Why do people keep clubbing Real Madrid and Barca together, when it comes to financial mismanagement?
Flo Perez has been absolutely brilliant in his second term as President ... His first job is to make sure Madrid are a solvent concern and then to win trophies.
I'm using approximate numbers here but in the last 3 years, despite a E150 mil drop in revenues due to Covid, Madrid have maintained an EBITDA of E180 million ... that is brilliant! Currently we have E120 mil of cash on hand excluding the E40-50 mil from the Varane sale.
In terms of Debt:
- Non-stadium Debt of E160 mil: This is mainly working capital debt (virtually every company on the planet has this). Typically secured against assets like player contracts/gate receipts/infrastructure. If Madrid were to dissolve tomorrow - our cash in hand and player sales would easily cover this many times over. This does not affect our operations as working capital debt is constantly renewed (typically is never really paid off by a going concern, and interest rates are low to encourage borrowing). This has no impact on us.
- Stadium Debt of E575 mil: This is NOT a mortgage and the stadium is not used as collateral. I have no idea how Flo Perez negotiated this but this is brilliant for Madrid. I dont believe any player contracts have been used to secure this debt because banks want actual 'infrastructure' as collateral for an infra project - not a contract which may lose its value (player becomes poor). As long as we can pay a fixed E29.5 mil every year beginning 2023, for 25 years, we are set! Nothing is certain in life but is Madrid ever not going to be able to afford a fixed E29.5 mil payment? The new stadium is expected to bring an additional E50-150 mil in revenues depending on who you ask.
We had 30 first teamers at the start of the transfer window. Flo is ruthlessly clearing out the excess players and has informed the board not to expect any major outlay this season. Exactly the tough decisions that a real leader makes.
Financially: we are guaranteed CL, have long term contracts with sponsors, have saleable assets (talented/low wages) and expect to regain sales as lockdowns are eased.
Team-wise: We have a squad that came 2nd in the league/CL semis with a coach who had mentally checked out in the last 3 months (team was on auto-pilot), both main center-backs were perpetually injured, Hazard/Bale were a non-entity and the team was young: Vinicius/Rodrygo/Militao/Chust/Arribas/Blanco/Gutierrez all acquitted themselves well under pressure.