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Real Madrid more reliant on revenue from player sales

The authoritative Swiss Ramble reviews the 2018/19 accounts of Real Madrid. Profit before tax increased by €10m from €43m to €53m (profit after tax up €7m to €38m). Revenue was a record €757m, but only rose €6m (less than 1%), while profit on player sales shot up €45m to €99m. Real Madrid are highly profitable, mainly due to their ability to generate revenue. In fact, they have made €222m profit before tax in the last five years, averaging €44m a season.

Even though Real Madrid profits have been remarkably consistent, it is evident that they have become increasingly reliant on player sales with average annual profits more than doubling in the last five years to €57m. The 2019/20 budget includes €94m, already achieved by summer sales.

The only revenue stream to increase was international competitions and friendlies, up €13m (13%) to €114m, but the others stagnated: broadcasting was down €5m (3%) to €173m; membership fees & stadium revenue down €1m to €173m; while marketing was flat at €295m. However, the 2019/20 budget estimates significant revenue growth of €65m (9%) to €822m, due to higher sponsorship and merchandising deals.

The €38m profit after tax would have been higher than any club’s profit in 2017/18 with Real Sociedad and Sevilla next best at €29m and €26m respectively. Barca’s 2018/19 profit was only €5m. Worth noting Madrid’s figures include €26m loss from basketball.

The club benefited from €99m profit on player sales, very largely due to Cristiano Ronaldo’s major transfer to Juventus. This was only just surpassed by Barcelona’s €101m profit from this activity and was €45m higher than the prior season’s €54m.

Based on the Swiss Ramble's estimate, Real Madrid earned €81m from the Champions League, even though they went out in the last 16, compared to €89m the previous season (when they won it for the third year in a row). Thanks to their fantastic record in the Champions League, Real Madrid have earned a hefty €383m from European competition in the last five years, which is €38m and €81m more than Barcelona and Atletico Madrid respectively.

Match day revenue of €143m, including membership fees, was the second highest in the world in 2017/18, only behind Barcelona €145m, but ahead of Manchester United €120m and Arsenal €112m.

The €362m wage bill is now significantly lower than Barcelona €501m with the gap widening from €92m to €139m. It is still the third highest in Europe, just below Manchester United.

Following the fall in wages, the Real Madrid wages to turnover ratio improved from 53% to 48%, one of the lowest in Spain and much better than Barcelona 59%. That said, this is still higher than the 42-45% the club achieved between 2012 and 2016.

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