Record signing fee becomes political football in struggling Spain

Real Madrid's move to sign Cristiano Ronaldo for a world-record US$132 million ($206 million) fee has become a political football in Spain.

Caja Madrid, Spain's second-biggest savings bank, said this week it approved a €76.5 million ($167 million) loan to the soccer club. Matias Inciarte, a vice-chairman of Banco Santander, declined to comment on reports the bank is lending a similar sum. The loans provoked criticism from business leaders and politicians.

"It's not a very good example in such a serious economic situation," Lorenzo Amor, president of Spain's National Federation of Self-Employed Workers, said. "How many small and medium-size businesses could have been saved with that amount of credit?"

Spain is stuck in its worst recession in 60 years and banks are tightening lending as bad loans rose to 4.27 per cent of total credit in March, the highest since 1996, compared with 1.2 per cent a year earlier, the Bank of Spain said. Some 87 per cent of self-employed workers and small businesses found it "difficult" to get credit in the first quarter, compared with 50 per cent a year earlier, Amor said, citing 13,000 businesses surveyed by the Madrid-based federation.

A Caja Madrid official, speaking on the bank's customary condition of anonymity, said Real Madrid offered a "double" guarantee to support its loan request, without giving details.

Real Madrid spokesman Luis Villarejo said he couldn't comment in detail about the loan. The soccer club, which had debts of €563 million in June 2008 according to club accounts, also signed Brazil's Kaka for €68 million last week.

Spain's Finance Minister Elena Salgado said she hoped banks would lend more to businesses to help kick-start an economy that she says will contract 3.6 per cent this year.

"I'm not a soccer fan so it's difficult to evaluate the decision" to buy Ronaldo, Salgado told Television Espanola.

"What I would say to the banks is if they have liquidity then lend to small and medium-size companies and families. Make an effort for them, too."

The 24-year-old Ronaldo is set to get a salary of €9 million, according to El Pais newspaper.

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