Real Madrid continue to match success on the pitch with financial success off it, the one clearly contributing to the other, but it also requires good financial and commercial management. The financial results for 2016/17 show that revenue rose nine per cent to reach a record high of €675m: Financial results. Revenue for 2017/18 is estimated to be €690m.
Revenues are once again higher than rivals Barcelona by €25m. They are three times as high as those of Atletico Madrid, the next nearest challenger. Manchester United displaced Real Madrid from the top of the Deloitte Money League in 2015/16, but Real Madrid could regain the top spot in 2016/17, depending on the exchange rates used.
In that season the club won La Liga, the Champions League, the Club WC and the European Super Cup. The club regards these trophies as among the greatest sporting achievements in its history. They are regarded as the team to beat in this year's Champions League competition.
Since 2000 revenue has grown at an annual average rate of 11 per cent. It is made up of a balanced mix of stadium, television and marketing, each contributing about a third of the total. For those who think that football clubs never make a profit, Real Madrid has chalked up €221m in the last five years, an average of €44m a year.
Real Madrid have the fifth largest commercial income in the Money League, around €100m less than Manchester United. The two biggest contributors are the shirt sponsorship from Emirates worth €70m and the kit deal with Adidas also worth €70m, but with merchandising benefits.
Since 2012 50 per cent of available cash (€440m) has been spent in net player purchases. They have made a profit from transfers in the last two seasons, although that was partly related to a transfer ban imposed for breaking rules over signing youth players. Even so, the average net spend in the last six seasons has been €9m, compared with €81m in the preceding six seasons. This suggests good judgement in a transfer market where it is all too easy to waste money.
Real Madrid's total football wage bill was €377m, €38m higher than that of Barcelona. Real have spent substantially on extending contracts which makes sense if you want to retain good players who fit into the team.
The wages to turnover ratio did increase from 46 per cent to 56 per cent. This is above the 50 per cent ratio recommended by Deloitte, but below the 70 per cent favoured by the European Clubs Association. It is not an unreasonable level given the general financial position of the club and is arguably necessary to sustain their success.
It should also be noted that the club has spent substantially on infrastructure (€195m). For those who think football clubs do not pay any tax, they shelled out €81m. Another €80m went on interest and loan payment. However, they have consistently reduced debt and (on their figures) have net funds of €10m. This compares with €327m in debt in 2009 and shows the improved financial health of the club.
Match day revenues of €129m are the third largest anywhere, after Manchester United and Arsenal.
Real Madrid have earned €320m from European competition in the last five years, only Juventus have earned more. They earned more prize money (€55m) than anyone else in the Champions League in 2016/17, but only €26m from the television pool, less than Leicester City. This reflected the fact that five Spanish clubs were involved in the competition and the Spanish television deal being relatively small.
Even though profit before tax decreased from €43m to €26m, Real Madrid are clearly in good financial shape.
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