Florentismo Part 3: Analyzing the Evolution of Real Madrid’s transfer policy

This is a three part series. Read part one here; and part two here.

Love him or hate him, Florentino Perez will go down as one of the most iconic football club presidents of all time. Where you stand on that love or hate scale may also influence how his legacy will be remembered most. One thing both sides will surely remember is his activeness in the transfer market. He birthed the dawn of the “Galactico” era. However there has been a major shift in Real Madrid’s transfer policy since 2015/16 — the basis of the Florentismo 3.0 era.

According to transfermarket.co.uk, during his first term, which ran between the ‘00/01 season to ‘05/06, that “Galactico” era, the club had an estimated spending on player purchases of 384 million pounds, compared to only 132 million pounds in transfer fees received from players sold — so a net spending of 252 million pounds. (Worth noting here that, this was an era where 50-60 million pounds was considered a record-like transfer, not the starting quoted price on any top-tier player in the market that we tend to see these days).

During Florentino 1.0, Real Madrid were truly THE purchasing powerhouses in European Football. Perez believed that success on the pitch will create more interest in the club and its superstars, which meant proper commercialization off the pitch. It was no coincidence that the club always negotiated for specific image rights with mega players signed during this period.

During the first part of Perez’s second term — ‘09/10 - ‘14/15 — the pattern continued. Total spending on transfers during this period jumped to a whopping 671 million pounds, and fees received in players sold at 330 million pounds. Total net spend: 341 million pounds.

We did start to see a healthier ratio of fees received vs fees spent towards the second half of Florentino’s second reign — from 2012/13 - 2014/15 specifically. With the club focusing on buying mainly players at age 27 or below, it gave them more opportunities to still be able to monetize players — not just throughout their playing period with club, but also by still being able to sell them at premium value before their playing skills declined. This laid a foundation of how the policy shifted again in the coming years to come.

Florentismo 3.0 – The Asset Manager

There was a clear shift in Real Madrid’s transfer activity during this period, which ran between 2015/16 - 2018/19. While the club still spent heavily in absolute terms (286m pounds, or 71.5m a year, which is higher than the average under Florentino 1.0, another indication of the total inflation in pricing in modern times), there were no more “Galacticos” signed, with the last being James Rodriguez in 2014.

What Real Madrid have done instead is to focus on acquiring as much young talent as they possibly can. During Florentismo 3.0, we have seen the arrivals of many “up and coming” talents such as Dani Ceballos, Mateo Kovacic, Martin Odegaard and Vinicius Jr to name a few.

Real Madrid have been for years acquiring players in their peak or entering their peak years, so it was only logical to harvest this crop of players to its fullest. It allowed for more stability as well with more playing time for players to develop better chemistry. This period has seen arguably the club’s greatest success under Perez, with three Champions League titles in a row and another league title as well.

Adding younger players, allowing them time to adapt on and off the pitch, to learn from more experienced players, and to integrate slowly beforeing expand their roles into key starters — the foundational idea here is very sound. Have your leaders — players like Cristiano, Benzema, Modric, Kroos and Ramos — truly lead the team; while you groom players like Asensio, Morata, Kovacic, Ceballos and Vallejo naturally and gradually.

The lower transfer fees needed to acquire such young talent allowed the club to stockpile players — simultaneously casting a wider net and increasing their chances of one of them developing into a great player. In theory, it didn’t matter which of Kovacic, Ceballos or Fede Valvderde would be the next Luka Modric, as long as one of them is (for NFL fans out there, think of the “draft the best player available” concept regardless of current depth).

It was a good “asset management” strategy as well. Investing in young players was somewhat fail-proof. Players would only get better and can be integrated in team, while others will be sold at appreciated value in relation to their progression as players, or at the very least sold at the same or similar cost of acquisition.

The cumulative data supports that logic. Real Madrid have received 284 million pounds in transfer fees, so pretty much breaking even during this period of spending.

Risks that lie ahead

While this new strategy has been very sound, it doesn’t come with its own set of risks.

In order for players to feel their development is moving forward, they really need sufficient playing time. However, we have seen many cases where this has been a challenge, either due to “overstocking” in one position, or lack of trust of coach in the player to perform in given matches. Real Madrid fans are notoriously impatient with results, hence coaches naturally will always emphasize accordingly short-term results over long term gains. This gets more complicated with the “stockpiling” strategy. Even if Zidane wants to give sufficient time to one central midfielder, its very hard to give time to all three (as we saw in the cases of Kovacic, Ceballos and Fede). On the wing, you have a similar situation with Vinicius, Brahim, and Rordrygo all vying for playing time.

In the long term, one has to also be concerned on how this impacts the rising young players’ decisions to join Real Madrid. For every Vinicius that, for the time being at least, seems to be getting good first team playing time, many other players have not had such luck or opportunity. Real Madrid can (and have) resorted to loaning players to other clubs, but being loaned out has its own challenges. There is no guarantee that players will want to stick around and come back to Madrid. Kovacic, a player who should be entering his best years, lost interest and pushed to stay in Chelsea. Ceballos, a player who always performed well in limited playing time, is getting a hero’s praise for starting (and starring) in his Arsenal full game debut, does he really want to come back to prove himself again?

You have to wonder if within a few years, this stockpiling of talent and lack of real structured development will deter the next wave of Vinicius’s and Odegaard’s of this world to choose Real Madrid to begin with.