Real Madrid leaves Barça behind in financial battle

Last week Barcelona and Real Madrid announced their year reports. Both clubs claimed ‘the largest revenue obtained by any sports institution in the world’.  At the time, they both were right. And although both reduced their debt significantly, Los Merengues leads this financial battle. FC Barcelona is happy to announce they reduced their debt with fifteen percent. Real Madrid reduced more than thirty. A fact that signs the financial differences between the rivals. In this article we review and compare the financial situation presented by the big two.

Turnover

 

At their presentation of the annual report both FC Barcelona and Real Madrid claim to have ‘the largest revenue obtained by any sports institution in the world’. In fact, none of them was lying. Barcelona presented their annual report two days earlier than Real Madrid and at that moment they had the greatest turnover (473 million) in the history of sport. Two days later presented Real Madrid a turnover of 480 million. Just seven million more than their rivals at Camp Nou.

During the season 2009/2010 both clubs gained almost the same amount of money from commercial activities and media. The difference Real Madrid made was because of their stadium income. They earned almost 150 million thanks to the Santiago Bernabeu and supporters. Barça only got a ‘lousy’115 million.  With commercial activities Real Madrid also generated more money than their rivals.

Last year the income from Barcelona’s Camp Nou increased with twenty million. On top of that, Barcelona sponsors generated another rise of thirty million. Real Madrid didn’t announce the structure of their turnover yet, but their total revenue increased with nine percent. The Barcelona revenue increased with fourteen percent, which is especially thanks to their great performances on the pitch.

Expenses

The real difference between FC Barcelona and Real Madrid is not revenue, but expenditures. Real Madrid are known as shopaholics in football, but in fact Barcelona spends more on players. They have spent more than 480 million last year. It makes them the sportclub with the highest expenditures in history.

A year earlier the Barcelona expenses were even worse. It led to a record loss of eighty million euro. At that time their total expenses were close to the magic border of 500 million. To prevent another catastrophic bookyear Barcelona tries to change their club statutes. They want to add a passage which says that doesn’t allow the club to have a financial loss at the end of the year.

Real Madrid is a lot more polite in that way. Ofcource, spending 450 million a year is a lot. But when you got a net profit of thirty million, it is acceptable. It has been different in the past, but at the moment Real Madrid makes profit. A healthy development.

The difference between Barcelona en Real Madrid is mainly caused by the amount of player salaries. In Madrid 45 per cent of their income is going to players in form of salary. FC Barcelona spend up to 67 percent of their income at Messi and co. A year earliertheir players  earned a shocking 77 percent of the revenue. In fact not only their football players earned the salaries, but also other sections of sport. If we only look to the football section of FC Barcelona, their players earned 57 percent of the income. Still a lot more than their biggest rivals.

Debt

If you look at this numbers you wouldn’t be suprised to hear that the total debt of FC Barcelona is much higher than the debt of Real Madrid. Despite losing fifteen percent of their debt, the debt of Barcelona still reaches an immense 364 million. The board wants to bring this debt back to two hundred million on a short term.  Barcelona doesn’t have to be concerned about the UEFA Financial Fair Play. The FFP says that the total debt have to be less than the annual revenu, which is already the fact at Camp Nou.

Meanwhile Real Madrid is busy eliminating their debt. Last year they reduced their debt with thirty percent to 170 million. The last couple of years, Real Madrid made a profit of at least twenty million. So it is just a matter of time before Los Merengues will be without a debt. A great advantage to Barcelona, that pays many millions on their debt each year.

Future

The future of Real Madrid looks very healthy, so far. The successes of Barcelona on the pitch seem to mask their financial problems, but sooner or later their sportive successes will come to an end. At that moment they have to trust on a good organisation and solid finances, but there isn’t a financial basic in Barcelona at the moment, except their policy of paying players relatively low salaries and high bonuses, which automatically decreases their expenditures in less fortunate times.

That is also the greatest concern of the Barcelona board at the moment. The club is already busy changing their statute, in order to take less financial risks in the future. The board also make plans to extend Camp Nou with another ten thousand seats, with the purpose of a higher revenue. The board is however not planning to cut in the player salaries. The total player salaries are just getting higher and higher, with the arrival of Alexis Sanchez and Cesc Fabrégas. Nevertheless Barcelona is expecting to cut the expenses with fifty million. Where this amount of money has to come from stays unclear.

Meanwhile Real Madrid is preparing for a new era of success. Just as Barcelona they have a fantastic squad on the pitch, with great individual qualities. The difference with Barcelona is that Real Madrid doesn’t need to cut on their expenses. Sooner or later this will be visible on the pitch. On a longer term a championship of Real Madrid cannot wait much longer. The basic for this success was not made on the football pitch, but in the boardroom.

About Pieter Zwart

Pieter is naast eindredacteur bij Catenaccio ook bureauredacteur bij Voetbal International. Hij is al vanaf het begin betrokken bij Catenaccio. Pieter richt zich vooral op financiële en tactische analyses, maar schrijft ook andere onderzoeksartikelen. Volg Pieter op Twitter | Meer artikelen van Pieter