usual acquisition, of soccer’s superstars.


When Perez initiated ‘Los Galacticos’, his main aim was not to excel on the pitch, even though it was an expected side effect with such supreme talent being assembled. In fact, ‘Los Blancos’ have often been overshadowed since 2000 in terms of quality and competitive success by their arch rivals Barcelona, a team who develop and promote from within, instilling a consistent soccer philosophy from a young age at their legendary ‘La Masia’ soccer academy. With championships and glory a secondary objective, Perez managed the club with one real endeavor - to enhance Real’s standing and prominence as the richest and most prestigious sports team in the world.

Real Madrid has always been synonymous with Europe’s sporting elite. They are Europe’s most decorated continental champions and have possessed several storied dynasties where they ruled domestic and international competitions throughout the last century. However Florentino Perez wanted to separate them from the likes of Bayern Munich, Manchester United, and especially fierce rivals Barcelona, as the world’s stand-alone soccer example. If Forbes’ recent valuation is any measure, he succeeded.

Through their acute and aggressive acquisition of talent, Perez has lifted Real to the status he envisioned. They have won several titles and accolades since 2000, however more important to the bodies that fill their board room, their marketability, brand, and commercial standing has risen to become what all clubs in Europe and all over the world now strive for.

Over the last 14 years, Real Madrid have bought Luis Figo, Zinedine Zidane, the Brazilian Ronaldo, David Beckham, Portugal’s Cristiano Ronaldo, Welsh stalwart Gareth Bale, and most recently, Colombian wonder boy James - all arguably at the pinnacle of their positions at the time of their acquisitions. The assembly of the worlds most popular and talented players has accumulated followers all over the world, converting them into fanatic Real fans due to inevitable attraction of a constant ‘dream team’ stacked with talent.

The ‘Galactic’ strategy strengthened Real Madrid’s brand at a vulnerable time in the economics of sport and soccer. Their star power and authority allowed them to establish a footprint in large markets such as East Asia at time when globalization was galvanizing sports teams with resources never before seen.


The Spanish giants have been able to fend off competition from the heavily marketed, accessible, and economically strong English Premier League, which experienced very fast growth, popularity, and vast resources due to the emergence of satellite television available to mass audiences.

England’s Premier League was the first to make their product available to a global audience, however no English club has been able to overtake Real as soccer’s supreme economic force, due to the pure market power they possess with their superstar brand, making their strategy feasible.

Real Madrid’s economic model is a tough one to sustain even with their strong trends in revenue. The ‘Galacticos’ strategy forces them to spend well over $100 million dollars a year on one player alone, only to fulfill their operating procedure of obtaining the world’s best talent.  Yet with every new player they purchase, their market share and brand power increases.

In the James Rodriguez example, the sale of his emblazoned replica jersey in Real’s iconic white kit in less than a week has already paid for nearly 30% of the player’s acquisition fee, and that’s just in replica jersey sales.  The impact of his addition will also have a resonating influence on Real’s revenue from television rights, gate prices, and commercial sponsorship.

Zidane, Beckham, and both Ronaldos sold a lot of jerseys and compelled the masses to consume the commodity that is Real Madrid.

Like the ‘Galacticos’ before him, a large part of Real’s model is sustained through the commercial revenue that is garnered from its illustrious group of players.  Whether or not Real Madrid receives the value for their investment in Rodriguez on the pitch, his acquisition in terms of brand power and profit has already started to pay dividends.