Real Madrid’s relentlessly optimistic financial results beg closer scrutiny

Despite all the newly arrived clubs whose deep pockets are changing European football’s landscape, it is still Real Madrid whose actions and largesse provoke stronger criticism. Younger and older fans alike may struggle to reconcile the club’s habit for preening itself as an institution of history and tradition with its routine practices of amputating managers’ careers, accumulating trophies through spending near-grotesque levels of cash on players and capitalising on close ties with government institutions in Spain that border on incestuous. This is a club that wiped nearly 206 million euros of debt off at a single stroke by somehow convincing Madrid’s city council to spend such a lavish sum on purchasing their training ground, and that once again called on Spanish banks to secure £157 million of public money at unusually low interest rates in a time of recession to acquire Cristiano Ronaldo and Kaka in 2009.  It would not be too far-fetched to claim that, given the amount of public money that Madrid have pilfered with the assistance of Spanish banks in a fifteen-year period, they are directly responsible for a significant part of the economic woes of the people who pledge them their support.

However, while the Glazers’ reliance on English banks to bankroll their takeover of Manchester United has seen the club fall into a logical, cause-and-effect based spiral of debt and struggles to refinance the debt, Madrid’s comparable levels of borrowing have not brought them the same problems. Rather, a club who reportedly took out 300 million Euros’ worth of bank loans at the start of Florentino Perez’s second spell as president have gone from strength to strength, proudly announcing a record turnover of 514 million Euros for last year and that their debt has been cut to 124.7 million Euros. Indeed, despite assembling a team that cost roughly 300 million Euros and having to deal with interest payments, there has not been a single financial year in which Madrid have failed to either increase their revenue or announce impressive profits. The latest revenue sums are, as the club’s website boastfully states, “the biggest of any sporting institution in the world” while Madrid have managed to continue reaping in more money than Manchester United and Barcelona even during a period that has seen them fail to claim the Champions League for ten years. We are constantly told that they have an enormous fan base spanning the world (and, in the eyes of Perez, probably any alien worlds as well), but anyone living in South and Southeast Asia will confirm that there are far more Barcelona shirts with Messi on them than Madrid ones with Ronaldo going around. In the Middle East, where Spanish football is more popular than the Premier League, their fan base is pretty much equally split with Barcelona. So too is their TV rights deal with Mediapro, which earns each club roughly 160 million euros a season.

So, if the allure of their players, their on-pitch successes and commercial draw has not been stronger than Manchester United’s or Barcelona’s at any point over the last six seasons, how is it that they are constantly in a position to declare themselves the most lucrative football club and best-performing sporting institution in the world? One suspects that the continued affiliation of Real Madrid with the Spanish government has seen them secure advantageous terms on everything from sponsorship deals, to loan arrangements, interest rates, and payment deadlines. If this did not have such a draining effect on the Spanish economy and its unemployed masses, it would not appear to so much resemble corruption. Yet as it stands, Madrid’s reliance on money to stay competitive is far more damning than that of clubs owned by sugar daddies whose extravagant expenditure was not sourced directly from a public who couldn’t afford it.

As they begin to implement Financial Fair Play rules in full force, it would be an oversight on UEFA’s part not to examine the sponsorship deals and commercial arrangements Real Madrid have secured, and adjudge whether the money accrued is the result of their apparently Midas-like business touch or more dubious special relationships with public institutions that have been in place since the dictator Franco anointed them his club and began lavishing them with his patronage. It is these murky foundations on which the “history” of Real Madrid, and its first five Champions League titles was built, and it is this same culture that has continued to prop up the club’s status today despite a relative lack of on-pitch success.

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