July 26 – Real Madrid has reported a 27% rise in operating income for the 2023/24 financial year to €1.073 billion, an increase of €230 million and making it the first football club to break the €1 billion mark.
Revenue performance was helped substantially by on-field performance with the first team winning the Champions League for the sixth time, as well as the LaLiga title and the Spanish Super Cup.
The club said that this was achieved without the newly renovated Bernabeu Stadium still not having reached full operational capacity.
The revenue growth was accompanied by a rise in operating expenses and personnel costs, particularly as regards win bonuses, but the club still reported an operating profit before disposal, tax, interest and depreciation (EBITDA before disposal) of €144 million. This figure is 71% higher than the previous year’s €84 million and the club pointed out equates to 13% of revenue.
Profit after-tax was €16 million, 32% higher than the previous year.
“Every line of business has seen growth, with the exception of broadcasting rights, where revenues received from LaLiga in 2023/24 were lower than in the 2022/23 season. The gains in marketing and the stadium are particularly notable,” said the club.
The reference to lower broadcast revenues from LaLiga is an open sore in Spanish football in terms of the ongoing disagreements between Real Madrid and LaLiga over centralised broadcast sales and revenue distribution, as well as Real Madrid’s vehement opposition to LaLiga’s private equity partnership with CVC and the creation of LaLiga.
In that respect the club still remains something of a pariah within the game both domestically over its refusal to show solidarity within the Spanish professional game, and internationally over its insistence that a European Super League is still the best way forward for Europe’s top clubs.
Despite the club’s thirst for more money and the insistence of its president Florentino Perez that it needs that revenue increase to survive, it clearly doesn’t and its financial report highlights that it “has significantly boosted its merchandising and sponsorship activities during the 2023/24 financial year. A substantial element in relation to the latter is the new deal with HP to be the team’s sleeve sponsor.”
The opening up of the new stadium is also opening new revenue areas, particularly in the latter part of the last financial cycle, “in particular hosting major events and a new premium offering with new VIP experiences”. Those new revenue streams will fully contribute in the next financial year.
While stadium investment in 2023/24 focussed on core infrastructure (facade, roof, retractable pitch), the next year’s focus will be on completing and rolling out the new business areas (VIP Area, Tour, RM Experience, events, restaurants, club shop).
“The completion of the works will also have an impact on stadium-related revenues. Although this figure has already increased during the 2023/24 financial year, it will see further significant growth in the 2024/25 period once the stadium becomes fully operational across all business lines,” said the club.
The crucial wages to turnover ratio that is used as a broad-based measure of a club’s financial health shows Real Madrid in a very healthy position at 47%, a 7% improvement on last year including win bonuses paid to players. As a measure, the European Club Association recommends 70% as the level for its clubs to stay below.
The financial results off the pitch are of course driven to a large degree by the players on it, though Real Madrid have taken significant steps in the direction of mitigating financial dependence on winning titles – both in terms of prize money and commercial opportunity of long runs in European competition in particular.
Though the club probably has little concern about its continued existence at the top of football’s tree.
It said it “intends to continue strengthening and developing its sporting model, aimed at continued successes in both football and basketball. This has distinguished the Club throughout its history, and in recent years in particular. The most notable aspect in this regard is the signing of Kylian Mbappé by the football first team, starting from the 2024/25 season.”
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