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£41 million Figo presented at Bernabeu

Luis Figo became the most expensive player in the world on Monday afternoon when Real Madrid paid £38.5 million plus tax to buy out his contract at Barcelona. He told a press conference at the Bernabeu stadium: "I hope to be as happy here as I was at Barcelona."

Figo passed a medical in Madrid on Monday morning and ended his five-year association with Barcelona at 1445 when an associate deposited the record-breaking cheque at the Spanish football league's headquarters.

He had earlier spent 45 minutes with Real president Florentino Perez thrashing out the details of his contract. The Portugal winger has signed a six-year deal worth an annual £2.4 million – tax-free.

He is also set to receive a £2 million-plus signing-on fee. Figo will wear the No 10 shirt this season, Real confirmed. He added: "I'm going to try to win as much as I can for Real Madrid. I'll try to bring as much dignity as possible to the name of the club."

Perez said: "I wish to tell Figo that, from now on, this will be his home. Figo, I give you a big welcome to the club, be sure that all of the madridistas are going to love you as much as the board appreciates you."

The president went on to ask the player for "the same professionalism that has distinguished you all these years".

But Barcelona's distraught president Joan Gaspart stormed: "I'll get my own back. I will never forget this."

Gaspart revealed that he spoke to Figo at 0300 on Monday – two hours after his election success – but later admitted it was too late to change his mind, saying: "Once something is done, it is done.

"Figo should be brave enough to say that money can buy everything in life," Gaspart added. "It's understandable that a player should want to earn more and more but Figo can't admit it. Real Madrid will have a player who says he loves the colours but he does not.

"Barca will not take any action against the player or Real Madrid but we will never forget what has happened. I will take revenge."

Barcelona captain Josep Guardiola said: "A one-off player is leaving. It will take a while to get used to seeing Figo kitted out in white. But Figo must have believed that going to Madrid was the best thing for him and his family and I respect that decision."

Another former team-mate, Abelardo Fernández, said: "I wish him all the luck in the world – but only when he is playing for Portugal."

Lluis Bassat, the runner-up in Barcelona's presidential race, blamed his victorious opponent and former chief Josep Lluis Nunez for Figo's departure.

He said: "Figo would be at Barcelona today if Nunez and Gaspart had sat down with the player before Euro 2000. Nunez was the only one who could make a decision but he never made his mind up."

The founder of the Luis Figo Barcelona Supporters' Club in Cedillo, Gonzalo Nevado, was furious that his man had become a Real Madrid player. He added: "This is too much for me and is unpardonable in the eyes of God."

Nevado said that he was disbanding his club and would throw away all memorabilia relating to the Portuguese maestro. "From this moment on, nobody is allowed to even mention his name. I'm taking down everything related to him," he wailed.
 

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I'll never understand how a team who is supposedly millions in debt can buy out contracts for $60 million.
 

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Daeone...I read once that the majority of the big clubs (AC Milan, Inter, Real Madrid and so forth) all have massive debts, English Clubs best run their finances and FC Porto are right up there in terms or running finances...but the deep pockets of the Serie A and Primera owners make the difference.
 

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Well, even with empty pockets, as long as they can make good money for any company (through publicity, and God knows what else), they're alive and rocking.

As for Figo, as I said before, it's not a brilliant way of leaving Barça, and he must have had a lot of headaches making up his mind.

But personally, I believe it was time for him to leave Barcelona, and this seems to be the best time. He's around 28 years old and won't be able to play many more years. He's at his peak and this is the time to get a good shot. If Barça didn't want to leave, they should have done something before Euro2000. They let this elections stuff leave them behind Real. But he's done a lot for the club, so their president shouldn't be throwing attacks on him now. What did he do himself to prevent Nuñez from letting this happen?
 

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All this talk of debt is misleading nonsense.

Any club or company has to be financed by debt or equity (shares)or a combination of both and retained profits.

Football clubs have never been run to make profits so this last category is very small and can be discounted.

If clubs generate an operating surplus this has been spent on better players to aid any clubs main concern - to achieve success on the field.

(btw this may change with SAD's as investors demand the clubs to make profits).

Football clubs have to use debt to finance the best palyers etc as there is a limit to the amount of equity they can raise. With the advent of SAD's this restriction disappears. The club becomes a company. Most companies like to be funded by debt as this is cheaper than equity. The cost of debt is the interest payment, the cost of equity are the dividends that shareholders demand.

Interest is lower than dividends as the loan(debt) is secured against the assets of the club. A shareholder can lose everything if a company goes bust so demands a higher return to compensate him for his higher risk.

The ONLY advantage of equity financing over debt is flexibility. If the club is struggling they can cancel the annual dividend to shareholders, you can't cancel the interest.

Provided a club can meet it's interest payments debt is the best form of finance.

In this respect real madrid etc are very well run clubs.

All this media talk is misleading rubbish peddled by an ignorant media looking for sensationalist stories.

[Edited by Santamaria on 25-07-2000 at 15:12]
 

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Or to put it another way.

take the relationship Assets = Liabilities.

Given that a club prefers debt finance, the higher the debt the higher are the clubs assets (players, stadium etc)

QED the higher the debt the better and more prestigious the club.

In Portugal before the advent of SAD's clubs had to finance their assets largely by debt as it was impossible to raise a lot of investment from shareholders without a market listing.

Much as it pains me to say it the "best" the most prestigious, the club with the most valuable assets in portugal is .....BENFICA.

Their only problem recently has been generating the income to pay the interest that finances these assets that are better than any other club's.

Re Real Madrid, i believe their are no SAD's in Spain so they have to finance their superb assets by debt finance.
Hence their huge debt reflects their huge success. Benfica is only just converting to a SAD so it's huge debt also matches it's huge status/value

[Edited by Santamaria on 25-07-2000 at 15:00]
 

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Santamaria,

I think you mean,

ASSETS=LIABILITIES+SHAREHOLDERS EQUITY. If your equation were true, then the value of any organization would be ZERO and practically insolvent.

However, the rest of your financial anaylsis was well done!

A+
 

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excellent observation there Nelson. I just cam back from the gym and now I see we are talking accounting in a soccer forum...whats next religion?
 

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Thanks Marco,

Shame on me, I should NOT be talking accounting and finance since I am off for the summer. However, I should start getting back in the groove. But Santamaria DOES know his SHI*T. Perhaps Santamaria and myself can join forces and reinvent and reposition SLBENFICA.PLC bringing the eagles back from the red and into black(THIS IS THE ONLY TIME WE DO NOT WANT TO BE IN THE RED!!!)

Oooopppsss I think Santamaria is a Sportinguista? Nevertheless the lad does know his stuff!

Viva o Benfica!
 

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..perhaps he is a fellow finance student such as myself?

well i'm switching programs anyways....
 
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As a Barca supporter, I do agree that Nunez should have done something to Figo's contract, but I expect Figo to be professional. Anyway, if Rivaldo can wait, why not Figo? We have been hearing about Rivaldo's moaning all year round but who would expect Figo to do this kind of thing. He should not have used the elections as leverage to get new contract.
Only a month ago, although I don't have any Portuguese connection, I supported Portugal even more than Spain in Euro 2000 (as I'm supporting Barca); the reason, LUIS FIGO.
But now, he has gone. We, Barca supporters feel so hurt. Anyway, as Figo would be playing for Portugal in World Cup 2002, I'm not sure whether I'll be rooting for your national team. Thanks for the memories, Figo.....:(
 

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sorry nelson, schoolboy error, i'd never want to turn this into an economics forum but the point had to be made that clubs with large debts are not necessarily badly run/in trouble. In fact usually the opposite is true.

Successful clubs like Real generate huge income, which can be used to finance huge debt which can be used to buy huge amounts of assets. people general apply their own relationship to debt to financial companies/clubs.
 
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Gentlemen get over this misconception you have that today's football is somehow based on integrity or loyalty. I applaud Figo for what he did. Barca fans and admin. should be wipping the egg off their face for letting the world's best player get away.

Listen well because I'm only going to say this once:

FOOTBALL IS A BUSINESS, GET OVER IT!

[Edited by Ola on 25-07-2000 at 22:49]
 

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No kidding, Ola. We've been down that path many times. Neither the clubs/owners nor the players are loyal in a true sense. Even the fans' loyalty or lack there of becomes evident when the team does poorly. I was just curious as to how these clubs pay these fees when they claim huge debt. Santamaria, Nelson et al. did a good job of explaining. Are you guys all accountants or what?
 

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Din: I understand many of Barça's fans feelings. OK, Figo can do what he wants, but his credibility doesn't get out of this thing clean. Aparently he did want to stay in Barça, and something got out of his hand. He should know what he was doing, but probably he didn't realise the mess he would get himself into.

Anyway, I won't be his, or any other player's judge. And honestly, wouldn't most people - who want to spit and shoot him - have done much worse without thinking twice?

Leave him alone, and don't forget all the excellent work he left in Barcelona. There's a big diference between a fan and a fanatic.
But I do understand the disappointment you must be feeling right now.
 

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I think Figo had a pretty good idea that he could manipulate the situation. He and his agent did similar things when he left SPorting (signing leters with two different teams). I love Figo as much as the next guy, but I don't believe he was some pawn. At first I did only because I didn't want to think Figo was that way. However, football is football and Figo is just another player, albeit a freaking great one!
 

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I agree 100% with Santamaria and Ola. Sad but true, football is a business like any other in any industry in any country. Players and owners alike are looking for the best return on their investment. BRAVO FIGO! Take the money and run! If he wasn't loyal to the club that developed him, why then be loyal to Barca!

So Santamaria, are you accepting my offer as the CO-CFO of SL Benfica PLC? I am sure we can do a better job than the current administration!

ME an accountant? No just a business and economics teacher
 
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Thanks Game Rod for your understanding words. Hmmm, yeah maybe after all if he can leave S Lisbon before, why not Barca?...:)
Maybe he was thinking in his best interest, good luck to him.....
 

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Boys I am very much impressed with your handle on the economics of football! Santa and Sniper should really look into hooking up with the genius JVA over the finances of Benfica.

Figo did the wise thing for himself and his family...he secured his future. Barca should have altered his contract to reflect his value to the club. However he should have been more honest and direct with Barca's fans. His situation in a sense mirrors JVP as far as fan support, except in this situation the Barca fans have turned on him not being honest.

Ola however is right....this is a business, and the important thing here if you're a fan of the game is the club. Players will always come and go.
 

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I thought I was reading Financial Times! :eek:
JVA is sleeping, with all these economy experts wasting their science here. :p
 
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