The sale of a part of Real Madrid between 5% and 10% that Florentino Pérez intends to propose to the shareholders at the meeting on November 23, would take place through the creation of a new company, which would allow the current structure of the club to be kept intact, according to sources close to the latest draft. The president’s plan provides for Madrid to maintain the nature of a “sports entity” described in its statutes, with the same governing bodies and procedures, without the need to transform itself into a sports club.
This avenue was one of the first explored when Pérez proposed his intention to rework the corporate structure to effectively distribute Madrid’s assets among shareholders and protect them. However, it was discarded due to the difficulties it entailed in introducing the limitations that the president intended to protect on the weight of the deputies. In his speech to last year’s meeting, he explained that he intended the new structure to contain “the necessary elements so that effective control of the club always remains in the hands of its members”.
His proposal includes various limitations to protect this control which is difficult to sustain over time with classic corporate structures. It is expected to distribute the club’s assets equally among its nearly 100,000 members. The number of shares will be permanently fixed at the number of members existing at the time of approval of the plan. At last year’s meeting, Pérez reported that there were then 95,612.
The idea is that even if the number of members increases, which can only happen through the incorporation of children or grandchildren of members, the number of shares does not change. This is one of the safeguards of the plan, which aims to prevent movements equivalent to capital increases of joint-stock companies from diluting the power of the shareholders with the possible sudden incorporation of large quantities of new shares.
These shares would automatically pass into the hands of each shareholder, without the need for any payment. Only one participation in writing, without the possibility of accumulating others. They will not be shares in a company, but their character will be more similar to the membership rights of a golf club. The change that Pérez will propose means supporting the real value of these shares through the sale of at least 5% of Madrid. The price that the investor will pay for this stake will serve to determine the value of the entity, which Pérez estimated at over 10,000 million euros at last year’s meeting. In the case of the recent sale of 57% of Atlético de Madrid to the Apollo fund, for example, the amount paid was used to value the red and white club at 2.5 billion.
The investor’s outlay will therefore also serve to enhance the value of the shareholders’ shares. This would be the actual distribution of Real Madrid’s assets, announced by its president a year ago. These shares can be bought and sold, but only between members, in a restricted internal market in which the club could act as a sort of intermediary that would help put those interested in selling in contact with those interested in buying and who are not already owners, which will be the maximum allowed.
Without the right to decide
Regardless of the entry of the investor who will purchase up to 10%, and who will not have the right to intervene in government decisions, the club will continue to be managed in the same way. The bodies described in the current statute will be maintained: the general assembly, the board of directors and the president, who will be elected with the same procedure in force until now.
Florentino Pérez intends to present these general lines of his proposal next Sunday, November 23, at the ordinary general assembly, which however does not represent the actual start of the transformation plan. The president of Madrid promised last year to submit his proposal to a referendum when he had it ready. This process can only be started in the extraordinary session, which, unlike previous years, this time was not convened on the same day as the ordinary session, and which is therefore awaiting a date.
The meeting of representative partners should decide to hold the referendum, the conditions of which have yet to be specified. The statute mentions this mechanism only for cases of “transformation, merger or extinction”, in which an absolute majority of members with the right to vote is required; not the absolute majority of votes collected at the polls. At the November meeting last year there were 75,937 members, which would require at least 37,969 positive votes. However, as the entire club structure remains in place, it is unclear whether the change falls into the category of “transformation”.
