Real Madrid reached to answer unexplained €122m costs in club funds
Real Madrid has been asked to explain why €122 million in expenses were not accounted for in the club’s financial statements.
Real Madrid have refused to explain the presence of €122 million in their club accounts, according to an exclusive report published by The Telegraph and reiterated by MD.
Their annual report attributes approximately €135m to ‘other operational expenditures’, of which €13.6m was paid to La Liga – a requirement for all La Liga clubs.
When contacted, the club neither verified nor denied that these expenses were part of an agreement to sell future sponsorship funds to a company named Providence.
In 2017-18, the club reached an agreement with the corporation to raise sufficient funds to cover losses totaling at least €216 million between 2014 and 2017.
Real Madrid has not confirmed how the money will be repaid, despite renewing the contract for 2019-20. As the president of a club owned by its members, Florentino Perez must clarify the club’s finances to the membership.
However, The Telegraph asserts that this cash was exchanged for a share of prospective sponsorship funds.
The Spanish tax office considers this to be a debt, although the English paper notes that nothing in this transaction is unlawful.
Nonetheless, it may raise concerns with UEFA regarding how this money is accounted for and whether it may put Los Blancos in violation of Financial Fair Play regulations. This would then expose them to sanctions.
The operation has the benefit of preventing Los Blancos from incurring debt in the form of loans, which would increase their expenses with interest rates.
In 2022, these inexplicable ‘other operational costs’ will account for 20% of their revenue, as they have increased year after year.
Real Madrid recently sold 30% of the income from their newly renovated Santiago Bernabeu stadium for the next twenty years to Sixth Street for €360 million.
Sixth Street is the same company that purchased a portion of Barcelona’s TV rights from La Liga for the next twenty-five years.
In recent years, Los Blancos have been praised for their prudence and financial management, allowing them to weather the pandemic without significant issues. However, if The Telegraph’s assumptions are correct, it would cast a different perspective on the situation.
Real Madrid reached to answer unexplained €122m costs in club funds