Real Madrid have been asked to explain why €122m in expenses have not been explained in their club accounts.
The Telegraph released an exclusive report on Wednesday, as echoed by MD, which show that Real Madrid have refused to explain €122m in their club accounts.
Their annual report attributes around €135m to ‘other operational costs’, €13.6m of which was made in payment to La Liga – something required of all La Liga clubs.
When contacted, the club neither confirmed nor denied that those costs were part of a deal to sell future sponsorship money to a firm called Providence.
In 2017-18, the club reached an agreement with the company in order to bring in cash to cover losses of at least €216m between the years of 2014 and 2017. Real Madrid have not confirmed how that money is to be repaid, although they renewed the agreement in 2019-20. As a club owned by their members, President Florentino Perez is required to explain the club accounts to the membership.
However The Telegraph allege that this money was a sale in exchange for a percentage of future sponsorship money. The tax office in Spain regard this as debt, although the English paper point out that nothing in this deal would be illegal.
Nevertheless, it could raise questions with UEFA as to how this money is accounted for, and whether it might bring Los Blancos in breach of Financial Fair Play rules. That would in turn open them up to sanctions.
The advantage of the operation is that Los Blancos would not have to take on debt in loans, and thus increase their costs with rates of interest.
They go on to highlight that these unexplained ‘other operational costs’ have risen year upon year, reaching 20% of their income in 2022. Real Madrid have also recently sold 30% of the income from their newly renovated Santiago Bernabeu stadium for the next 20 years to Sixth Street for €360m, the same business which bought a percentage of Barcelona’s TV rights from La Liga for the next 25 years.
Los Blancos have been praised for their prudence and financial management in recent years, riding out the pandemic without major problems. However if The Telegraph’s suppositions are correct, it would colour matters in a different light. As of yet, only the Telegraph have levelled these accusations.
But they have been explained.
Operating costs are associated with the maintenance and administration of a business on a day-to-day basis. Every business has those and RM as a giant brand has well higher costs. Add to that, if youre rebuilding a stadium, there will clearly be higher operating costs than usual.
There is no need for a mystification and sensantionalism, its perfectly legal to quote the article.