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Is Real Madrid playing the "too big to fail" game?

2009 June 12
by Skip Sauer

That’s what co-blogger Stefan Szymanski implies in this article (towards the end): “Real’s really too big to disappear, whatever debt they can incur… No bank would ever be allowed to be the bank that sank Real Madrid.” Interesting… I don’t know what La Liga’s rules may be with regard to points deduction for clubs going in to bankruptcy. But even if they did, their history would likely be sufficient to restore them to the top, regardless. Certainly, foreign creditors wouldn’t hesitate to pull the plug on Real if that was in their (the creditors’) interest.

Another thought-provoking quote in the article is the opinion of Simon Chadwick:

“Real Madrid is effectively injecting inflation into the transfer market,” Simon Chadwick, a professor at England’s Coventry University, said in an interview. “What we’re going to see is transfer-fee inflation over the next few months up to the start of the season. That’s a serious issue, because it’s something that (soccer) really can’t afford when many clubs have major financial concerns.”

While AC Milan and Manchester United have certainly benefited from Real’s profligacy, I would be surprised if this is sufficient pump-priming to inflate transfer fees this summer. Manchester City’s oil-fueled ambitions may be a factor though. Time will tell.

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