Real Madrid out performed most clubs in COVID era

Real Madrid’s pre-tax profit in 2022/23 reduced from €20m to €9m, even though revenue shot up €121m (17%) from €722m to a club record of €843m, which comfortably surpassed the pre-pandemic €757m peak, and profit from player sales increased from €62m to €71m.

However, all of these improvements were offset by the fact that there was no repeat of the previous year’s €316m capital gain from Sixth Street/Legends.

Marketing increased €40m (14%) from €290m to €330m, while broadcasting rose €8m (4%) from €179m to €187m and other income more than quadrupled from €9m to €39m. Real Madrid earned €118m for reaching the Champions League, semi-finals in 2022/23, which was €16m less than the prior season’s €134m, when they were the winners.

Real Madrid’s profit from player sales increased from €62m to €71m (€104m gains less €33m losses), mainly thanks to the sale of Casemiro to Manchester United. A number of players left on free transfers, including Gareth Bale, Luka Jovic, Isco and Marcelo. This is the highest player trading profit in La Liga to date, a fair way ahead of Sevilla’s €43m in 2021/22. This was in stark contrast to Barcelona’s €42m net loss.

This result means that Real Madrid have remained in profit over the last four years, though their surpluses were much higher before COVID struck. In fact, they have generated profits every year since 2003 and have also budgeted a €10m surplus for this season.

Real Madrid have become more reliant on player sales, making an impressive €439m from this activity in the five years up to 2023, though the average €66m in the last two years was a lot lower than the €102m average in the preceding three years.

The club said that it had become more difficult to carry out significant player sales, both because of the huge losses incurred by most European clubs due to COVID and because of the evolution of the dynamics of the transfer market itself, with an increasing number of players finishing their contracts without being transferred.

Real Madrid’s revenue remains higher than Barcelona, as has been the case for the last three years, with their €843m giving them a €37m advantage over their great rivals. The last time the roles were reversed was back in 2018/19, when Barca were €84m ahead, so there has been a €121m revenue swing since then.

Real Madrid’s €800 stadium loan is made up of two elements: €575m at 2.5% and €225m at 1.53%. The club did well to secure the funding at such an attractive interest rate, which averages out at 2.23%. Adding €159m invoices payable and a €59m stadium adjustment gives the €1,018m gross debt.

It is clear that Real Madrid performed better than most clubs in the COVID era, though they obviously benefited from the major Sixth Street/Legends deal in 2021/22.

The good news is that they still managed to deliver a profit last season even without the help of any economic levers, thanks to a combination of impressive revenue growth and some good cost containment (relatively speaking).

Looking further ahead, the Bernabéu stadium development will represent a major challenge, building up sizeable debt, but it also an opportunity to generate much more money, taking the club close to the elusive €1 bln revenue barrier.

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The Political Economy of Football V2

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