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Currencies Direct June 11th 2009 - 2 minute read

Ronaldo deal getting more expensive by the moment as pound hits new highs against the euro

Christiano Ronaldo’s proposed transfer to Real Madrid was announced on the day the pound hit its highest level against the euro for six months – and until the paperwork is signed and sealed every rise will costing the Spanish club more money.

The pound hit 1.17 euros on Thursday, up from lows of 1.07 in January, and currency experts have calculated that each cent the euro falls will cost the Spaniards an extra one million euros.

The GBP80million price the two clubs have agreed would have cost Real Madrid EUR83 million in January when the pound was much weaker, but at today’s exchange rate the same sterling amount will cost Real Madrid EUR93 million.

Good news for Real Madrid supporters

Mark O’Sullivan, director of dealing at the UK’s leading foreign exchange firm, Currencies Direct said: “While the Ronaldo deal is good news for Real Madrid supporters, the accountants at the Bernabeu stadium will be sweating until the paperwork is all signed and sealed.

“Ronaldo’s price in January 09 was 83 million euros, today it is 93 million euros and rising and this will have a tremendous impact on Real Madrid’s plans to amortise this investment.

“This deal highlights the fact that the final price of a player like Ronaldo is very much decided by the currency markets and not always in the board rooms of football clubs – though who would put it past a canny Scot like Sir Alex Ferguson to take all this into consideration too!”

Volatility affects the transfer price

Mr O’Sullivan added: “This is a double edge sword for British clubs. From one hand those that didn’t buy in the January transfer window will find that sterling has appreciated 20% against the EURO since then, thus increasing their buying power.

“However if they are looking to sell players into Europe the strength of sterling means they may have to drop the player’s price to close the deal. Currency volatility not only affects the transfer price but all other elements around the deal: agents fees, commercial rights and players salary.”

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Currencies Direct

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