Leadership Lessons from Florentino Perez

Florentino Perez, the president of Real Madrid, is not only one of the best presidents football could ever have but also a great example of how to handle issues with your business.

It’s no secret that we are living in a time when competition is very high in any industry, and football is no exception. If 20 years ago there were a few clubs that were financially strong and could afford any player or build any facility, today more and more clubs with billionaire owners have come to market. COVID-19 has damaged the market, and the overall worldwide instability has also affected clubs' capabilities to maintain successful financial operations. Doesn’t that sound familiar, my IT guys? ;)

But we, Real Madrid fans, are very thankful to Florentino for his flexibility and wisdom in making decisions over the past few years. Here is an example of how he dramatically changed the strategy of one of the wealthiest clubs in the world and turned it into absolute success:

Finding players for the squad in a different way - In the past, Real Madrid could spend $100m+ for players to achieve goals and stay competitive on the pitch. However, due to higher competition and a ruined market, the prices of already established football stars now cost more than $200m, which is obviously a ridiculous price. Clubs like Real Madrid, which have only "natural" sources of income such as fans, facilities, or selling players, are not able to afford those expensive players every time. Moreover, the risks are too high if the club eventually buys an expensive player who then gets injured or lacks motivation.

So what did the management decide to do?

They hired some of the best scouts in the world to find exceptionally talented youngsters and started to buy those players from LATAM countries such as Brazil or Uruguay. These investments are designed to reduce the mentioned risks as they could afford to buy 18-year-old players for less than $40m. If these players do not meet the requirements, Real Madrid can sell them or send them on loan and "amortize" the original transfer to a minimum. Moreover, it is also a great tool for increasing the club's popularity in those countries, which will lead to improved monetization in those regions.

What was the result? Real Madrid found exceptional players who are already part of the first team, and some of them are on their way to becoming legendary. It was a long-term investment that required patience from the management, fans, and squad. However, in retrospect, it was one of the best decisions. The team has already won many international and domestic cups with youngsters who are only in their mid-20s. But the most important achievement is that the club recovered from COVID and returned to a leading financial position on its own, which is a role model for all businesses in the world in terms of how to manage your company’s resources properly and plan long-term investments.

Florentino Perez showed that no business has a guarantee of safety. We should adapt to the current market state, even if it’s a club worth billions of dollars, and prepare ourselves for any situation, maybe looking at them from different angles.