Kaka & Cristiano Rolando pledged as collateral?

Some of you might have heard of this new item already on financial papers. Marca and As didnt seem to cover it in detail, as one would have expected. The story goes something like this.

About 2 years ago, Real Madrid took a loan of €76 million from Caja Madrid one of the Banks of Bankia group to finance the purchase of Cristiano Ronaldo and the Brazilan Ricardo Kaka together for about €160 million euros. The financial situation in Spain has only worsened since then leading to the bankruptcy of many Spanish banks. This past week, crisis has finally hit home with Bankia Group.

Bankia asked for help from European Central Bank (ECB) for an urgent injection of funds to keep the bank's Credit to reserve ration above the safe thresholds. As ECB is not a money printing machine that queues up orders and delivers freshly printed euro bills, they asked Bankia for a guarantee. Bankia submitted the loan of €76mil that they gave to Real Madrid as the collateral.

What does this mean? This means if Bankia fail to repay ECB and were to go bankrupt(unlikely), Real Madrid is liable to repay the loan. In the hypothetical case of Real Madrid not being able to repay the loan or meet the conditions of ECB, we end up with a weird situation on hand. Kaka & Cristiano Ronaldo could be 'seized' by the ECB just like a house or property. But obviously we are talking people, who probably have no idea of what this means or why this is happening.

Let us ignore the worst case scenario, because the chances of it happening are very slim. What really worries me about this is are the following:

1. How many other clubs are in similar situation with other banks?
2. What will happen if the economy in Spain continues to deteriorate and more banks get into precarious position vis-a-vis their CRR and need the support of ECB to survive?

For #1 I am sure there are more such cases, but may not be of the same magnitude but teams like Barcelona, Zaragoza, Valencia etc. have huge debts on their books and some if not most of it must be from banks. El Pais reports that Real Madrid took a similar loan from Banco Santander to make the two deals. This means Real Madrid signed the two players worth 160 million euros with almost zero money from their pocket. The report also goes on to add that Real Madrid is supposed to pay the principal in three installments in June 2012,2013 & 2014.

It is evident that Spanish football clubs are deeply entwined with banks, while this is not a novelty by any means and it is the case in other countries with the top level football leagues, the level of leverage seems to be very high and that is never a good news even when the economy is healthy.

As for #2, this could get real ugly very quickly if the situation worsens. As more banks declare bankruptcy and/or seek the protection of ECB or Banco de España, more clubs and in turn players might end up on the books of these central banks as collateral, assets etc..

All this left me wondering: Why do banks lend huge sums of money to clubs for signing new players?
Agreed that Real Madrid and Barcelona generate a lot of revenue, but still financing deals like this where the club is not even putting 20-30% of the total worth of the deal? RM's revenues this year were ~ 450million(not profit, just revenue), so 2 years ago let us assume that is in the 300+ range. This means Caja Madrid and Banco Santander approved a total of about 160 million in loans which is almost 50% of the revenue generated by the loanee here. I wonder what will happen should Banco Santander need funds and they put their loan with RM as collateral. I am not a financial expert by any means but this seems like a recipe for disaster.

I just hope that this was a thing of the past and banks dont do it anymore.

Going on a tangent here, in the same week we saw the transfer of Santi Cazorla, an iconic player at Villarreal to Málaga for about 20 million euros in cash. There was a lot of disappointment and anger among the fans of the Yellow Submarine. The club president reasoned that this sale is to keep generate enough funds to keep the rest of the stars of the team and be on a good financial footing in the next few years when he expects the financial troubles in Spain and La Liga even worse.

If more presidents of football clubs in Spain think on the lines as Mr. Roig does, we might be able to avoid situations like this in the future.

To reiterate, none of big banks of Spain are in bankruptcy trouble, however they could struggle to keep the CRR above the thresholds if the economic situation deteriorates further.

Will Kaka Leave?

On June 9th 2009, Ricardo Kaka becomes a Real Madrid player after siging for a fee around £57 million. This marks the begining of what looks to be a huge spending spree by returning president Florentino Perez. Perez pledges big money transfers to the fans to bring back European and domestic glory after a disappointing season for Madrid and also the treble winning season by rivals Barcelona. Players like Ronaldo and Benzema soon followed although Real Madrid failed to win a trophy that year. His season wasn't the best either having to miss some of it with injury.

His second season with Madrid saw the arrival of new manager Jose Mourinho having just won the Champions League with Inter. (beating Barcelona along the way was a key reason for his appointment according to others). The spree continued with Angel Di Maria, Sami Khedira, Sergio Canales, Pedro Leon and Ricardo Carvalho. Mesut Ozil was bought by the club after having a good World Cup with Germany. He was considered to be the best rising star out of the tournament . August 5th 2010 and Kaka had undergone surgery for yet another injury initially believed to keep him out for four months. Mesut Ozil began to show what he was bought for with some key dazzling performances for Los Merengues. Mourinho seems to have gotten the best out of the young German for the season in place of Kaka. Ozil has had times drifted out to the right with his left foot, something we rarely see Kaka do. After a lengthy eight months out, Kaka returned to action coming off the bench against Getafe in January. He soon scored against Villarreal in a 4-2 win. In March however, he picked up another injury which kept him out a few weeks. He made his return in style scoring two goals in a 3-6 win over Valencia. Despite his performance, Ozil was still given the nudge ahead of him in the champions league classico in which Madrid lost 0-2 to Barcelona. Kaka stayed on the bench for that game and people began to question why he was never used. Mourinho was sent to the stands for comments to the referee for a red card on Pepe. After the match he said that the sending off did not enable him to complete his game plan. He said that Kaka was supposed to be substituted later on in the match.

One may question that will Kaka be happy at Madrid even if it means sitting on the bench? Mourinho looks as if he prefers Ozil to Kaka for that attacking midfield role and Kaka may not be given as much chances as he would have thought. We have to remember that this is the former World Player of the Year that we are talking about and he may choose the choice of leaving to get more first team opportunities in the latter stages of his career. My view is that the decision is in Kaka's hands. If up to Madrid, he most likely would not be sold as Mourinho sees him as a super sub in games. Also with Kaka possibly on the bench, he gives Mourinho one of the strongest benches in football with plenty of talent to choose from. If he chooses to leave however, the papers are saying that there are about two or three possible suitors after the player. Both AC and Inter Milan are said to be interested in the player. One may question if Milan will really try to acquire a player that they let go of only a few years ago. Inter looks the more realistic option as Sneidjer may be out this summer and the Nerazurri may look towards Kaka. Chelsea are also said to be in the race. Manager Carlo Ancelloti knows the player well from their days at Milan. There also looks like Chelsea will be having a makeover this summer with new players to come and some to leave. However the fact that Kaka is already 29 years old may not convince Roman Abramovich to splash the cash for a player whose best years look behind him. My guess on this is that it's all up to the player himself. Will he choose to stay on the bench or leave to get more playing opportunities. Real Madrid will certainly not want to let a player go who cost them alot of money and also who has only been around for two years.

Hala Madrid: what to do with Kaka

When Cristiano Ronaldo put his Real Madrid kit on, it was as if the club finally had a Galactico in this version of the squad to match the likes of Zidane or Ronaldo, but when Ricardo Izecson dos Santos Leite, Kaka, put on his kit there was a sense of alleviation more than anything. The long, hard-fought battle for the AC Milan ace had been finalized. Everyone drew a sigh of relief and the papers trumpeted both their arrivals but a part of any knowledgeable fan had to say to themselves, "How would they make them all fit in?"

This isn't a game of cromos, where cards are traded and any player can play along-side any other in our imaginary midfield. It was always going to be difficult for Kaka to fit himself alongside Cristiano and adapt to each other's tendencies, even if Kaka had kept himself injury-free. They are mirror images of each other. They play on the wing and drift centrally. Cristiano requires the freedom to move around the pitch, feeding off the tactical and transitional play of others, and so does Kaka.

Should he have stayed at Milan, become the heir to Paolo Maldini, maybe Ricky might have retired a club legend in the rossoneri kit? It would have been the safe thing to do regarding his footballing legacy. You have to hand it to him though for wanting to acquaint himself with new leagues and new experiences. If Pellegrini had stayed maybe he would have made it work, to have two individualistic rovers attacking the opponents half, but Mourinho requires more of his players. He knows that Cristiano won't accept the grunt-work required and he can't have two defensive holes in his midfield. Should Kaka play more over the spent Mesut Ozil? Maybe, but they aren't necessarily interchangeable under Mourinho's system. If anything, Kaka should play if Cristiano is hurt, and while that may make sense in the short term, it doesn't make sense in the long-run. Real Madrid needs more from their superstars.

There are rumors that the Brazilian wants out and he is seeking terms with teams in England or Italy. Chelsea and Manchester City may make him a better offer, and the player may be seduced into returning to AC Milan under reduced terms, but if he truly wanted to thrive and return to some semblance of his former form he would sign with Inter as the man to play behind Samuel Eto'o and in front of Wesley Snejder.

As for Real Madrid? Maybe it's time that they cut their losses and sold the former Ballon D'or winner for a decent partner for Xabi Alonso? That would be hoping for too much. Hala Madrid.

Best of Jornada 22 in La Liga

Time to pay homage to those players that really impressed this past week.


GOAL:

Just for that awesome save that was just out of this world, My hat goes off to Vicente Guaita from Valencia. Incredible piece of skill and timing against Hercules in the derby Valenciano. What vision! What reflexes! What a stretch! Mystifying.


DEFENSE:

Kudos go to a player out of position (Eliseu), an over the hill veteran (Ballasteros) and one who stepped up to the captaincy (Fernando Navarro).

Normally a left winger, Eliseu was asked to play at Left Back for Pellegrini in the Andaluz derby against Sevilla. That said, he was solid and handled his defensive and offensive duties with ease. Shame the finishing by the anchovies was lacking.

Big, thick, over the hill, these are some of the names often heard by Sergio Ballasteros, but this week the central defender had a massive game (no pun intended). He was part of the five man defensive wall, that coach Luis Garcia played at the back against the red hot Villarreal in El Madrigal. The Granotes surprised the Yellow Submarines and Ballasteros did the same. Quality display.

Fernando Navarro was one of the few shining stars for Sevilla in the Andaluz derby. He came through with some critical tackles to halt the Malaga attack and the Euro champion let his actions speak, as he allowed very little goal penetration by the opposing side.


MIDFIELD:

Brasilian superstar, Rikki Kaka had one of his best games with Los Merengues this season. He played with calmness, stealth and velocity. He opened the flood gates, with the opening goal against Real Sociedad at the Bernabeu. The best man on the pitch without a doubt.

After a poor run of form and a consecutive string of losses, Getafe came back to life and trounced Deportivo La Coruña. The one man who was involved in nearly every single play was Jaime Gavilan. Incredible game.

Solid in the center and even bagging a goal, Hernan Bernardello has been a key player for Almería over the past few games. The ex-Newell's hard man has really made the difference for the little Andalusian club. He was instrumental in holding the win against a very difficult Espanyol.

The trickster, el travieso Iker Muniain has been playing out of his skin. The 17 year old enganche received his first call up tothe Spain U-21s and was eager to show Coach Milla that this was not a fluke. Against Sporting Gijon, he started on the wings, but moved into the middle and became the sublime playmaker. I love watching this kid grow and fulfill his potential at Athletic, in front of our very eyes. He is the real deal. It was fantastic to see him play with Ander and Javi Mar in the U-21s this week, as well.


UPFRONT


Messi, Messi, Messi - hat trick king extraordinaire now tied with Cristiano Ronaldo for the pichichi. He ran rampage over Atletico de Madrid with ease. Doesn't he link up so well with Alves, El Guaje Villa and Pedro?

Cristiano Ronaldo was fit to be tied. He is obsessed over that pichichi trophy, so he netted two against Real Sociedad. Incredible drive and skills.

Finally Getafe's coach Michel plays two strikers upfront and brings back Adrian Colunga into the starting eleven. Well, the ex-Recreativo striker proved his worth by scoring a brace and spurring the team on to win in the process. Colunga started off the season slow and nervy, but it looks like the mighty mite has finally found his groove. Stupendous game.


GUAITA (VALENCIA); ELISEU (MALAGA), BALLASTEROS (LEVANTE), FERNANDO NAVARRO (SEVILLA); KAKA (REAL MADRID), GAVILAN (GETAFE), BERNARDELLO (ALMERIA), MUNIAIN (ATHLETIC); MESSI (BARCELONA), RONALDO (REAL MADRID), COLUNGA (GETAFE)

Monday Morning Headlines 01.04

Marca.com
Real Madrid: Four Great Nights: A great game for CR7 who distances himself even more from Messi after two more goals. The excellent sensations that Kaká transmitted, after 240 days. The excellence that Madrid had at Getafe: Parejo, and the selection of Mourinho as best coach of the year. (IFFHS). Higuain-gate: Dr. Caceres: ¨I told them on December 2 that if he didn´t get better in 5 days we needed to operate.¨
Atlético Madrid: New Year, same old life at the Calderón: Cerezo: ¨The public has witnessed another fiasco.¨
Barcelona: Favored in the last 5 games: The referees become supporters to help the blaugranas.
Reaction:  If there were a match-day when reading Marca was as much the equal of reading the Lord of the Rings, a bit of fantasy in the midst of a Christmas vacation, then it´s today. It is idiotic to believe the swill that Marca are selling: Cristiano Ronaldo better than Messi? Kaká in an excellent bit of form? Higuain´s problems down to lack of communication by his surgeon? Add a little dig at Atléti and dig up the Villarrato nonsense to explain why Barcelona won´t lose (ignore the fact that Barcelona are leagues ahead of the crap that is being sold at the Bernabeu) and you begin to realize the fact that you are not reading news. This is Pravda before the wall fell.

The rest of the papers are sleeping it seems. No great headlines.

Ricardo Kaka: Life of a Football Great.

Tuesday, June 30th 2009 is the day we will finally saw a football great joining a giant ... Ricardo Kaka left Milan to join Madrid.

Ricardo Izecson dos Santos Leite (Kaka) was born on 22nd of April 1982 to financially secure family in Brasília.

Kaka's first step in football was when he was discovered by Brazilian club Sao Paulo FC while playing in the youth team Alphaville. Ricardo kaka continued to grow in skill as he was reaching 18 years of age, yet he suffered from a career threatening swimming-pool accident  but his will and professionalism enabled him to make remarkable full recovery. Kaka being  a spiritual individual, he attributed his recovery to god.

His professional football career at Sao Paulo FC made a lot of people turn their heads to a great talent in the making. Kaka made a wonderful debut on January 2001 where he came as a substitute and scored 2 goals in 2 minutes, helping his team to win their only Torneio Rio-São Paulo championship. Kaka made 22 appearances in the next season, scoring 10 goals. Soon enough, kaka was attracting attention for major European Football clubs, that being a sign for the end of his Sao Paulo career. Kaka made 58 caps for Sao Paulo scoring 23 times.

The wise eyes at Italian football club AC Milan saw the raw talent of Ricardo which propelled them to make an offer of €8.5 million in 2003 which was accepted by Sao Paulo FC. It only took Kaka a month to crack his way to the first team line up at milan making his first appearance on the 2-0 win against Ancona in the Serie A. Kaka made 30 caps scoring 10 goals helping his team win Scudetto and the UEFA Super Cup. Next season for Kaka was less impressive as Milan finished second in Scudetto and losing the Final of the Champions League to Liverpool, but Kaka was voted as the best midfielder in the Champions League none the less. Kaka made 36 appearances in the 2004/2005 season.

Shevchenko's departure to Chelsea allowed Kaka to step into more pivotal role at the Milan offense, alternating between the midfield and being a striker up front  in the 2006/07 season. Kaka finished that season being the top scorer at the UEFA Champions League with 10 goals. Kaka won his first Champions League as he provided the two assists in the match which Milan won against Liverpool in the final.Kaka was voted the Vodafone Fans' Player of the Season in a poll of over 100,000 UEFA.com visitors. On 30 August, Kaká was named by UEFA as both the top forward of the 2006–07 Champions League season and Club Footballer of the Year. Kaka made his 200 appearance for Milan mean while winning the prestigious Ballon D'or with 444 votes way ahead of second placed Cristiano Ronaldo. Ricardo Kaka signed an extension of his contract with Milan until  2013 with Milan on February 29, 2008. Having such a wonderful career so far made The Times magazine to name Kaká in the Time 100, a list of the world's 100 most influential people.

Januaray 13th 2009 saw Man City making a £100 million offer for Ricardo Kaka. The player said that he doesn't want to leave his current team but if Milan wanted to sell him he will consider the offer. Milan fans protested the offer, pressuring the Milan administration to end negotiations with the English club.  Yet at the end of that season, Ricardo Kaka would leave AC Milan .. joining another giant in football.

Newly elected Real Madrid president Mr. Florentino Perez was reportedly ready to make a €68 Million offer to sign Kaka from Milan. For the first time there was no denying of the offer and it was attributed later to the declining financial position of Ac Milan. Barlesconi there after was quoted as saying "We cannot allow [AC Milan] to lose £70m [...] The reasons behind Kaká's departure would be economic."

On June 8,  Kaka signed a 6 years contract with Real Madrid for a bid believed to reach the €67.2  million mark thus being the first player to be bought by Perez in his second term as Real Madrid president. Kaka  cited his move as to help Milan improve their financial position, saying Real Madrid was the only club where would have moved.

His International Career is nothing less impressive.  Kaka was called up for the 2001 FIFA World Youth Championship but they were knocked out after losing to Ghana in the the quarterfinal. Kaka made his debut against Bolivia in the friendly which Brazil won 2-0. Ricrdo was part of the 2002 World Cup winning team but he only played 25 minutes in the first round against Costa Rica. In 2003, Kaka was made captain for  the 2003 CONCACAF Gold Cup tournament. Brazil finished runner-ups as they lost to Mexico in the final. Kaka Scored 3 goals in the tournament

In 2005 , Kaka participated with his national team in 2005 FIFA Confederations Cup, playing in all 5 games, winning the championship final against Argentina. Kaka scored 1 goal in the 4-1 win in the final .

the 2006 World cup saw kaka failing to keep up with the momentum of the tournament, only scoring one goal. Brazil was knocked out of the World cup after losing to France in the quarterfinal.

Kaka attributed his absence to play in the 2007 Copa América to his exhaustive schedule. He later returned to play for Brazil against Algeria in a friendly match on August 22, 2007

In 2009, Kaka lead his team to to win the 2009 FIFA Confederations Cup, scoring 2 goals in one match against Egypt and playing in the 3-2 win against the US in the final.

It is worth noting that when ever Kaka scores, Brazil never loses.