This is a great topic!

Very informative and thorough posts in this thread, which is very nice to see. Speaking of money, i'd like to share with you, in this thread, an interview of Fiorentino Perez, i posted a while back. I find this interview quite relevant to the topic of this disscusion to give us more insight about how Real is being run and that is also the way the top clubs in the world may have to follow it, if they are to compete economically. The interview is from the prestigious France Football, a French weekly magazine, the same magazine which awards the Ballon d'Or each year.
"France Football: How has Real Madrid gone from a gigantesque debt to having a balanced budget?
Florentino Perez: Very simply. When I arrived at the presidency of the club, a year and half ago, its principal problem was an incredible debt of 300.5 Million Euros. Our old installations were not worthy of the best club of the world, based on FIFA's rankings. We have then sold la Ciudad Sportiva, for 480.8 Million Euros and then we have bought a new land of 120 hectares, which is 10 times bigger, for only 2.4 Million Euros.
FF: Your budget will then explode this year!
FP: Our gross volume for this year will obviously not be representative. On the 480.8 M Euros of this real estate deal, we will utilize 360.6 for the 2001-2002 season and 120.2 M Euros for the 2002-2003. Real Madrid should then have a budget of about 600 M Euros. Half of that has been used towards the amortization of the cost of players and we have also been able to reduce the costs of the club by 78.1 M Euros. Thus, that's where this balanced budget comes from.
FF: What is then the actual day-to-day budget of the club?
FP: The objective that we would like to obtain right from the 2003-2004 season is 240.4 M Euros in the revenue column and 192.3 M Euros, in the expenses columns. The difference of 48 M Euros is the profit that we would like to utilize each year towards buying the best players of the world. We want to amortize annually, all these expenses, it is the best way to stabilize the economy of the club over the long term.
FF: What would the new sporting city (Ciudad Sportiva) look like?
FP: It would be built on a very well located place, near the airport and close to the subway, and divided into 4 parts. The first is destined for our 72000 socios (members) , who will have their club in this new sporting city. We will also build a practice centre for the professional players with football fields and the best equipment and a residence for the preparations of pre-matches. The city will also have a youth school, a centre of formation for our 500 youth players to continue to live, practice and continue their studies in the same place. (90 M Euros will be devoted towards the construction of this city).
FF: How about the 4th part?
FP: We want to install a thematic park entirely devoted to football in general and to Real Madrid in particular. It will relate the story of the club thanks to the different techniques that would particularly use the new technologies available; it will also offer attractions, stores, and restaurants…Just like the Disney and Warner parks, but here it would only be about football and Real Madrid. This new sporting city should be built within five years.
FF: Can we compare Real Madrid with Disney?
FP: Real is a brand, just like Disney, known around the world. But we still have some efforts to do in order to have all these people that know Real to become customers. We think that all the fans are in theory, clients of the Real Madrid product. Thanks to them, we would be able to obtain extra profits and then increase the number of fans in all the continents. Our policy of recruiting the best players in the world goes towards that direction.
FF: Can you afford to pay each year stars such as Figo or Zidane, whose transfers have been world records?
FP: If we have the best players in the world, the various television stations and networks, will pay more, the marketing side works great, more and more people come to the stadium and the teams that wish to play against us will have to pay more than 2 M Euros for one friendly game. It’s all a set of elements that allow to make profitable the purchase of these players. It is crucial that the players at Real, matches with the image of the club.
FF: Are the salaries of the stars not weighing too heavily on the budget of the club?
FP: Real Madrid has a special envelope for the salaries, which they must not go beyond. It is for this reason that the salary inflation has to be contained. The salaries represent today 60 % of the club’s budget and we want that percentage to go below 50 %. In order to achieve that, no need to pay the players less, it only requires increasing the profits. Also, there are too many players in the team: we have to reduce that number.
FF: What is your sporting policy?
FP: It is to mix the best players of the world such as Figo, Zidane, Raul or Roberto Carlos with the young players that are coming from our own centre of formation, such as Pavon or Guti. Raul also is from our youth system. As to the economic point of view, we have to make more profitable the potential of the Real Madrid brand. Finally, we have to set up a modern, professional and transparent organisation and dispose of the best installations, in regard with the prestige and image of the club.
FF: Do you also want to sell the Santiago Bernabeu stadium?
FP: No, we would like to improve it. 30 M Euros have been destined for its renovation and modernization. We will also be changing the dressing rooms, redesign the interior of the stadium, from the stairs to the roof. Several restaurants and stores will also be opened inside the Santiago Bernabeu stadium. We will also finally increase its capacity by an extra 6,000 to reach more than 80,000 by 2004. There is not a better-located stadium in the world and it belongs to us.
FF: Since 2002, the Spanish clubs can have access to public fundings. Do you wish to have Real Madrid listed in the Stock Exchange?
FP: It is not possible because the socios that own the club are so happy of its sporting patrimony and of its other values that are being attached to the club, that they do not want to sell anything. I think that if the club were to become a PLC one day, it would mean that it would lose its identity. We don’t want to cede the ownership to no one but the socios.
FF: In this Centenary year, the objective of Real is to win it all. However, the more a club wins, the more it becomes expensive to the club because of all those bonuses to be paid to the players. How do you plan to handle this situation if Real were to succeed in their quest for the treble (Liga, CL, Copa del Rey)?
FP: We are so strong that no insurance company has accepted to cover us only for the double Liga, CL. The only solution for us would be to cover us, but also for the Liga, CL and the Copa del Rey. (Real Madrid is believed to have disbursed 2.7 M Euros for their current contract with the insurance cies Willis and Musini to cover them for the bonuses to the players) In case of treble, the club would have to disburse only 15% of the promised bonuses to the players.