Will Kylian Mbappé and Jude Bellingham finish this summer at the Santiago Bernabéu? Credit: Getty Images/Etsuo Hara Real Madrid's pursuit of Kylian Mbappe, as well as Jude Bellingham, this summer has prompted comparisons to their spending on the Galacticos era in the early 2000s, days before Financial Fair. gaming and national state clubs. However, Real Madrid's finances are very different now and the biggest question will be can they afford to buy these players?
Bellingham's price tag is bound to top £100m if he's really going to leave Borussia Dortmund this summer. As for Mbappe, it's unclear whether the final year of his much-touted new contract with Paris Saint-Germain until 2025 is an option or guaranteed, but either way, his club can be expected to demand a sum in the region of £200. at least a million. The two presidents, Florentino Perez and Nasser Al-Khelaifi, currently disagree with each other on the future of UEFA.
Apart from these requirements, there will be a salary corresponding to the players expected to be the best in the world for the next decade. Previously, this did not stop Real Madrid, but this time there were serious obstacles.
The sale of future revenue streams is a highly contentious area, the usefulness of which depends on how UEFA classifies the revenue it generates. Last summer, Real Madrid sold 30% of its revenue from the rebuilt Bernabéu over the next 20 years to US investor Sixth Street for €360m (£312m), paid out in two tranches. The first amount of 316 million euros was received by the club last summer and, according to their latest financial results, saved them from a loss of around 166 million euros.
Is the income generated from the Sixth Street deal debt or income? The club and Sixth Street are adamant that it is the latter and are therefore free to spend money on whatever they choose, subject to FFP rules. But what if another club like Newcastle United sold €300m of future proceeds to, say, a Saudi Arabian investor and then entered the transfer market this summer with that amount in FFP-ready cash?
In this scenario, perhaps Bellingham and Mbappe will go to St. James Park, and Perez will certainly have something to say about this. He has already complained to PSG at UEFA over Mbappe's new contract, and his European Super League aspiration is now not only a political stance but a viable plan for football.
Two big Spanish companies are already married to the sale of future earnings: Barcelona sold 700 million euros last summer alone, and more such deals are likely to be planned. If UEFA treated the infamous «palanques» — financial leverage — as a debt, then both clubs would immediately fail the FFP. La Liga has reached a similar deal with CVC private investors for its two top divisions, minus a small group of refusers, including Real Madrid and Barcelona.
The second tranche of 44 million euros from the investment in Sixth Street is to be paid to Real in the summer. Because these numbers are for the previous fiscal year ending June 30, Real has released an update detailing results up to December 31. Cash in the business amounted to €174 million, of which €96 million in income tax had to be paid, leaving €78 million left. of which some will have to be used for additional costs for the stadium.
This is all that is left of the 316 million euros from Sixth Street in the summer. This was mainly used to cover earlier additional costs for the stadium in addition to the original €800 million, as well as to cover a €150 million shortfall for their two-year salary due in July which was €216 million plus €35 million in the form of related taxes. This doesn't tell us how Perez might structure a deal for these two young talents, but it does indicate that the great Champions League club of the last decade has been burning money trying to renew an aging team and rebuild an aging stadium.
Attractiveness Real Madrid are strong and the shock and awe of the big summer transfer window is long overdue at the club. They have always found a way in the past and maybe this time it will be different, but the world and UEFA Compliance will be waiting to see how they do it.
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