What's the biggest difference between a head coach and a technical director?

Your perspective is determined by where you stand. It changes how you see things.

When Gao Shen was managing Manchester City, he also served as technical director, but it was a part-time role. Now, it's full-time, and that makes all the difference.

Only five members of Real Madrid's senior leadership are eligible to attend the club's executive meetings: President Florentino Pérez, Second Vice President and club lawyer De Blas, CEO José Sánchez, Vice President and Head of Public Relations Butragueño, and the president's assistant Manuel Redondo.

This was Gao Shen's first time participating as Real Madrid's technical director, and he specifically invited Zidane to attend as well.

Another interesting change was that Gao Shen's office was no longer at the Valdebebas training ground, but rather in the main Real Madrid headquarters building.

Although the two locations are adjacent and connected by a corridor, their business operations remain clearly separated.

The first topic discussed in the meeting was team sponsorships.

Real Madrid had just signed a 12-year kit deal with Adidas, worth a staggering €2 billion.

In addition, Adidas would give Real Madrid 20% of the annual sales revenue from Real Madrid merchandise and provide another €9 million per year in gear to support the club's football and basketball teams.

This was arguably the most extravagant sponsorship deal in European football at the time.

It also showed that even though Real Madrid's performance this season had dipped, they remained one of the world's most valuable clubs commercially.

From now on, with sporting operations contracted out to Gao Shen, Real Madrid would concentrate all its efforts and resources on commercial development, further accelerating the globalization of the team.

The Adidas extension would further increase Real Madrid's revenue, but the club still needed to keep its wage structure in check.

According to José Sánchez's projections, Real Madrid's commercial revenue would continue to grow steadily this season. However, due to early elimination in the Champions League Round of 16 and lackluster performances in major competitions such as La Liga and the Copa del Rey, the club had lost at least €100 million in direct revenue.

That figure did not include indirect losses.

This was because many sponsorship contracts included clauses tying payouts to team performance.

Not to mention the club also missed out on prize money, broadcasting revenue, and matchday income from further European progression.

Overall, Real Madrid's revenue this season was expected to be flat compared to last year, with no growth.

Of course, poor results also came with one benefit—player bonus payouts would be lower.

Contrary to public speculation, Ronaldo's departure had not significantly impacted the wage bill.

This surprised Gao Shen.

He had originally thought Ronaldo's exit would create room in the salary structure, but that wasn't the case.

He specifically asked José Sánchez about it, only to learn that players like Modric, who had performed well at the World Cup, had renewed their contracts. As a result, the total salary expenditure remained about the same.

The wage-to-revenue ratio was still controlled at 53%, a very low figure among Europe's top clubs.

In terms of total wage bill, Real Madrid ranked second in Europe, still far behind Barcelona. But when it came to overall revenue, Real Madrid significantly outperformed them.

José Sánchez also revealed that Real Madrid currently held more than €200 million in cash on hand, making it the most liquid club in Europe.

The club carried €50 million in bank loans, but once accounts receivable and other assets were factored in, their net debt was negative €40 million—meaning the club was effectively debt-free.

As for the Bernabéu renovation, the team planned to raise €600 million from Merrill Lynch and JPMorgan Chase at a fixed 2.5% interest rate, over a 30-year term, disbursed in three installments across three years. For the first three years, Real Madrid would only pay interest. Starting in 2023, they would pay €30 million annually in combined principal and interest.

Gao Shen had to admit, this was nothing for a club with €800 to €900 million in annual revenue.

Based on the financial report, Real Madrid could easily afford the €250 million total investment required to sign Mbappe this season. In fact, Florentino Pérez hoped to further push forward a youth-oriented rebuild by signing more young talents.

Gao Shen smiled and nodded in agreement.

Financially, Real Madrid was in as healthy a position as any club in the world.

If Real Madrid had financial issues, then most European clubs would have already gone under.

With their current situation, they could sign two or three Mbappés, let alone just one.

Bringing in more young talent wasn't just about rebuilding—it made financial sense too.

Take Mbappe for example. Even at €250 million, on a seven or eight-year contract, his cost would average just over €30 million per year.

That's the advantage of signing young.

For selling clubs like Leeds United, they actually preferred installment payments. It made accounting easier. Receiving €250 million all at once would trigger higher tax obligations.

To be clear, player transfers are not ownership transactions.

Human trafficking is condemned globally, and such behavior is strictly prohibited.

When clubs transfer players, what's actually being traded are their "sporting rights"—intangible assets.

Gao Shen had once come across domestic league regulations, where they were referred to as the "right to use a player's skills."

That's essentially what it is.

Legally, players are always free agents. What gets sold are the rights to their performances or technical services.

Clubs treat transfer income as business revenue, and for tax purposes, installment payments are beneficial to the seller.

...

Real Madrid's current wage structure was quite unique—no one earned an outrageous amount, but the overall wage level was high.

The current top earner was Ramos, whose pre-tax salary was €16 million. With Spain's tax rate at 45.5%, his after-tax salary would be around €8 to €9 million.

Following him were Toni Kroos, Modric, Di Maria, Pogba, Verratti, Marcelo, Courtois, Benzema, Carvajal, and Jesé, all earning more than €10 million pre-tax.

Then came Džeko, Varane, Isco, Asensio, Odriozola, Vázquez, Nacho, Casemiro, and others, who were all between €5 million and €10 million.

This meant Real Madrid had no single sky-high salary, but the team as a whole was very well-paid.

The challenge was maintaining that balance.

Take Varane, for example. His current salary was €7.5 million annually. After the World Cup, Real Madrid wanted to renew his contract, but his agent demanded €15 million, which would make him the club's top earner.

Naturally, Real Madrid refused, and negotiations stalled.

Then there was Pogba, who currently earned €12 million annually at Real Madrid. But both Manchester United and PSG were willing to offer him €17 million and promise him a guaranteed starting role.

At Real Madrid, the midfield trio was firmly established. Even though Pogba's importance was growing, he still had to wait his turn and was limited by seniority.

Now, Real Madrid wanted to bring in Mbappe and were prepared to pay him €17 million per year, making him the team's highest earner, replacing Ronaldo.

As the senior member of the national team, could Pogba accept this?

If he couldn't, then what?

Give Pogba a raise? Then what about Ramos, Kroos, Modric, Di Maria...

Wouldn't they all expect raises too?

Setting aside starting positions, just the salary situation alone was a nightmare to manage.

But what if they didn't offer Mbappe a high salary?

That wouldn't work either.

Leeds United players were easy to buy for three reasons: they were young, their salaries were low, and the club was professional and reasonable.

But Mbappe was a premium asset. His transfer fee was already sky-high. And with PSG also pursuing him, Real Madrid had to match or exceed the offer.

Currently, Mbappe's weekly wage at Leeds United translated to an annual salary of about €8.5 million—very low.

Based on usual transfer practices, offering €17 million annually was standard for a player of his caliber.

This was the calculation José Sánchez had made after Zidane raised the issue of giving more attention to Pogba during the executive meeting.

It had to be said—this was a massive headache.

When Gao Shen was just the head coach, he could hand these issues off to management. But now, he was part of management.

It was easy to predict. Once Real Madrid signed Mbappe, Pogba would demand a raise. And that could trigger a chain reaction.

If not handled properly, it could ruin next season.

For Real Madrid, the current season had already caused a direct loss of over €100 million—not including intangible losses to brand value.

This was the real difficulty behind transfer operations.

...

As the discussion continued, the meeting room suddenly fell silent.

Everyone turned to look at Gao Shen.

Because now, he was the one in charge of Real Madrid's first team.

He needed to make the decisions.

No one knew whether the choice would be right or wrong.

Just like when Manchester United signed Alexis Sanchez—who could have predicted the outcome?

Or back when Real Madrid signed Hazard—who would have thought he'd flop so badly?

"Get Mbappe first!" Gao Shen made the decision.

This had been part of Real Madrid's long-term strategy. The club urgently needed a new top-tier superstar.

And Mbappe was undoubtedly the most suitable candidate.

"I'll have the team draft a detailed plan immediately, to prepare for whatever comes next."

With that, Gao Shen looked toward Florentino and José Sánchez, then turned to Zidane.

"I will build a competitive, elite team while maintaining the stability of our current wage structure."

This was a major commitment.

Unlike matches on the pitch, this was a battlefield without gunpowder. Fans rarely saw what happened behind the scenes.

Even Zidane now realized just how difficult this problem really was.

That was why he stopped insisting on keeping Pogba and Varane.

Buying and selling players isn't the hard part. The true challenge is building a competitive squad and managing team harmony.

That's what truly tests a club's operational strength.

(To be continued.)