The Real Madrid Way. Steven G. Mandis
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accomplishment. Generally unnoticed, in the space of fifteen years Real Madrid has gone from near bankruptcy to becoming the most valuable sports team on the planet. Their secret to success, revealed here, is a fascinating story, with implications for industries and organizations worldwide.
How the Book Came to Be
On a weekday morning in 2014, I passed through security at what is considered one of soccer’s cathedrals: Santiago Bernabéu Stadium in Madrid, Spain. It is the home of the celebrated Real Madrid soccer team, but I was not going to a game. Rather, I was headed to a meeting in the executive offices located inside the stadium.
When I arrived, Carlos Martínez de Albornoz, Real Madrid’s director and a key member of the executive team responsible for turning Real Madrid into an international powerhouse, warmly greeted me.2 He looked distinguished, dressed in a conservative suit and tie, his silver hair parted to the side. When he shook my hand, he drew me closer, as if we were old friends. He walked me to his office, and as we talked he came across as levelheaded, thoughtful, and analytical, but he had the Latin warmth of a Spaniard and father of four.
I asked Carlos, “Did you grow up as a Real Madrid fan?”
He chuckled and replied, “Before this job, I didn’t even like soccer. My background is in engineering and managing engineering-related companies. The president of the club plus my wife and kids had to talk me into taking this job.”
What?!
One of the most important executives running one of the most important soccer teams in the world didn’t even like soccer and didn’t want the job! As I sat down, I thought to myself, This should be interesting.
After a few hours, we adjourned to my favorite restaurant in Madrid, El Landó, and continued the meeting over a traditional Spanish lunch. I was fascinated by what Carlos had to say about Real Madrid’s history, ownership structure, financial turnaround, investment in facilities and people, global fan base, style of play, and ability to attract the best players and get them to work together. Since he was a former engineer and now responsible for reporting Real Madrid’s financial performance, I expected that he would have talked about income statements or balance sheets or data analysis and performance metrics. However, what really stood out to me were the numerous times Carlos used the words community, passion, values, expectations, transparency, and culture.
Carlos explained that he had previously worked with Florentino Pérez in various executive and board positions at engineering-related companies. Florentino, a Spanish businessman, civil engineer, and former politician, is chief executive officer of Grupo ACS, the largest engineering and construction company in the world with €35 billion ($38.5 billion) in sales and 210,000 employees. In July 2000, he was also elected president of Real Madrid.
Florentino’s election was a surprise because the incumbent had won the UEFA3 Champions League titles in May 1998 and May 2000. At the time Florentino was elected, however, Real Madrid was close to bankruptcy. In the media, Florentino is most associated with lifting the debt-laden club to their current position as the most valuable sports team in the world and ushering in the period during which Real Madrid signed the best of the best players from around the globe. The term galácticos (“a galaxy of stars”) has been used in the media to describe Florentino’s signing of star players and also as a nickname for the team.4
After the club members elected Florentino to be president of Real Madrid in 2000, he asked Carlos to take the executive role of Director General and focus on selected day-to-day activities—in particular administration, finance, and legal. The fact that Carlos was neither a soccer aficionado nor a Real Madrid fan was precisely why Florentino wanted Carlos to join the executive team. Florentino wanted someone who wouldn’t be swayed by biases or swept up in the glamour or intimidated by the star power of the players. He wanted someone he knew and could trust to apply and execute their knowledge of what was needed to successfully run a global corporation.
Carlos has a son, Lorenzo, who, like me, had worked at Goldman Sachs. By coincidence, not knowing that his father and I would one day meet, Lorenzo had given Carlos a copy of my book, What Happened to Goldman Sachs? An Insider’s Story of Organizational Drift and Its Unintended Consequences (Brighton: Harvard Business Review Press, 2013), which was my dissertation for my PhD in sociology from Columbia University. Its focus is on organizational culture. During our meeting, when Carlos said he had enjoyed reading my book, I thought he was merely being polite. Then he walked across his office and pulled it off his bookshelf. When he opened the book, I could see pages he had marked and sentences he had underlined. I was stunned. Not only had he read my book, I now had a sense of how meticulous and curious he was.
As I got to know Carlos better, my inquisitiveness and fascination remained unabated. The more I learned, the more I wanted to know. During another visit to Madrid and lunch at El Landó, I told Carlos that I wanted to do a rigorous study of Real Madrid,5 taking an analytical and dispassionate approach similar to the one I used in researching and analyzing Goldman Sachs. Unlike any other book written about a sports team, I wanted to investigate both the on-field and business aspects of the club and see if, and how, the two were linked.
One of the things in the back of my mind was Michael Lewis’s bestselling 2003 book, Moneyball: The Art of Winning an Unfair Game (New York: W. W. Norton & Company, 2004), about the Oakland Athletics baseball team and its general manager, Billy Beane.6 The book describes how Beane, a former professional baseball player, uses an unconventional, analytical, evidence-based, sabermetric approach to assemble a competitive baseball team, despite the Athletics’s disadvantaged revenue situation compared to large-market teams like the New York Yankees. Lewis’s book, which is one of my favorites, captures the moment when baseball changed its player selection strategy from a reliance on instinct to data analysis of past performance, a shift that revolutionized baseball and sports management.
The enormous popularity of the book and then the 2011 film Moneyball (starring Brad Pitt and Jonah Hill) solidified the power of data-driven decision-making in the minds of the general public and corporate management teams around the world. While the power of data analysis is undeniable, I was interested in what and how large of a role it played in the overall success of Real Madrid.
Carlos described to me an equally dramatic shift in Real Madrid’s business model, but one that was utterly unlike Beane’s. Instead of being driven by data analytics, the Real Madrid revolution stemmed from an organizational culture centered on the shared values and expectations of the club’s fans. Also, while Beane was a baseball insider, Real Madrid’s revolution was being led largely by a bunch of outsiders! One of the things they had in common, however, was that both innovations were driven out of financial necessity and constraint. I was fascinated by the potential the Real Madrid way has beyond the sporting world—potential that I felt the need to explore and identify. Big money and glamorous stars tended to camouflage what the executives were really doing, and what they were doing can be appreciated far beyond the realm of soccer or Real Madrid.
Real Madrid provided me with unprecedented access, both to people and to data. Over two years, I conducted more than 100 hours of semi-structured interviews with more than twenty people associated with Real Madrid, from the president of the club to current and former players and coaches, to people who work in the stadium, academy, and practice facilities. My research included an entire week in Madrid during which I was given complete access to the club, including being allowed to meet with whomever or see whatever I wanted. Real Madrid staff also thoroughly and promptly responded to at least fifty or so very long information request lists from me. I was provided financial information and statistical data, some of which Real Madrid makes publicly available in its commitment to be transparent. (Real Madrid regularly issues annual reports of approximately 300 pages.)
In addition, I sought my own data and independently interviewed community members; soccer and sports experts; current and former executives and players at competing teams; academics who have studied Real Madrid, soccer, sports, or organizations; sports agents and legal advisors; data analysts; and members of the media. I agreed that I would keep all interviewees’ participation confidential and not quote them, unless