Friday, September 29, 2023
HomeSportsFlorentino's finances: this is how he keeps Madrid's accounts in order

Florentino’s finances: this is how he keeps Madrid’s accounts in order

Real Madrid’s success in the 2021/2022 Champions League has dazzled Europe. If we review the last ten seasons, we can see that the white team has won five of the titles at stake, which has meant an injection of income of more than 500 million euros and has favored a growth cycle in which neither not even the pandemic has been able to stop white ambition.

In a Spain weighed down by problems such as the chronic deficit of public accounts, Real Madrid has set an example of austerity and efficiency, two levers that will be vital for the country as a whole to return to growth and get out of the stagnation in which we find ourselves plunged as a result of the disastrous management of PSOE and Podemos.

These are the two great lessons that Florentino Pérez leaves to the political class: the importance of avoiding budget deficits, in order to always maintain economic-financial stability, and the relevance of efficiency in spending, which allows doing more with less and maximizing the profitability of the disbursements made. If we add to this the cultivation of a winning culture, which is not suspicious of success but rather celebrates it and demands it, it seems clear that the merengue success equation contains very valuable lessons for our entire country.

1. Budget austerity…

In a context in which practically all the big teams in Europe have seen the fall in income caused by the pandemic become the catalyst for deep budget deficits, Real Madrid has managed to avoid losses and has kept his accounts in order:

– The 2019/2020 season ended with a decrease of 106 million euros in the club’s income, but the accounts showed a symbolic positive balance of 313,000 euros.

– The 2020/2021 financial year also ended with profits. This time, the positive result was 874,000 euros, again a symbolic figure that made it possible to avoid a loss scenario.

– The year 2021/2022 contemplates a surplus of 76 million euros, in the heat of the recovery of income and the containment of disbursements.

In the first two years affected by the pandemic, the drop in income accumulated a collapse of more than 300 million euros. However, Florentino Pérez and his Board of Directors took the bull by the horns, applied spending containment measures and managed to consolidate a culture of economic-financial stability at the most complex time. And all of this, moreover, while European football is filled with “dirty money” provided by petro-dictatorships that adulterate the market by systematically breaching the rules of fair play financial, all with the collusion of UEFA.

… and 2. Efficiency in spending.

Real Madrid has also set an example in its talent management. Although some of the “galacticos” incorporated by Florentino Pérez had a high acquisition price, the truth is that his career at the club has been so successful that the initial cost of his incorporations has come to nothing compared to the income they have generated.

It is the case of galactic such as Cristiano Ronaldo, Karim Benzema, Luka Modric, Toni Kroos or Gareth Bale, who have made history in the merengue team and have added five Champions League titles since their arrival at Concha Espina. It should not be forgotten that the cost of the players is amortized throughout all the seasons they play for a team, so that the financial profitability of the signings is directly related to their durability and sporting performance. In this sense, no one escapes that the outlays made in hiring these stars have been some of the best investments in the history of Real Madrid.

Something similar can be said of other vital players for the team, such as Thibaut Courtois, Marcelo, Casemiro or, more recently, Alaba, Militao or Camavinga, who joined the Madrid team in exchange for derisory figures. And, let’s not forget, the team has also shown great intelligence in its management of the quarry and of the young promises, whose market value experiences an average revaluation of 66% thanks to the intelligent management of the club chaired by Florentino Pérez. In this sense, the disbursements made to incorporate Rodrygo (54 million), Vinicius (45 million), Ceballos (18 million), Valverde (5 million) or Asensio (4 million) reflect equally noteworthy operations.

A winning culture

Steven G. Mandis, one of the world’s leading sports management experts, writes in The Real Madrid formula (Deusto, 2016) that another of the keys to the success of Florentino Pérez as president of Real Madrid has been the cultivation of a culture of excellence based on the Madridista identity, competitive ambition and commitment to growth.

This not only has a sports reading, but also a business one. What the white president was looking for with the Super League is a good example of this. And something similar can be said of the new Santiago Bernabéu, called to raise the club’s annual income by up to 150 million.

Recent posts