[Edit, 7/15/13, 2:30 PM: I want to quickly note--and I forgot to mention this below--that one of the best ways for Madrid to get a jump on some of the top-tier competition is to invest heavily in statistics, and not just for medicine. I alluded to it with the line about Manchester City, but I think it deserves a full mention. If you're interested, check out my article on The Atlantic. --Gabe]
This summer, FC Barcelona sold the current crown jewel of their youth system to a German club to-in part-finance the purchase of a relatively unproven but highly regarded Brazilian youngster's contract. Real Madrid, on the other hand, has invested a good sum in younger Spanish prospects-including members of their own youth system-shoring up holes in the current squad while looking forward.
"I've seen this movie before," you might say to yourself. And you'd be almost right. You have seen this movie before. But here's the thing: you don't know how it ends.
Let me explain:
By many modern accounts, Florentino Pérez's first administration's transfer policy-colloquially referred to as the galáctico era-was a failure (see, e.g., this article from 2004, or Flo's tail-between-the-legs exit in 2006). Madrid failed to win a single trophy from 2003 through 2007, despite fielding the most star-studded team in modern history. Now, we have seen the rise of the Barcelona juggernaut, based almost entirely on homegrown Spanish players. Real Madrid is second (SECOND!) in all surveys of Spanish fans' favorite team-and Madrid is by far the most hated side in the country. Why? Galácticos! Pérez! Mourinho!
At least this is the narrative that we've been quietly accepting for the past few years. But it's wrong. Or, more critically, it's deeply flawed.
This narrative is based, at least in part, on a couple years of very damning survey data (see above): in 2013, 41% of Spaniards ranked Barcelona as their favorite team, compared to 34% who fell to Real Madrid. 55% of respondents said that Madrid were their "least favorite" (or "most hated") team. What disgrace!
But here's the thing: this isn't shocking. Or, it's not shocking for the reasons you'd think it's shocking. Real Madrid in 2002, ostensibly one of Madrid's best years-the peak of galacticism-only captured the fandom of 38% of the Spanish populace. In 2007, Madrid had slipped to 32.8%. We're at 34% now. This doesn't look like a team with a popularity crisis-it looks like the normal fluctuations of a team with a strong base that doesn't attract many bandwagoners in Spain.
At the same time, Barcelona's popularity has soared: from 18% in 2002 to 25.7% in 2007 to 41% now-now that's a surge. And it's relatively easy to explain.
Now let me tie this all together: basically I see this data as telling us a very complicated, but explainable story. The first part of the story has to do with history: it seems to me that Real Madrid may have a peak popularity level in Spain. No matter how much the team wins, I would guess that they will never be higher than a certain threshold (maybe 38%, maybe 40%, maybe higher!). This is, in part, because Madrid has historically been the establishment's team-talking about Madrid is a political act in some parts of the country. With that in mind, it's not that hard to see why Madrid might be bounded popularity-wise.
To hate Barça is not as widely known or accepted as hatred of Madrid
Barcelona, on the other hand, isn't burdened with Madrid's unpopularity in Spain. Sure, in some places liking Barça is a political statement. So is speaking Catalan. But it's not a political statement to hate Barça-or, perhaps more correctly, it's not as widely known or accepted as hatred of Madrid.
The second part of the story we know well: people like winners. It really is that simple. If your team wins, and wins consistently for a long time, people will naturally gravitate towards your side-unless, as I said earlier, there are sociopolitical undercurrents that stem or bound the tide. This almost entirely explains, in my view, Barcelona's surge in popularity-and likely their continued placement as Spain's most popular team.
But there's a third part, and it's easy to forget: during the galactico era, there wasn't a really obvious alternative to Real Madrid in Spain (Valencia might get closest). Regional rivalries aside, no one side competed with Madrid year-in and year-out. The way I see it, this historical coincidence left a power vacuum because fans tend to gravitate towards rivalries-and Spain is too small a country to base their entire sporting currency uniquely on regional rivalries. There was a huge, untapped market for an anti-Real Madrid. And Barça cornered it.
And they'll likely remain as the most popular team in Spain for the foreseeable future.
And you know what? That's fine. Because, and, here's the dirty little secret that Florentino knew so well back in the early-2000's: it couldn't matter less. If Real Madrid's popularity has an upper-and probably a lower-bound in Spain, then the only way the team can grow is by engaging with other fan-bases. Engaging new and emerging markets, so to speak.
Now let me come back to my original analogy: you've seen the way the movie I described above plays out.
The best way to engage with more people is to win
Except you haven't: because if this strategy-retreating to Spain-doesn't work, it could be actively poisonous to Real Madrid, a team that remains one of (if not the) the world's most well-known, popular clubs. Real Madrid in 2013 is not Barcelona in 2000. It's bigger. It has more overhead. It needs to continue to expand in order to exist in the market. It can't afford a worldwide popularity dive. This is what Pérez never receives credit for: the galacticos may not have won for four years-but they did maintain (even expand) Madrid's popularity on a global scale.
Yes, the best way to engage with more people is to win. That should always be priority number one (and this was Florentino's biggest failing). But that absolutely does not mean disengaging with the world. If Real Madrid begins to win globally with this squad, then great; but if they don't, then they're in trouble, at least if they continue along the trend line that we're seeing.
So, what does this all mean? Outside of the general advice we can all agree on-just win your f@#$ing games-I have a few recommendations.
First, and absolutely foremost, Madrid should be doing everything in their power to keep Cristiano Ronaldo. More money? Sure. More institutional clout? Sure, just keep him away from any major decisions. More face time with the coach? Yup. The guy is worth way, way more than Madrid is paying him.
Second, they need to re-engage with certain global regions. So far, Florentino has focused his energy on Asia and parts of Africa and the Middle East. That's great. But there should be more invested in the Americas, specifically in the South and the emerging United States market. There are lots of ways to do this. One is the galáctico model-just have the best players from the countries come to your team, then go there for pre-season. That works well, and it's what Barcelona's doing so well right now in the South. But there are other ways to engage: namely, make sure your brand is accessible! For example, right now, BeIN owns the rights to broadcast La Liga in the United States. This is spectacularly bad for Spanish soccer. The United States is a huge market and BeIN engages with precisely none of it. Even without reimagining the way the league works out its international television rights, there are other ways to engage: I'm thinking about Manchester City's work in particular. Why doesn't Madrid invest in an American franchise and use it as a C team? The general consensus on City's move-investing in New York FC-is that it is risky and a bit odd; I think it's brilliant (like other things City has done).
Finally, have a series of long conversations about institutional culture. I love that Madrid is popularly owned. It's really cool, one of the best things about the club. But my god this team needs an institutional makeover. I don't know the best way to do that, but I basically think almost anything would be better than the current structure. So let's talk about that.
Author's Note: You probably don't remember me. That's good-it means that our amazing team has done their jobs perfectly. Like Clint Eastwood in Unforgiven, I used to be a regular around these parts before my wife cured me of my evil ways-my wife being law school, and my "evil ways" being the EIC of MM. And, well, like Clint Eastwood in Unforgiven, I'm back to my old whiskey-drinkin' gun-shootin' ways, for a bit at least. I'm incredibly proud of the staff we've assembled at MM-in fact I think the best thing I ever did for the site was hiring these awesome people. I want to personally thank Lucas for what he has done, continues doing, and will do for the site. I couldn't have imagined a better replacement. And I want to say thank you to all of you for making this site such a great community. Hala Madrid.
 The USA actually is big enough for this. That's what we see with the NFL, NBA, and MLB. This regionalization is only spurred on by the division system, which splits up the leagues geographically (at least in theory). There's no need for this in Spain.
 Aaaaactually, it could matter slightly less: Spain's government is currently helping to prop up Real Madrid (and Barcelona, of course) as their banking system staggers to its feet. If Madrid's fiscal stability weren't tied to Spain's economy, then this wouldn't even be a question.