Dividends and The Real Madrid Way

In North America we are conditioned by the sports we watch on TV. All sports are played and it is great people play them. If you are a parent, the idea is your children should be exposed to a multiple of sports to determine which one they really like and which would they do not care about. In today’s world, there are as many sports leagues as there are people. In North America football tends to mean the NFL, in the rest of the world, football tends to mean what we call soccer.

In the world of soccer, there are elite teams and they have valuations similar to US Football, one of the elite teams for seemingly generations is Real Madrid which is based in Madrid, Spain. It helps they have won championships along the way, some of the best footballers in the world have played and continue to play for the team. The questions for people on the outside is how does Real Madrid stay consistently in the top teams of the world?

In a book called The Real Madrid Way by Steven G Mandis, published by Benbella Books, Dallas, Texas, 2016 believes it is the values of the team – the book asks How values created the most successful sports team on the planet. Mr. Mandis works at Columbia University in their MBA program.

Real Madrid is owned by club members which there are 92,000 who vote for the President and Board of Directors to run the team. For a number of years, the position of President was held by Florentino Perez who is also the Chief Executive Officer of Grupo one of the largest engineering and construction companies in the world. The club similar to all organizations had great successes, then not so good, and then rebounded. If you like the team on Facebook, you will be joined by 83 million plus other people or the team is followed by people around the globe.

Mr. Mandis believes as the club executive believes at the center of the Real Madrid way for success on and off the field are the values of the community and the resulting culture. The values and expectations of the community drive the decision making throughout the organization from on the field (in player selection, player behavior expectations, style of play and priorities) to off the field (in business and management characteristics, strategy, marketing, investments, financial reporting, human resources, and technology). The Real Madrid management teams spends their time reinforcing and solidifying increased personal connections, relationships, and communication directly with their community members. Management is there to serve the Real Madrid community.

For example, if and fact they do, the community wishes to share content of the games, Real Madrid helps fans share through Realmadrid.com and their social media accounts.

With every sports club because it is a team, the team has to work together which is the reason why values are important. What type of player chosen or not chosen is important. There was a great example of values in the stadium fans. People go to the stadium to both cheer and boo, but sometimes they overstep the bounds on booing, particularly the other team and nationality of the players. Real Madrid told people in one section, which had a reputation to either change or leave and Real Madrid enforced it.

Values are given by all companies, when it comes to making money, many companies overlook attempts to cash in short term and destroy values. If professional sports teams there are salary caps or question how much money goes to players, and how much to run the team. It is for that reason and others, Real Madrid was one of the sports teams to have sports academy training facility to develop its youth and university level courses to teach its experience and model of management. It is also reinvests in the facilities to ensure the facilities for both professionals and up and coming are top rated. If you are a fan of any sports team, there are lessons to be learned from them, even as your cheer for them.

Linking to dividend paying stocks, for dividend investors the primary reason to invest is the long term, yes we all love capital gains, but consistency and profitability are what makes an investment a lasting investment. If the company has the ability to have a seemingly partial monopoly, the ability to raise prices and consistency make profits to reinvest and pay a dividend, they should be prime targets on your list to own. As management changes, how does the new management view continued changes in the world and what keeps them up at night?

There are more questions than answers, till the next time – to raising questions.

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