As Spain’s economy swoons, prompting a general labor strike ahead of an austerity budget, at least one business in the country is expanding. Real Madrid, the world’s richest soccer team, will build a $1 billion resort on an artificial island in the United Arab Emirates. Real’s resort complex will include luxury hotels, villas, an amusement park, a marina, a team museum, and a 10,000-seat stadium with one side completely open to the sea where Real will play exhibition matches. Watch the promotional video.
The island could open as early as January 2015. The club predicts it will attract one million visitors in its first year.
Why would a soccer team build a resort? Well, its president, Florentino Perez, owns Grupo ACS, one of the world’s largest construction firms. In Spain, many club presidents are elected by the fans, so the more money they spend the more likely they are to get re-elected. Previously, though, Perez had limited his outlay to world-famous soccer stars like David Beckham, Zinedine Zidane, and Cristiano Ronaldo, the so-called galacticos.
It could be that Real wants to broaden its appeal in Asia, home to about half the team’s 300 million fans. The team claims 2 billion people live within a four-hour flight of the island. Perez grandiosely said that “When the Real Madrid Resort Island opens its gates, visitors will become part of the legend of this club, which strives to be eternal and universal.”
In fact, money, not eternal glory, may be at the root of the resort. Sam Wallace of The Independent wrote that “As with all the moves of Europe’s biggest clubs, there is a good chance that Madrid’s motive for backing the island relates to UEFA’s new Financial Fair Play (FFP) regulations forcing clubs to move towards a ‘break even’ financial model.”
Unlike the U.S., where team spending in major sports is usually closely regulated by the league administration, European soccer teams can spend whatever they want. But now UEFA (European soccer’s governing body) is attempting to rein in club spending, worried that a) rich teams like Real and Manchester United have made it impossible for smaller-budget teams to compete, and b) that some clubs, ignoring the poor economic climate, are spending so recklessly on players that they will be bankrupt within a few years.
Perhaps Real, instead of employing less expensive players or expanding stadium capacity, has taken a more creative revenue-creating approach. If so, it better hope the plan works. UEFA threatened the ultimate punishment for teams that don’t break even starting this year: expulsion from the European Champions League, the world’s most prestigious and profitable club tournament. Real, has floundered in the competition in recent years, much to Perez’s dismay. It might well win in 2012. In the quarterfinals on Tuesday, it beat this year’s Cinderella story, Cypriot “minnows” APOEL Nicosia, 3-0, despite being shut-out by the home-side’s stout defense until the 74th minute. Watch the highlights here: