Real Madrid’s accounts allow for another Galáctico signing in 2024

Real Madrid have prepared their accounts for the arrival of a Galáctico signing and their salary package.

In order to secure the signature with the selling club, Real Madrid have €128 million ($139m) available in cash according to the latest official accounts, added to that undrawn credit facilities of €265 million ($289m).

Regarding the salary of the future Galáctico, quite a significant factor due to the fact that it is an expense that will be repeated for at least five or six years, the club have also made room on the wage bill, meaning that Mbappé and Haaland are on the horizon.

Real Madrid are in an incredibly strong financial position

The ECA (European Club Association) have a scale that measures the economic health of football clubs. Known at the Efficiency Ratio, it states that the percentage of a club’s total personnel expenses cannot be higher than 70% of total income. Last season Madrid were at 72% (€519 million/$566m in total expenses from €712 million/$777m of final income), in the last approved accounts it went down to 54% (personnel expenses of €452 million/$493m for a total income of €843 million/$920m).

The reason for this change is straight-forward: spending on wages has been reduced, while total revenues have increased by 17%. The scenario is very favourable for the LaLiga side, more than ever in recent seasons, and certainly paves the way for the arrival of a Galáctico.

Real Madrid, who on the pitch are suffering with an injury crisis, have become a super-company. As of June 30, 2023, the club claimed to have 1,072 staff members. “This figure will have to increase for the operation of the new Bernabéu,” declared Florentino Pérez at the last Members’ Meeting. Of all those employees, 473 are players and coaches (remember, this number is not just the senior men’s football team, but a number than encompasses all the different branches of Real Madrid as a sporting institution).

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Big-money wages moved away from Real Madrid

In any case, special attention must be paid to the particular expense of the salaries of the first team, since they are the most volatile and the most expensive while the others remain more stable.

And here is where the 14-time Champions League winners have done their best work: as of June 30, 2022, the salary expenses of players and coaches of the men’s first team amounted to €404.9 million ($440m), and for 2023 that figure has been reduced to €326.5m ($356m). It is a difference of €78.4 million ($85m) and behind it there are two main factors that are simple to explain.

As for the player expenses of the 21-22 first team, which stand at €404 million ($440m), Madrid declared that €35 million ($38m) were for bonuses (they won the League and Champions League) and another €19 million ($20m) were for severance pay. That summer saw players such as Marcelo, Isco and Bale all leave, but all of them saw their contracts run out; the only one who left with three years left to go was Jovic.

On the other hand, and on the more positive side of things, the reduction of €78.4 million ($85m) in salaries of the first team that took place last season (officially, with the accounts now closed), will be consolidated in the current year as this summer players with very high wages left, such as Hazard (who was paid €30 million/$32m per year), Benzema (also €30m), Asensio (€16m/$17m) and Mariano (€8m/$8m).

What impact will the new Bernabéu have on Madrid’s finances?

The new Bernabéu, which should be inaugurated next spring, represents the latest boost for the club’s ability to compete with the state-owned clubs, and is something that will ensure the future of the team in the current environment. The stadium also facilitates the arrival of big-name signings as Real Madrid forecast a final revenue for this season of €939 million ($1 billion), already close to €1 billion euros ($1.09b).

More importantly, the club expect the revenue from the stadium redevelopment of the stadium to be around €317 million ($345m), almost €150 million ($163m) more than it had been earning. The last season with the stadium at full capacity, in the pre-pandemic world, was 2018-19, when €175 million ($190m) were earned. With the stadium completed, that figure will double. Last season, for example, the stadium earned the side €151 million ($164m). From there, it will increase to €317 million ($346m) in an instant.

Cádiz are Real Madrid’s next opponent in a game that will be played at the Estadio Nuevo Mirandilla on Sunday 26 November 2023, with kick-off at 12.30 p.m. ET / 9.30 a.m. PT.