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? 

Crisis, what crisis? – Barcelona’s problem

LOOK at the facts: top of La Liga, in the last 16 of the UEFA Champions League, crowds of 74,000 people packing the Camp Nou every game, and now top of the Deloitte Football Money League for the first time. Barcelona were supposedly, in crisis mode.

It’s all relative, of course, as some people have noted. Bury was a crisis and they are no longer playing football. Even by elitist discomfort standards, Barcelona’s “crisis” was not a “Manchester United situation”. It’s just that Barca are accustomed to high quality, flowing football and they’ve not been getting that. They’ve been rather spoiled in the Catalan capital.

Coach Ernesto Valverde was the fall guy in this drama and was relieved of his duties by Barcelona. They made a mess of it and were left with egg on their face as Xavi, one of their favourite sons, turned down the job a few days ago. This left Barca in something of a quandry because Valverde had been told by the club that he will be getting the sack – a quite bizarre way to conduct business. Former Barca midfielder Andrés Iniesta has said the Valverde affair was a “bit ugly” and that people should  have more respect for the coach. The whole episode made Barca look very unprofessional and lacking scruples. It also meant the club had to act quickly to find a replacement for Valverde. The baton was passed to Quique Setién, the 61 year-old former manager of Real Betis.

But who exactly is in the driving seat at the Camp Nou? There are hints of player power in Barcelona. Lionel Messi has said he may leave if his “demands” are not met. According to media reports, Messi wanted Valverde to be dismissed immediately and for Ronald Koeman to take his place.  Those same reports suggest Messi also wanted the club to get rid of players who are not good enough and for Barca to sign PSG’s Neymar and Lautaro Martinez from Inter Milan. He recently blamed his team-mates for “childish mistakes” in the Super Cup defeat in Jeddah, the game that added fire to the “Valverde out” movement.

Barcelona cannot afford for Messi to depart as they are still very reliant on the Argentinian and now Luis Suarez is out for a few months they cannot risk losing their talismanic number 10. The “gorilla in the room” is what will Barca do when Messi retires? He has scored 13 goals this season in 14 games in La Liga. Barca’s home form has been good, in nine games, they have scored four or more goals seven times. But away from the Camp Nou, Barca have lost three, drawn three and won four. Big summer signing Antoine Griezmann, who cost € 120 million, has struggled to adapt to the Barca style, but the other big signing, Ajax’s Frenkie de Jong, who cost € 73 million, has been a success. Although Barca are top of the table, they don’t seem particularly happy about it and Real Madrid are breathing down their necks with one of their least appealing teams of recent years.

Valverde’s style did not go down too well with Barca’s fans, even though it was good enough for the club to extend his contract for two years last February. In truth, the writing had been on the wall for him since the Liverpool Champions League debacle in 2018-19 when a three-goal lead from the first leg was thrown away as Barca lost 4-0 in the second leg. Barca also lost the Copa del Rey final last season against Valencia.

In this season’s Champions League, Barca came through their group unbeaten and will face Napoli in the last 16. Goals were a bit scarce – nine in six games – but it wasn’t one of the easiest groups, including Inter Milan and Borussia Dortmund.

Perhaps that’s why Barca were keen to dispose of Valverde – they were still smarting from last season’s capitulation at Anfield and they don’t want any careless slip-ups. Having gone into Christmas ahead in La Liga and qualified for the last 16, they may have wanted a little insurance ahead of the vital games. It was interesting that Valverde criticised the decision to playing the Spanish Super Cup in the Middle East, admitting that the only reason the competition was being played in Saudi Arabia was money. “The bottom line is football has become a business and as a business it looks for income,” he said. Was he trying to force his employers’ arm by speaking out? If he was, it worked.

As for the league, they are going to have to work harder for the title this season as Barca and Real Madrid are level on points. When the two sides met just before Christmas, it was one of the worst clasico encounters seen for some time, adding fuel to the argument that the Spanish giants are both less than formidable at the moment. Setién is a disciple of the Barca style and an admirer of Johan Cruyff, but he’s never won a major honour as a manager. Will his appointment make them any happier?


Photo: PA

Yes, Barcelona are going for the one

BARCELONA are closing in on their target of € 1 billion in revenues by 2020, a figure that will create a new record for the football industry and place them ahead of their peer group. With their Camp Nou stadium redevelopment and a commitment to technology and youth development, Barca’s ambition is very clear. The only dark cloud on the horizon is the eventual loss of Lionel Messi. Real Madrid have shown, to a certain extent, how the departure of an icon can leave a big gap, but just how huge a chasm will be left when Messi goes?

Barca’s 2018-19 financials show record revenues of € 990 million, although to get a true picture of their relative strength, transfers and other fees have to be subtracted. This gives Barca revenues of € 852 million, a substantial increase on the € 690 million generated in 2017-18. Over the past five years, revenues have grown by some 60%.

Barca spend a lot, though. Their expenses run in at € 973 million and their net profit after all things have been considered was just € 5 million. They had a wage bill in 2018-19 of around  € 542 million (up by 2% in 2018-19), the highest in world football by some distance, in fact the highest in professional sport. According to capology.com, Lionel Messi has a base salary of more than € 70 million.  No surprise that Barca have a very high wage to revenue ratio, more than 75%.

With such a high cost base, it is no wonder the club is also heavily reliant on the income it generates from player sales. In 2018-19, this amounted to € 101 million, compared to € 200 million-plus in 2017-18. They also maintain an aggressive presence in the market, paying huge fees for players they have earmarked for their squad. In the summer of 2019, they spent € 255 million on players, including € 75 million for Ajax’s Frenkie de Jong and € 120 million on Antoine Griezmann of Atlético Madrid.

Transfer income aside, all of Barca’s revenue streams were up in 2018-19. The stadium generated € 212 million (+6%), TV and media was up by 33% to € 298 million and commercial income rose by 24% to
€ 325 million. Ticket sales amounted to € 71.6 million, an increase of 17%. Barcelona topped the La Liga attendance table, with an average of 75,600 at the Camp Nou, an increase of 13.5%. Real Madrid, by comparison, saw their crowds fall by roughly the same percentage with an average of 66,600, possibly partly due to Barcelona’s domestic dominance – eight La Liga titles in 11 years.

Barca are focused on the overhaul of the Camp Nou – the Espai Barça development – which will raise the stadium capacity from 99,000 to 105,000. The work will cost just under € 700 million and includes making the stadium the first 5G-enabled in Europe. The club will recoup some of that through a naming rights deal for which there will surely be no shortage of takers. Barca increased their net debt to € 217 million by launching a series of bonds and other securities, totalling € 197 million.

Barca have 142,000 members of which 131,000 are in the city and across Catalonia, but the club is also committed to growing Barca’s global footprint and is pursuing a digital initiative in China, which has seen the consolidation of the club’s presence on Weibo and WeChat. Social media is an important tool in spreading the word and Barca has over 300 million followers on the main channels, including 137 million Facebook friends and 84 million on Instagram.

Barca have offices in high growth areas like New York and Hong Kong and have opened the “Barca Experience” in Haikou, a retail centre and museum, among other things Barca. The club also has 50 Academy schools worldwide and have also recognised the potential of eSports by investing in this growing area where technology meets the game. In fact, the club has also launched an “Innovation Hub” which will drive the investment in technology and data. President Josep Maria Bartomeu consider the hub is the club’s most important project.

Unless something goes badly wrong, Barca will reach their € 1 billion revenue target in 2019-20. In some ways, they are ahead of their rivals in so many areas, but as the club continues its strategic plan to upgrade the Camp Nou, they will also have to ensure competitiveness on the field. The gorilla in the room, though, is what will they do post-Messi?

In Spain, it should not be too difficult to maintain momentum, but Barca also have their eyes on another UEFA Champions League title. The past two seasons have seen them go out after letting slip substantial leads, capitulating to Roma and Liverpool. They’ve got a tough group this season, but Barca will still be the team to beat – at home and abroad.



Photos: PA