Real one of few clubs not to incur losses

The authoritative Swiss Ramble reviews the latest accounts of Real Madrid.

Profit before tax fell very slightly from €1.9m to €1.7m (€0.9m after tax), despite revenue dropping €62m (9%) from €715m to €653m, as this was offset by a similar sized decrease in operating expenses. Profit on player sales was up €5m to €106m.

The pre-tax €2m profit was an exceptional performance in the circumstances, as other Spanish clubs have posted large losses in 2020/21, e.g. Sevilla €39m, Real Betis €37m and Athletic €25m. All dwarfed by Barcelona’s massive €555m loss (€481m after tax).

The €62m revenue fall was due to COVID €116m (92%) reduction in membership fees & stadium to €10m, while other fell €18m to €5m. However, broadcasting increased €59m (40%) to €208m, competitions rose €11m (10%) to €116m and marketing was up €2m (1%) to €314m.

Barcelona’s revenue loss is much higher, so Real Madrid have once again overtaken their Catalan rivals (€653m vs. €591m), which means a €146m swing in the last 2 years. Both clubs are still much higher than other Spanish clubs, e.g. Atleti €345m, Valencia €172m & Sevilla €171m.

COVID has had a huge impact with many leading European clubs reporting horrific losses in 2020/21, e.g. Inter €246m, Juventus €210m & Roma €185m, which makes Real’s small profit very impressive. In fact, they are one of the few clubs not to incur losses in past two years.

They have become more reliant on player sales, making more than €300m from this activity in the last three years, one of the best in Europe. The 2021/22 budget includes another €108m, largely achieved via sales this summer.

It’s an “arms race” in shirt sponsorships and kit deals, but Real Madrid’s are among the very highest with Emirates and Adidas paying €70m and €110m a year respectively. Emirates deal runs to 2022, while Adidas agreement has been extended to 2028 (merchandising is on top).

Real benefited from La Liga international TV deal rising by 30% in 2019/20, giving total TV rights of €2.0 bn. Although still a long way behind Premier League €3.6 bln, it is comfortably ahead of the others: Bundesliga €1.4 bn, Serie A €1.3 bn and Ligue 1 €0.8 bn.

Based on the Swiss Ramble's estimate, Real Madrid earned €111m for reaching the Champions League semi-finals, €30m more than prior season €80m (only last 16). This is much more than Barcelona €85m, Atletico Madrid €76m and Sevilla €68m.

Thanks to their fantastic record in the Champions League, Real Madrid have earned a hefty €446m from European competition in the last 5 years, which is €25m and €85m more than Barcelona and Atletico Madrid respectively. In Europe, this is only surpassed by Juventus.

Work on the €575m redevelopment of the Santiago Bernabéu stadium continues with estimated completion date of 2023 (€279m investment to date). Funding is in place, charging 2.5% over 30 years. Annual loan repayments of €29.5m will start in July 2023.

Football wages fell €6m (2%) to €372m, due to 10% salary cut in response to COVID and players leaving (e.g. James) or going out on loan (e.g. Bale, Ceballos, Jovic and Odegaard). This is down from €395m peak in 2018. Total wage bill, including basketball €31m, was €403m. Despite the savings, the wage bill is still among the highest in Europe. In fact, in 2019/20 only Barcelona €443m, PSG €414m and Manchester City €401m paid more than them. Budgeted to further decrease in 2021/22 to €366m.

The €372m wage bill was still €60m lower than Barcelona’s €432m, though the difference has more than halved from €139m two years ago. There is then a big gap to the third placed club, Atletico Madrid €227m, followed by Sevilla €133m and Valencia €110m.

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The Political Economy of Football V2

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