Widening the gap: Real Madrid’s resilience

NO MATTER how much Real Madrid’s fans might be enjoying Barcelona’s economic discomfort at the moment, even the most ardent merengue must realise that in some respects, Real need Barca to keep them on their toes. The competition between the two football giants extends beyond matches, it also includes other elements like influence, financial power and cultural importance.

But while Barca seem to lurch from one crisis to another, Real Madrid’s financial results reveal a relatively well managed club whose status has, to some extent, cushioned them from the very worst of the pandemic. Even with a team in something of a transition period, Real are benefitting from a salary cap of € 739 million in 2021-22 compared to Barcelona’s sub-€ 100 million. 

Real are top of La Liga with 33 points from 14 games and have lost just once. They have scored 34 goals, more than any of their competitors and have a four-point margin at the summit. They’re keen to make up for 2020-21 when they endured a barren season and finished runners-up to city rivals Atlético Madrid. It’s clear even at this early stage that unless something dramatic happens, Barcelona will not be challenging for the title in 2021-22. They’re already 10 points behind, so La Liga may be a fight to the death between the Madrid duo, Real Sociedad and Sevilla.

While many Spanish clubs are posting big losses for 2020-21, Real’s own figures indicate they are one of the exceptions during the crisis. They made a pre-tax profit of € 1.7 million, slightly down on 2019-20, but still impressive compared to the deficits suffered by Barca, Sevilla and others. And this is in a period when their stadium grand plan is taking shape and will cost well over half a billion euros before its completion in 2023. Excluding this project, Real Madrid’s net debt, according to the club, was reduced to € 46 million from € 240 million in 2019-20.

Real have been dealing with the problem of an ageing squad and although veterans like Sergo Ramos and Cristiano Ronaldo are no longer around, Real still have a number of players in their 30s. On the other hand, they have youngsters like the rapidly-developing Vinícius, Rodrygo and Eduardo Camavinga to call on. The squad still needs some work, but the age-reduction process has started. One player enjoying an Indian summer is 33 year-old Karim Benzema, who has become Real’s primary source of goals since Cristiano Ronaldo left the club. Up to the end of 2020-21, the France international had scored 87 goals in the three campaigns since CR7’s departure and has now passed 100 with 16 more in 2021-22. A case of coming out of the shadows?

Real Madrid have made around € 300 million on players sales over the past five years, not to mention the € 106 million profit they generated in 2020-21 – it’s now an important feature of their business model. They are also one of the biggest movers when it comes to acquiring top talent, the “go-to” destination for players at an important stage of their careers. It doesn’t always work out, Real can be a make-or-break place to earn your living. In 2021, have been linked with a lengthy list of possible signings for the next two transfer windows, including Chelsea’s Rüdiger, Liverpool’s Mo Salah and, most predictably, Paris Saint-Germain’s Kylian Mbappé.

While Real’s total revenues, at € 653 million, were at their lowest level since 2017, and represented the end of three consecutive years of € 700 million-plus turnover. The overall decline was 9%, chiefly attributable to an 85% fall in matchday income. Media/broadcasting was up by 35% to € 302 million and commercial income was down by 13% to € 335 million. Both Real and Barca, even after the tweaks made to the Spanish media deal, are so far ahead of their stablemates.

Real’s wage bill fell by 2% to € 372 million and was actually some € 60 million lower than cash-strapped Barca’s squad costs. The wage-to-income ratio is now 57% compared to 53% in 2020, which given the drop in revenues, is probably acceptable.

Real Madrid have qualified for the last 16 of the UEFA Champions League and have a 100% away record in their group. How they managed to lose at home to Sheriff Tiraspol recently is a mystery. They have one game remaining in their group, at home to Inter Milan.The club will be eager to compensate for three consecutive years of disappointment in which they were beaten by Chelsea, Manchester City and Ajax in the knockout phase. Real Madrid may not be the team that won four Champions League titles between 2014 and 2018, but they will still fancy themselves as serious contenders. Is their team, managed by Carlo Ancelotti, as robust as their financial performance appears to be at present? 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.