Will Real Madrid's New Star Sink Spain?

Paying 100 million euros for Gareth Bale is not going to bankrupt Real Madrid, nor will it make Spain any worse off than it already is.

The great Gareth Bale saga has finally ended with the 24-year-old Welshman moving from Tottenham to Real Madrid for a record transfer fee of 100 million euros ($132 million).

From the start, Madrid's deep-pocketed pursuit of Bale occasioned all kinds of moral outrage. "Bale's a very good player," Barcelona coach Gerardo Martino told reporters last week. "But the numbers are a lack of respect to the world in general." More pointedly, critics have suggested that it's somehow unseemly for Real Madrid to spend such a vast sum on a soccer player when the country's economic situation has become so desperate that Spaniards are fleeing to Morocco for work.

I don't get this. There's no denying that Spain's economy is a disaster: Its unemployment rate is 27 percent. Next year, the OECD projects that it will rise to 28 percent. But how is this Real Madrid's problem? After all, it's not Spain that's buying Gareth Bale. It's the world's most valuable sports franchise.

Madrid can afford Bale. The club may be carrying a lot of debt -- estimates put it at around 590 million euros -- but it also generates almost as much in annual revenues, which are up a total of 62 percent over the past three years.

Some of Madrid's growth is connected to its rising global profile, which Bale will only help. Some of it is connected to the team's TV deals. The Spanish league allows clubs to negotiate their broadcast rights individually, rather than requiring them to pool revenues. This may be bad for the long-term health of La Liga, but it's good for Real Madrid (not to mention La Liga's other global super-power, FC Barcelona).

You can certainly argue that Bale is overpriced. He may have lit up the Premier League last year, but 100 million euros is 7 million more than Madrid paid Manchester United for Cristiano Ronaldo a few years ago. Really, though, isn't an athlete worth precisely what someone is willing to pay for him -- like any market investment?

We'll see in the coming months and years whether this particular investment pays off, but it's not going to bankrupt Real Madrid, nor will it make Spain any worse off than it already is. Meanwhile, it's going to be a lot of fun for everyone -- even depressed Spaniards -- to watch Bale play alongside Ronaldo.

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    Jonathan Mahler

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