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.

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s...

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 ...

Spurs to sell minority stake

Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to ...

The Political Economy of Football V2

Search This Blog