Real Madrid financial situation worse than reported

Real Madrid president Florentino Perez always understates the size of the club’s debts while Mesut Ozil was sold last summer to cover the problem, according to the head of a group of club members.

Carlos Mendoza, president of ‘Asociacion por los Valores del Madridismo’, was interrupted by Perez when he tried to raise his concerns at September’s club assembly.

In Tuesday’s AS he insisted that the figures presented at that meeting were false and its financial situation was much more perilous than the club’s board lets on.

“We have studied the accounts and the budget and we have detected things which are not explained by the president,” Mendoza said. “Things which worry us for the future. The club’s debt is 541 million euros, including that owed in the short term and long term.

“Florentino only recognises the ‘net’ financial debt, which is only the debt owed to the banks, some 90 million euros. But Madrid has other debts – to players, clubs, sporting associations, public administration, suppliers. That all adds up to 541 million euros, more than double the debt Florentino inherited from Lorenzo Sanz.”

Construction magnate Perez’s plans for the redevelopment of Madrid’s Estadio Santiago Bernabeu are even more of a worry given this context, said Mendoza.

“Even with that debt, he wants to take on the redevelopment of the Bernabeu, which he says will cost 400 million euros,” he said. “And then he says he does not know how it will be financed, that he will use ingenious methods… If there is uncertainty, then to plunge into this 400 million euros Bernabeu project does not seem the most prudent.

“And there is another detail – two lines of credit have been opened and they have had to put down as security the income from the sporting sponsor and from members fees and season ticket sales for three or four years… This is not just me saying it – it is in the club’s accounts. The financial institutions are asking for such guarantees as they do not trust in the club’s solvency.”

Mendoza accepted a Forbes report that Madrid is now the world’s richest club, but said the increased revenue did not cover the growing expenditure.

“We have the highest revenues, but also the highest outgoings,” Mendoza argued. “And revenues have been growing by 12 percent a year for the last decade, but in the last year only grew by 1 percent. While the costs are exploding.”

Mendoza also claimed that next year’s figures are likely to be worse after last summer’s transfer business – which included a 200 million euros outlay on players including Gareth Bale, Isco, Asier Illarramendi, Dani Carvajal and Casemiro.

“The [latest] accounts are up to June 30,” he said. “Bale will be included in the next year, and will be amortised – if he cost 100 million euros and has five year contract, it will be put in as a cost of 20 million euros a year. The amount paid for Bale is scandalous.”

This year’s sales of senior players including Ozil to Arsenal and Gonzalo Higuain to Napoli were financially motivated, Mendoza said, while Kaka’s return to Milan would pose another problem for the accounts.

“[Madrid] have had to sell to compensate the cost of signings, like Higuain,” he said. “With that they can cover it up with make-up for next year. The sale of Kaka will look very bad in the accounts, as he had two years left to amortise at 20 million euros a year. Then there is Bale, Illara, Isco and salaries going up. Ozil was bought cheaply and sold expensively. That will have a positive effect on the accounts, but the costs keep going up and up.”

“Since he sacked Del Bosque, Florentino has spent 800 million euros on players to win one La Liga and one Copa del Rey,” he said. “The model is clearly not efficient.”