Real Madrid consider ‘splitting club in two’ as part of changes to ownership model

Real Madrid are considering changing their 123-year-old ownership model, and are looking into some potentially drastic changes. Veteran President Florentino Perez appears keen to carry out some form of evolution before he leaves power.

The 78-year-old Perez declared that the club were looking into changing their ownership model at last year’s General Assembly, and that would potentially involve foreign investment in the club. Earlier this year, Perez and Real Madrid requested a study from investment firm Clifford Chance into the viability of converting each membership into a share in Real Madrid Foundation, which would see the Foundation become the club’s majority owner. However Clifford Chance advised against this course of action due to some of the legal complexities.

Real Madrid ‘stepping up’ plans towards ownership model change

Currently, the club are 100% member-owned, and the President, in this case Perez, is elected. The Athletic report that Los Blancos are stepping up their efforts into changes to this ownership model, and Perez will give more information on a potential shift in this year’s General Assembly, which is yet to be organised.

One option that has been discussed is ‘splitting the club into two different entities’; one side dealing with the football, and one with the business. This would allow investors to buy shares into the latter, and fans to retain control over the former. Another alternative discussed is the ’50 + 1 share model’ in operation in the Bundesliga, where fans must remain majority shareholders. However they go on to say that the financial and legal details of this remain difficult to work out.

Perez’s red flags for Real Madrid shift

A drawback of the latter for investors is that they would not have decision-making power, making it less attractive. Yet control over hiring and firing managers is a decision that Perez wants to remain with the board, and he has previously stated that he does not want a foreign businessperson to be in charge of the club. The idea is that the members remain a powerful voice.

It seems that Perez is keen to bring in more finance from external sources, but ultimately without sharing the profits or the power, it will be a difficult compromise to pull off. Any change in ownership will likely be subject to a vote for the club’s membership, and Perez will have to convince the members that further investment would be worth that sacrifice.

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