€100 million for a single player. €15 million per year as salary. After tax.  

 

Those were the figures that were being touted so shamelessly in the market.

 

€100 million. Enough to revamp an entire squad, buy three or four truly world class players and start ushering in a new era. And win trophies.

 

€15 million per year. After tax. Enough to buy a few more Ferraris, one or two Porsches, purchase a villa or maybe a plot in some remote island.

 

So what was the justification?

 

Well first of all, the deal did not go ahead after pleanty of publicity.

 

As was reported on the soccer websites -

 

"But Milan's and Kaka's snub on Monday exhibits that possessing money is one thing, gaining respect and honour is quite another.

 

If Kaka were indeed convinced to join Manchester City, then it would have symbolized the arrival of a true dawn at the City of Manchester Stadium, as possessing a player of Kaka's class and personality, would have imported a sense of serious prestige."

 

A sense of prestige comes at a pretty high price.  Or maybe a ego trip for the Chairman, who often is puttig up his own money.

 

Parallels with business

 

So parallels with corporate M&A?  M&A is often started by rational stragegy, but the price is driven by some pretty irrational thinking.

 

But at least there is some semblance of a busniess case.  €100 million plus €15 million / year.  That is a cost of €175 million for an asset over a lifetime of 5 years.  Where will the increased revenue come from?  certainly not increased tickets sales.

 

But does this really matter.  Sport is not business.  The new owners from Abu Dhabi of Manchester CIty purchased it for €250 million and pledged to inject €660 million and buy 18 world class players. This is explored in more detail in numerous  articles.