Had to leave
Real’s recent history has shown the only way club president Perez has been able to keep them in the black has been to sell top players
It was last Sunday that Florentino Perez presented Real Madrid’s financial results to his loyal cadre of socios compromisarios at the club’s general assembly, the super-socios, who are the only members permitted to attend the meeting, although they are expected to do as they are told.
Unusually there were some hints of rebellion towards Perez, the allpowerful club president who is in his second spell in charge during which he has made it all but impossible for anyone to challenge him. It came from one of his fellow socios, all of whom pay an annual membership fee of about €150 (£134), which is no more than Perez, the multi-millionaire chairman of Spain’s largest construction and utilities company, puts into the club himself.
The socio in question reminded Perez that although they had been to school together, not everyone was in such a strong position to absorb the 10 per cent rise in season ticket prices. Perez snapped back that revenue from membership fees and season tickets constituted just six per cent of the club’s income, as if to suggest the socio should really know his place.
Hardly in the tradition of Santiago Bernabeu’s great vision for his member-owned club and, given the state of the club’s finances under Perez, it is a wonder he is lecturing anyone.
This is the year that the club sold Cristiano Ronaldo, the greatest player in their history, and as the accounts were broken down in detail, you could see why. Without his €100 million sale to Juventus, which also wiped out his €42 million annual wages, Madrid would be posting an €87 million loss rather than a €43million profit.
The accounting impact of replacing Ronaldo with the Dominican Republic striker Mariano, re-signed from Lyon, is €96 million: Mariano cost
€20 million, spread over five years, making his book cost this year just €4 million. He earns €34 million annually less than Ronaldo, altogether lifting €130 million off the costs.
It seems to be not a question of whether Perez should have sold the club’s all-time leading goalscorer, but whether he could afford to keep him.
The club are in the midst of financing a new stadium extension that will not put a single extra standard seat in the Bernabeu, which you might have been thought a priority given membership, at about 92,500, has been closed for years. The new Bernabeu with a shopping centre is Perez’s long-term plan to increase revenues but it is painfully behind schedule.
Since it was first announced in 2011, he has already lost his naming rights backer, the Abu Dhabi energy company IPIC.
The stadium will cost €575million and, given that the president cannot borrow more than 20 per cent of revenue without permission, the assembly voted to approve him sourcing a loan for that amount.
There was more bad news. The club predicted a €45million loss in next year’s accounts on the demolition of part of the stadium and the outdated Esquina shopping mall that adjoins the Bernabeu.
It is listed on pages 142 and 143 of the accounts, begging the question: how will Perez keep Madrid in the black come this time next year? Certainly a €100million-plus bid for Eden Hazard looks out of the question. In previous years, Perez has stayed in profit by selling players: Danilo and Alvaro Morata in the summer of last year and then his most famous name, Ronaldo, in this most recent transfer window.
The Bernabeu project is not due to be completed now until 2023 and there is no intelligence as to whether further losses will have to be borne once this work has been carried out over the next 12 months. But wherever you look in Perez’s Madrid, the club are haemorrhaging money. Despite the sale of Ronaldo, the highest wage bill in European football is not expected to fall. Third-choice goalkeeper Kiko Casilla is understood to be on €3million a year. The left-back Theo Hernandez’s loan to Real Sociedad has had to be subsidised.
Then there is the basketball club, Real Madrid Baloncesto, also the current European champions and always a good insurance policy for Perez if his football team does not present him with a trophy photoopportunity.
Basketball racked up losses of €29million last year for Madrid, a financially doped team who have skewed the European game.
The third-biggest budget in European basketball after Madrid and Barcelona’s teams is that of CSKA Moscow, who operate on €36million a year, only a little more than Madrid lose.
Who is paying for it all? Certainly not Perez, with the club once again borrowing to pay wages in the previous financial year, a loan of about €50 million.
Madrid pay their squad twice a year, in January and then the first day of July. On June 30, those 92,500 Real Madrid socios see their membership and season ticket fees drop out of their bank accounts via direct debit. On July 1, enormous sums are transferred into the accounts of Sergio Ramos, Gareth Bale et al.
Such is life in football: it is not just in Spain where the fans foot the bill. Yet Madrid have made the cut-off for their accounts midnight of June 30, ensuring that the snapshot of their finances is taken for the few hours when they are at their healthiest. For the benefit of a supine Spanish media, this is presented as evidence of their transfer funds.
In 2016-2017 the headline figure breathlessly reported was €178million, this year it was €190million, although this great war chest has a big hole in the bottom: the money drains out the following day to pay the biannual salary bill.
Why did it rise fractionally? Member costs went up 10 per cent, as Perez’s old school friend reminded him. The most famous club in the world raising prices for those who can least afford it.
Madrid make so much money they should be cutting costs for their members, who still have to pay ticket prices on top of their annual socio fee. It is a wonder what three consecutive Champions League titles can do for your PR. The question is, now they have stopped buying the world’s biggest players, what will the socios say if they stop winning its biggest prizes too?
Third-choice goalkeeper Kiko Casilla is thought to be on €3m a year