REAL MADRID’S BID to try and catch up with Barcelona’s footballing supremacy could face an unprecedented hitch if the club’s bank hits financial turbulence.
Reports in Spain say the club’s two most expensive players, Cristiano Ronaldo and Kaka – who between them cost the club €155m to buy in the summer of 2009 – could end up being seized by the ECB’s hired goons if the Bankia group hits the skids.
In short, here’s what’s been going on. El Pais explains that Real Madrid president Florentino Perez financed the purchase of Kaka and Ronaldo in 2009 by borrowing €76.5m from his pals at the Caja Madrid bank.
Caja Madrid is a member of the Bankia group, which only just scraped through the European banking stress tests a few weeks ago – but which is nonetheless struggling with a heavy loan book that isn’t taking in much money through repayments.
As a result – just like Irish banks have been doing for a while now – Bankia is going to the European Central Bank, looking for some loans to keep itself in operation. It’s borrowing around €773m from the ECB, and is giving the ECB some bonds as collateral.
Included in those bonds is Caja Madrid’s loan to Real Madrid – meaning that, if Perez can’t keep up the loan repayments, and if the Spanish bank goes belly-up, the European Central Bank could take command of Real’s top players.
The possibility of this actually happening is fairly slim – Spanish football clubs, like their banks, tend to be the receipt of taxpayer bailouts so the chances of Real folding are pretty slim.
The last time Real had a major financial problem, the Madrid city council stepped in to buy the club’s training ground and then immediately rent it back – giving the club an immediate cash injection of millions.
Even if Real was to fold, the Bankia group would also need to default on its repayments before the ECB would send its bailiffs around to pick up the players.
Still, though, we’re going to hold out hope that Ronaldo ends up working at the European Central Bank – because if he’s the one on the other side of the table the next time we’re renegotiating our bailout, Ireland could end up getting a far better deal.
[H/T @izakaminska and @LorcanRK]
