The €100m question: how can an economic basket case like Spain afford Gareth Bale, the world’s dearest footballer?

As the Bale deal is sealed, Alasdair Fotheringham in Madrid reports on the Spanish reaction

Gareth Bale, centre, was unveiled at the Santiago Bernabeu in Madrid by Real president Florentino Pérez, right (Denis Doyle/Getty Images)

As former Tottenham star and new Real Madrid signing Gareth Bale stood in the centre of the Santiago Bernabeu stadium on Monday, some 20,000 fans cheered him to the rooftops and chanted his name. Further afield in economically crippled Spain, though, the news that one of their top two clubs had inked the most expensive soccer transfer deal in history – £85.3m – at a time when more than 25 per cent of Spaniards are living below the poverty line, met with a far more mixed reaction.

“Even amongst Real Madrid supporters, some find it hard to understand that such an expensive deal has been reached with things as they are,” Eduardo Rodríguez Alvarez, a football journalist with leading daily El País, said. “Beyond those supporters, it’s been greeted with much less comprehension altogether,” he added.

“The signing has been criticised both inside and outside the world of football. These are the kinds of sums are mind-boggling, although it is true that Real Madrid have always had a taste for signing big names.”

“I find it shocking,” says Jacinto Vidarte, a long-standing Spanish football fan who lives near Madrid, “but that’s just the way this team operates.” The transfer figures for Bale, Barcelona trainer Gerardo Martino said categorically last week, “seem to me almost like a lack of respect to everybody. Beyond that, he’s a very good player.”

The question of how Real Madrid can afford to go on such an expensive shopping spree as Spain records its eighth straight quarter of recession is more complex.

Though Madrid has topped Deloitte’s Annual Review of Football Finance for four straight years with an annual revenue of €513 million for 2011-2012, an increase of 11 per cent on the previous year, there have been reports that the club is in debt to an even greater amount – nearly €600m. Real Madrid last year claimed their debt was much less than that figure.

Critics of the signing also point to the fact that one of Real Madrid’s best known lenders in recent years former was Bankia – the bank central to the toxic property debt at the heart of Spain’s banking problems and subsequent bailout. The irony when the Bale deal – and presumable loan behind it – comes at a time when Spanish banks’ willingness to provide credit to small and medium-sized businesses is according to the European Central Bank among the lowest of the entire EU, has been lost on few, too.

Furthermore, Real Madrid remain under investigation by the European Commission over allegations of illegal state aid dating from a 1996 agreement with Madrid city council. The club have denied the allegations. But at a time when 18 of the 20 Spain’s top tier La Liga football clubs are in financial difficulty, and when average crowd figures are reported to have shrunk to 70 per cent of stadium capacitiy, 20 per cent less than Germany and the UK, buying Gareth Bale arguably looks like a risky policy.

Those defending club president Florentino Pérez’s policy of signing big names for astronomic sums such as Kaká and Cristiano Ronaldo, who cost £140m in 2009, say that merchandising remains the key to the financial gamble.

When David Beckham was in Madrid, over a million fans bought his number 7 replica shirt in the first year alone. And no one disputes that Perez has turned around Madrid’s finances since he became president for a second time four years ago.

As for the how of paying for the biggest deal in history, Real Madrid have a well-grounded reputation of preferring to pay for their transfers in instalments.

Local well-informed sources close to Madrid, who could not be named, say Bale’s deal is for six years, meaning that the payments could be for the same period. But the price still shocks.

“It’s taking us back to a time we should best forget of gross overspending in Spain,” Vidarte said.

“Beckham had a worldwide level of attraction before he came to Madrid,” Rodriguez Alvarez points out. “That isn’t the case with Bale, even though he’s more expensive.”

“Speaking personally, I think the whole of football is out of control here when it comes to spending. If the Tax Office and Social Security wanted here, they could finish it off.”

The next big layout for Spanish sport will be the Olympic Games, with a decision due this weekend, and Madrid with debts of around €7bn, the most indebted city in Spain. However, the Olympics is far less controversial given any future investment will, it is claimed, generate employment for at least 50,000 people. Real Madrid’s signing is for just one.

As for the man at the centre of the financial controversy, money seemed to be the last thing on his mind: “I wanted to come here, even if it was for a penny,” Bale said after his presentation.