Real Salt Lake: Real Madrid backs out of RSL game -> Deseret News/James Edward
Citing finances, Lagerwey said Real Madrid is no longer honoring the contract and instead will be in Colombia the first week of August followed by a visit to Germany the following week.
It's estimated that RSL was supposed to pay Real Madrid $1 million to make a visit to Utah in 2008. With the U.S. dollar so weak right now, that only translates into about 640,000 Euros. Real Madrid has decided it can earn significantly more taking its globally renowned brand elsewhere. Lagerwey couldn't help but admit that from the business side, it made sense for the European super club.
OPINION: Is this really due to the weakening dollar? This deal was announced in March. The average exchange rate for March was 1.55 USD to the Euro. The current exchange rate - 1.56 USD to the Euro. Even if this deal was struck in December when the rumors about it started, there has only been about 6% movement in the exchange rate. The big decline in the dollar that we have all heard about occurred primarily in 2007. I assume that they first would have asked for an additional fee. If the team is citing finances, is this more a case of us backing out and not being able to afford the $1M fee? The currency explanation just doesn't make sense. Somebody is using this as an excuse. Whether it's Real Madrid, or Real Salt Lake is not obvious. But somebody is not telling the truth.
UPDATE: I have learned that the currency explanation in fact doesn't make sense as originally explained in James Edward's article (and I believe that he has revised it). Also, it sounds like this was more of a joint decision by Real Salt Lake and Real Madrid even if initially brought up by the Spanish side. Instead of $1M it appears that the deal was 1M Euro's. This would seem to indicate that the contract was in Euro's and therefore any currency fluctuation would not affect how much Real Madrid received, but instead it would impact how much in US dollars this is costing Real Salt Lake. In fact, RSL would likely have been paying at least 20% more in US dollars to have Real Madrid appear this season versus 2006 simply because of the exchange rate.
In addition to the appearance fee there is also a significant amount of cost to bring the La Liga team to the United States. This can be extremely steep as the Spaniards are used to doing everything in first class. Just the cost of a charter flight can be quite staggering. These costs can be minimized by having more than one stop in the US and having other promoter's share in these fees. With the exchange rate, it is more difficult to get a US promotor (MLS team or otherwise) who is willing to pay the appearance fee expected by Real Madrid than it was in 2006. In this regard, the currency issue hinders BOTH Real Salt Lake and their Spanish cousins. RSL doesn't get to share in some of the expense, and RM earns less in appearance fees for a single tour of the US. My belief is that the lack of other takers in the US for a Real Madrid appearance is the PRIMARY DRIVER for today's decision.
At the same time, there are some special circumstances surrounding the trip to Colombia. It is being done in conjunction with a couple of significant milestones that will be celebrated in Colombia (the "Blond Arrow" may be involved). This likely made the Colombian promoter willing to pay a higher appearance fee than otherwise may be the case.
In addition, the Real Madrid match here was originally envisioned to be played in the new stadium, but the timing did not allow for that. Despite the smaller stadium, this would have been a huge coup for RSL. Look for Real Madrid to appear next season at the new stadium in Sandy (assuming an agreement can be reached).
I believe that RSL may have been put into a situation to make a financial decision in this case. In evaluating this decision, they may have chosen to focus dollars on getting the stadium open sooner or upgrading amenities rather than bring Real Madrid here this season. I have been assured that the partnership between Real Madrid and Real Salt Lake is indeed alive and well and this decision came as a result of that partnership, not in spite of it.
In the meantime, I would expect a Mexican side (or South American club) to make an appearance in August. In addition, a high-level European team may be in the mix as well.
ANOTHER UPDATE: Real Madrid financial troubles
currency rates via www.x-rates.com
