Real Madrid could face having to give up ownership of both Cristiano Ronaldo and Ricky Kaka to the European Central Bank (ECB), reports El Mundo Deportivo.
A financial crisis at Bankia, the bank that lent money from the ECB to help pay for the players, has meant that a knock-on effect of the transaction could result in Real having to relinquish the rights to both.
According to information released by the National Securities Market Commission (CNMV), the Spanish giants obtained a loan of €76.5m on June 23, 2009 from Caja Madrid, which was subsequently taken over by Bankia, a banking conglomerate formed in December, 2010 that merged the operations of seven financially-stricken regional savings banks.
Real Madrid now face a first repayment of €25.5m on July 3 – an amount close to the annual profit the club makes – for the loan, used towards the purchase of both players in June, 2009. That summer, Ronaldo cost the club €94m from Manchester United and Kaka €68.5m from Milan.
Under the agreement signed between the capital outfit and Caja Madrid, the guarantees submitted by club President Florentino Perez involve advertising and players’ image rights, the basis on which Perez has in the past used to justify the profitability of large investments in players. Much of the rest of the money put towards the signings of summer, 2009 (when Real spent €250m) also came from other banks such as Banco Santander.
A potential problem Perez could have to now confront is that in light of a change of presidency at Bankia, there have been rumours it may be taken over and funded by the state to ease the financial crisis it is currently undergoing.
In addition, when Madrid initially borrowed the money, Bankia put up two of its most valuable assets – Ronaldo and Kaka – as collateral with the ECB, to ensure that it would actually receive the cash to loan the club. Therefore, if Bankia now defaults on its own loan then the players could in theory become the property of the ECB, something the new Spanish champions would naturally wish to avoid at all costs.
At the time of the high-cost transfers of the footballers, the signing of the loan from Caja Madrid to Real Madrid caused a certain amount of indignation in Spain. The country was – and still is – in financial crisis and it coincided with many individuals and businesses failing to secure loans of their own, at a time when the perilous economic situation was first starting to take a hold.
Today, that agreement could well turn out to haunt Perez if the current state of affairs continues to spiral out of control, although for the players’ ownership to pass to the ECB then Bankia would have to be declared insolvent. At the moment this seems unlikely as at the beginning of May the Spanish government took out a 45 per cent stake in the bank, which had a €4.47bn loan converted into shares.
Nonetheless, it is a worrying situation not only for Real Madrid but the whole of Spanish football, particularly since many clubs (like other companies) have applied for and been given bank loans. In view of this, if such a situation could happen to the recently-crowned La Liga winners then it could have even worse repercussions for other, less affluent outfits who have also attempted to live beyond their means.