Endrick, Mbappe and Real Madrid’s €1.8billion squad value explained

Real Madrid have already presented one star signing, Kylian Mbappe, this summer and will unveil another one, the Brazilian striker Endrick, on Saturday.

The initial €35million ($38m; £29m at current exchange rates) deal with a further €25m in possible variables for Endrick was announced in December 2022, but international regulations meant he could only join his new team when he turned 18 on Sunday (July 21).

He and Mbappe have bolstered a squad brimming with young talent, including Vinicius Junior, Jude Bellingham, Rodrygo, Federico Valverde, Aurelien Tchouameni and Eduardo Camavinga.

That is the result of some clever business in the transfer market. According to the CIES Football Observatory, Madrid’s squad is worth an estimated €1.8billion — €1.2bn more than it cost to assemble.

So, what do the CIES estimates actually mean? And what do they tell us about Madrid’s transfer deals in recent years?

Most people would associate Madrid with signing ‘galacticos’ but until Mbappe, recent years had been more frugal given the effects of the pandemic and the renovation of the Santiago Bernabeu. The rebuild, which started in 2019, has cost the club more than €1.76billion.

According to the website Transfermarkt, Real Madrid rank 12th for transfer spend across world football since the 2019-20 season. They have spent €650.8million on transfer fees in that time — a far cry from the €1.59bn shelled out by Chelsea or the €1.01bn spent by Manchester United, and less than West Ham United’s €660.7m. They have made a loss of €215.2m on transfers, but that is better than 10 of the clubs above them for spending (Barcelona, with a loss of €145m, are the club with a better balance).

Keeping that figure down is partly thanks to the healthy profits they have made on players they signed at a young age.

There was Casemiro, who they bought from Sao Paulo for a reported €5.8m in 2013 aged 21. He left for Manchester United nine and a half years later for €70.6m at 30, after winning five Champions League titles with Madrid.

Madrid sold Raphael Varane to United a year earlier for €40m when he was 29. The French centre-back was another serial winner who cost them €10m as an 18-year-old from Lens in 2011.

They have done good business involving academy products too. Their sales represent pure profit in accounting terms. Madrid sold the then-21-year-old right-back Achraf Hakimi to Inter Milan for €43m in 2020. That summer, they also offloaded Sergio Reguilon, then 23, to Tottenham Hotspur for €30m. This month, they sold centre-back Rafa Marin to Napoli for €12m.

But not every deal has been a success.

They signed a 28-year-old Eden Hazard in 2019 for €100m from Chelsea, but the Belgian retired last summer after four seasons in which he struggled with injuries and his performances were questioned. That was a turning point for the Madrid hierarchy, who made clear they did not want to spend big on older players after that, deals that would be difficult to balance in the books.

Luka Jovic’s €60m signing that summer also proved costly. He left on a free transfer to Fiorentina in 2022 after scoring three goals in 51 appearances across two and a half seasons for Madrid. His spell at the Bernabeu left such scars that directors feared another ‘Jovic case’ when head coach Carlo Ancelotti requested an elite striker last summer.

When asked by The Athletic, senior Madrid voices said they were not planning for a big sale this summer — but they certainly have the players for it, according to the figures provided by the CIES.

The CIES rates Bellingham as Madrid’s highest-value player (Julian Finney – UEFA/UEFA via Getty Images)

Founded in 2005 by Dr Raffael Poli and Dr Loic Ravenel, the CIES specialises in statistical analysis of the game and has become the go-to method for estimating players’ market values. It is used as a reference point in club takeovers and cases that have reached the Court of Arbitration for Sport (CAS).

Poli and Ravenel’s model, built in 2013, consists of more than 10,000 fee-paying transfers. It focuses on factors including player age and contract length as well as variables such as a player’s experience and the number of goals scored and assists provided before a given transfer.

Here is a graphic showing the change in value for Madrid’s notable players since they joined the club (calculated by subtracting their reported cost from their CIES-estimated value now):

Some of the valuations are surprising.

Take Bellingham, who signed from Borussia Dortmund last summer for an initial €103m, with 30 per cent in variables that could see that fee rise to a club record. The Englishman’s CIES market value is €285.1m after a season in which he scored 23 goals and provided 13 assists in 42 games — making him the highest-valued player in the squad, even above Mbappe.

The Frenchman is valued at €250.7m after joining on a free transfer from Paris Saint-Germain — although his value change is slightly misleading given reports suggest the 25-year-old will be paid a signing bonus in the region of €100m and a €15m yearly salary.

Bellingham has called Vinicius Jr “the best in the world” — but the Brazilian forward is only Madrid’s third-highest valued player according to the CIES. The group estimates he is worth €231.5m — not bad for a player Madrid signed from Flamengo for a reported €45m in 2018.

Other young players illustrate the benefit of Madrid’s approach in the transfer market. Rodrygo is worth €203.21m after joining from Santos for €45m in 2019. Valverde arrived for €5m from Uruguayan side Penarol in 2015 and is now worth €122.3m. Camavinga is valued at €113.8m after joining from Rennes for €35m in 2021.

Even Endrick is valued at €55.7m more than when his €35m signing was announced 18 months ago years ago. He helped Palmeiras to the Brazilian top-flight title last year and finished with 21 goals in 82 games for his boyhood side.

Seven players have a lower value than what they cost Madrid after spending several years at the club, meaning their initial signing fees have been fully amortised — the accounting method used by clubs where a player’s transfer fee is spread out over the years of their first contract — or are close to being so. Eder Militao, Ferland Mendy, goalkeeper Thibaut Courtois, midfielder Reinier Jesus, Jesus Vallejo, Lucas Vazquez and Luka Modric are all in that group.

Modric is given a value of €0 given he is 38 years old and has been at the club since 2012, recently signing a one-year deal with Madrid.

Modric will stay at Madrid for at least one more season (Pedro Castillo/Real Madrid via Getty Images)

Mendy’s value has dropped since signing for a reported €50m from Lyon in 2019 to €20.55m. The French left-back has missed large spells through injury while at Madrid and is 29 years old. Even so, Mendy’s contract runs until 2025 and Madrid have almost fully amortised the €50m fee they paid for him, meaning they could sell him for around €8.3m without making a loss.

Courtois and Vazquez’s drop in value also makes sense given their ages and the time they have been at the Bernabeu. Both are 32 years old. Courtois joined from Chelsea in 2018 and Vazquez is an academy product who has been with the first team since 2015. Militao’s figure is partly due to the time he spent recovering from an anterior cruciate ligament (ACL) injury last season.

Even so, the CIES estimates that Madrid’s squad is worth more than €1bn than it cost to put together. Madrid have a squad that looks set to challenge for titles for years to come — Endrick and Mbappe have only added to the wave of optimism around the Bernabeu.

(Top photos: Getty Images)