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How will Mbappé’s signing be financed? Florentino’s accounts

The sports press takes for granted the signing of Kylian Mbappé for Real Madrid, which would become effective next June. The French player would have already transferred his decision to leave to Paris Saint Germain (PSG), so the speculation seems to have a much more real background than in 2021, when many media outlets took for granted a hiring that did not materialize.

On paper, the figures that would facilitate Mbappé’s arrival at the Concha Espina club would be the following:

– His annual salary would be approximately 50 million euros gross per season. By comparison, the French star is earning just over 70 million per season at PSG.

– Since Mbappé ends his contract with the French team in June, Real Madrid would not have to pay a single cent in transfer fees.

– In line with the standards that are used today, Mbappé would receive a transfer bonus valued at 120 million. In a five-year deal, this means an additional 24 million per season. To put this figure in perspective, it should be noted that the PSG player has a market value of between 180 and 200 million euros, according to the specialized portal TransferMarkt.

Therefore, if Real Madrid wants the operation to be viable, it must take into consideration (1) the need to disburse 50 million annually to pay his signing and (2) the payment of another 24 million per year that would cover the signing bonus. signing. Is it possible to fit those 74 million additional spending per season in the current income and expense structure of the merengue team? Libre Mercado already answered this question two and a half seasons ago, but situations have changed. Let’s see how.

Florentino’s accounts

At the outset, it is important to keep in mind that the signing of Mbappé will entail the achievement of significant additional income that would be obtained through image rights. A priori, Real Madrid retains 50% of these funds, but there has been speculation that the French forward will obtain around 75% of the total amount.

According to Forbes magazine, Mbappé earns around 100 million annually through this means, which would translate into another 25 million in income for Real Madrid if the distribution obeys the aforementioned special model of 75/25. In this sense, The net annual expense associated with the Frenchman would go from 74 to 49 million, only discounting the additional billing obtained from image rights.. Furthermore, if Mbappé increases his sales for this concept, Real Madrid will earn more. Recent experience with players like Cristiano Ronaldo or Jude Bellingham shows that joining Real Madrid greatly revalues ​​the attractiveness of a player in the advertising market, so it would not be surprising that so much The turtle like Real Madrid end up earning even more money this way.

Something similar happens with the sale of t-shirts. Let’s take a recent and close example. In just over half a year (from summer to December 2023), Bellingham sold more than 100,000 shirts, generating a total of 6 million in income for the white club (the lion’s share ends up in the coffers of Adidas). If Mbappé manages to double this figure over the course of an entire season, which a priori seems like a conservative assumption given his large business figures with PSG, Real would pocket 24 million per season.

Likewise, it is also reasonable to anticipate a certain reduction in spending in relation to the foreseeable end of some contracts in force. The clearest example is that of the Croatian Luke Modric, who is finishing his last years as a professional. It is not clear whether he will extend his contract beyond June 2024 but what is evident is that it seems highly unlikely that he will accumulate many more years as a Real Madrid player. Thus, the nearly 20 million that the midfielder receives could be “annulled” with his eventual departure, thus generating an additional “cushion.” Another notable example would be that of Toni Kroos, who has also entered the final phase of his career. The “brain” of the meringues receives around 20 million annually. He is going through a sweet moment, with the fans demanding his permanence and the German team celebrating his return but, at the time of his retirement from the white club, the German will have a certain financial relief that will facilitate Mbappé’s financial adjustment.

However, losing Modric and Kroos will also generate spending needs, since it will make it necessary to hire some reinforcements for the midfield. Therefore, it is important to now look at the new sources of income that the white team has at its disposal and which, happily for the whites, have already begun to materialize in 2024:

– On the one hand there is the new sponsorship agreement signed by the white entity with the technology company HP and valued at 70 million per season. This is a very high figure, similar to what the airline Fly Emirates is already paying. The largest contribution for this concept is made by Adidas, which disburses almost 120 million a year.

– On the other hand, there is the billing derived from the concerts and events that are about to start taking place in the new Santiago Bernabéua milestone that will mean an increase of 83 million in the income generated by the emblematic stadium, which generated 152 million in the 2022-2023 season but will contribute 317 million in the 2023-2024 season and will mobilize 400 million in the year 2024-2025.

These two variables (HP sponsorship and income generated by the expansion of the Bernabéu) would be enough to more than sustain the increase in spending associated with the signing of Mbappé. If we add to that the reduction in its net cost generated by the image rights and the possible savings in chips derived from the eventual retirement of Modric or Kroos, the operation is clearly acceptable. In fact, the HP contract is enough to fit the numbers.

On the other hand, it must be taken into account that Uniting the Mbappé brand and the Real Madrid brand allows us to be more ambitious when exploring other avenues of income, among which can be speculated with new sponsorship agreements, income from successes in sports competitions, cash generation associated with special events such as the traditional preseason tour of the United States, audiovisual content for platforms of streamingetc.

So, while waiting for a negotiation whose results will only be official at the end of this season, it seems clear that the Frenchman’s cost is high but is acceptable for Real Madrid, which can cover the “extra” expenses derived from his contracting using the additional income from image rights, the contribution from the sale of shirts, the juicy sponsorship agreement signed with HP, the extra billing enabled by the renovation of the Santiago Bernabéu stadium and other possible ways to reduce costs (possible withdrawal of Modric and Kroos) or cash generation (extraordinary income). Florentino has the calculations, but the last word also belongs to the desired French striker, who is also being sought by other teams.

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