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.

Wolves get raw deal from FFP

I used to see a lifelong Wolves fan for lunch once a month. He was approaching ninety, but still went to games. Sadly he passed away the other week. As football finance guru Kieran Maguire has noted, Wolves continue to be constrained by financial fair play rules. Radio 4 this morning described them as this year's 'crisis club' and the pessimists have certainly been piling in. Martin Samuel wrote sympathetically in the Sunday Times yesterday, saying that the Premier League drives talent away with regulatory red tape: 'Why could Al-Hilal sign Neves? Because Wolves needed the money. And why did Wolves need the money? Because the club had to comply with an artificial construct known as financial fair play. So Wolves are going skint, yes? No. There is no suggestion that Wolves are in financial trouble, only that they are failing to meet the rigours of FFP. Wolves’ owners appear to have the money to run the club, and invest in the club, and in fact came up with a pow

Gold standard ground boosts Tottenham's income

The gold standard in European football grounds is the Tottenham Hotspur stadium in north London, a £1bn construction project completed in 2019. Its impact on the club’s finances has become increasingly clear as the effects of the pandemic have faded. Previously, the average fan would spend less than £2 inside the ground on a typical match day, but now that figure is about £16, thanks to new facilities including the longest bar in Europe and an on-site microbrewery. Capacity has gone up from 36,000 at the club’s previous home of White Hart Lane to 62,000. The new stadium — built on land adjacent to White Hart Lane — has opened the door to a broad range of other events that have helped to push commercial income up from €117mn in 2018 to €215mn in 2022. Last year, Tottenham hosted US singer Beyoncé for five nights on her global Renaissance tour, two NFL matches, as well as rugby games and heavyweight boxing bouts. Money brought in from football has gone up too. Match day income is

Charlton takeover approved

The long awaited takeover of Charlton Athletic by SE7 Partners from Thomas Sandgaard has been approved: https://londonnewsonline.co.uk/se7-partners-obtain-efl-approval-for-charlton-athletic-takeover/ Charlton have had unhappy experiences with owners for over a decade, so how this works out will remain to be seen. There is certainly potential there, but will it be realised? This interview with Charlie Methven gives detail not available elsewhere: https://thecharltondossier.com/charlie-methven-on-the-record/

The Political Economy of Football V2

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