REAL MADRID

Real Madrid players set for further wage cuts as club reports expected losses for 2020-21

The finacial impact of the coronavirus on Real Madrid has been made clear with the release of the club's latest financial report and budget for the 2020-21 season.

One of the clearest consequences of the impact of the pandemic on Real Madrid is that, once again and for the second consecutive season, players and coaching staff from the first team, the reserve team and the basketball team will be forced to accept salary cuts.

The club has been clear and honest in the budget for the 2020-21 season that must be approved at the General Assembly this Sunday, revealing that it expects losses of €91 million euros this season, with revenues falling by 25% in two years to €616 million.

Madrid players face cuts of at least 10%

Last season, the 10% salary cut that was agreed amid the height of the pandemic translated to savings of €45 million. This season, the players and coaching staff will be asked to accept a cut of at least equal proportions, or perhaps even greater. The amount could depend on whether it will be possible to get fans back into stadiums and how far Madrid go in the Champions League.

The club itself has outlined this plan in its recent financial report. "There are plans to carry out a salary reduction action to mitigate the impact of the loss of income," reads page 153 of the report has already been made public. Talks with the first team on this issue have only just begun.

Madrid’s salary bill continues to grow

A fundamental problem at Real Madrid, beyond the fall in income and the possible financial impact of the giant loan for the Bernabéu revamp, is that the wage bill has continued to grow in recent times.

In the 2019-20 financial year, Madrid reported a total salary bill of €411 million (€301 million for the first team) when in the previous campaign, 2018-19, it was €394 (million €283 million for the first team). In the financial report for the current 2020-21 season, Madrid has reported a salary bill of €448 million (the exact amount spent on the first team has not yet been disclosed). And that's not counting the wages of future big signings.

Thus, the almost 800 workers at Real Madrid currently represent €448 million in salary expenses. With revenues at €616 million, the club's wage-to-income ratio remains controlled, standing at 72%, which is just above the 70% recommended by the European Club Association.

The Assembly held this Sunday is the first to be held entirely online. More than 2,000 delegates have already exercised their right to vote on the budget for the 2020-21 in recent days.

Real Madrid debt rise

The club's contingency plan helped to ensure that the 2019-20 financial year ended with a symbolic profit of €313,000. However, gross debts rose from €174 million to €409 million; while net debt (gross debt minus the amount in the treasury) increased from -€27 million to €241 million.

In the months of April and May, the club received €205 million in loans and credit facilities guaranteed by Spain’s Instituto de Crédito Oficial (ICO), €155 million over five years and €50 million over three years.