Real Madrid face questions over €122m unexplained expenses

Real Madrid were able to beat their rivals thanks to Jude Bellingham's signature. Photo: Getty Images/Helios de la Rubia

While Real Madrid have shown interest this summer in a number of leading strikers to replace Karim Benzema, so far their only signing in this regard has been their former academy boy Joselu, once at Stoke City, who was on loan from relegated Espanyol. They were interested in Harry Kane. More recently, there have been reports of renewed interest in Kylian Mbappé, a longtime Real Madrid target who is currently out of contract in France next summer and in opposition to his current club.

Although Real have reassured its members that it is in a strong financial position, it has remained only marginally profitable in recent years. This has been done in part through the sale of players, a financial deal with Providence and most recently a €360m (£306m) sale of future rights, known in Spain as the «palanca» or financial «leverage». The €800m (£681m) financial deal for the newly refurbished Bernabéu is an additional cost spread over 25 years up to 2049.

The issue of Real Madrid's rapidly growing sub-category 'other operating expenses', which is itself reported under the 'other operating expenses' category, remains unexplained by the club. Details were not forthcoming, despite an 800% increase in payments in this subcategory over five years. This comes amid the club's revenue growth of just six percent over the same period, as well as a two-year period of the Covid-19 pandemic, when revenues plummeted.

Of Real's total revenue of €672m in 2017, €17m (£14m) — three per cent — was included in the «other operating expenses» sub-category. It jumped to €46m (£39m) the following year and has risen every year but one since then. While Real's revenue has suffered in the Covid-19 era, payouts in the «other operating expenses» sub-category have risen. In 2021, payments under this sub-category accounted for 12 percent of total revenue, €77m (£65m), before rising again to €135m (£114m), or 20% of total income, in most cases. recent financial results.

The issue of transparency was raised by Real Madrid itself this year when it said in a March statement that it was «deeply concerned» by Barcelona's behavior in the case of payments to companies registered in the former Official Judge Jose Maria Enriquez Negreira. Barcelona sold €700m (£595m) worth of future revenue streams last summer, including a total of 25 per cent of the League's TV revenue over the next 25 years to Sixth Street. It is known that the American investor paid an upfront payment of 500 million euros (425 million pounds).