The economic crisis derived from coronavirus has not hit the Real Madrid like most of the big clubs in Europe. The white club announced this Wednesday a surplus of 874,000 euros at the close of the 2020-21 season.
In its official statement, Real Madrid informs that the Board of Directors, meeting today, has formulated the annual accounts for the 2020-21 financial year. The effects of the health crisis caused by the Covid-19, which began in March of last year, have been extended throughout the 2020/21 financial year, in which all the matches had to be held behind closed doors. This has caused a loss of income in all business lines, mainly in the stadium, as there is no income from attending matches, but also in television rights, both in the League as of the UEFA, and in commercial activities, both in the operation of facilities and in store sales and sponsorship ”.
The merengue club also explains in its official note that “regarding the situation prior to the pandemic, the loss of income suffered by the Club in its business lines from March 2020 to June 30, 2021, is close to the € 300 million, to which should be added the loss of new income that could have been achieved in the absence of the pandemic. This loss of income has only been able to be compensated by the Club through the execution of intensive savings measures of spending in all areas ”.
Savings measures plan
Below, Real Madrid details these containment measures:
– ”Players spending savings plan: in 2020/21 there have been no acquisitions and player withdrawals have been carried out, with the consequent impact on both transfer capital gains and cost savings ”.
– ”Reduction of salary expenses: both in 2019/20 and in 2020/21, members of the first football and basketball squads and the main executives of the different directorates have voluntarily agreed to lower their annual remuneration by 10% ”.
– ”Savings plan for operating expenses: In addition to reducing spending due to lower costs associated with loss of income, the Club has implemented, throughout these fifteen months of pandemic, a cost saving plan related to the different activities and services contracted, thanks to which has obtained an additional spending reduction equivalent to almost 25% of the total annual spending prior to the pandemic ”.
The Real Madrid highlights in its official statement that “both in 2019/20 (€ 177 million) and in 2020/21 (€ 180 million), the Club has obtained an EBITDA higher than that achieved in 2018/19 (€ 176 million) before the pandemic , in spite of the loss of revenue close to € 300 million suffered in both exercises by the effect of Covid-19, which is a sample of the operational efficiency of the Club, as well as its response capacity to adopt savings measures that mitigate these losses ·.
“After the savings measures adopted to compensate for the loss of income caused by the health crisis, the Club closes the 2020/21 financial year with a profit of € 874 thousand after taxes, just as it already closed the 2019/20 financial year with a profit of € 313 thousand. In this way, the Club will be one of the few large clubs in Europe that does not incur losses in these two years, given that, according to a study by UEFA, the operating losses accumulated by European clubs between 2019/20 and 2020/21 will approach the € 6 billion”.
“The Club wishes to express its appreciation for the contribution made by sports and non-sports personnel in the execution of the savings and improvement measures that have made it possible to achieve these results.”
Real Madrid adds that “having obtained benefits in both 2019/20 and 2020/21, despite the effects of the pandemic, the Club has managed to slightly increase the value of the net worth with respect to the situation as of June 2019 before the pandemic, so that, as of June 30, 2021, the net worth stands at a value of € 534 million ”.
New bank financing
According to the white club, “to offset the impact on treasury of the loss of income caused by the effect of the Covid-19, the Club obtained in April 2020 new bank financing in the amount of € 205 million, of which € 155 million correspond to four loans with a 1-year grace period and a 5-year maturity and € 50 million to a credit policy with a 3-year maturity. The operations were formalized independently with the five national banking entities with which the Club operates and are guaranteed for 70% of their amount by the Institute of Official credit (ICO), within the line approved by the Government to facilitate the liquidity of the companies. During the 2020/21 financial year, and in accordance with RDL 34/2020 of November 17, the Club has extended the grace period and maturity of the loans by 1 year ”.
Real Madrid points out that “the Club closes the 2020/21 financial year with a Cash balance at June 30, 2021 of € 122 million, excluding the stadium remodeling project. This balance has been reached after paying off a bank loan of € 50 M during the 2020/21 financial year and without the need to have any credit policy balance.
And he adds that “the loss of income caused by the Covid-19, with the consequent impact on lower treasury, it has been compensated by the Club through savings measures and the formalization in April 2020 of the bank loans of € 155 million long-term aforementioned. The Club has June 30, 2021 Credit policies without provision for an amount of € 361 million, which, together with the treasury, allows the expected payment commitments to be easily met ”.
Net debt of 46 'kilos'
The Real Madrid also announces that “the Net Debt as of June 30, 2021, excluding the stadium remodeling project, represents an amount of € 46 million, compared to 241 million the previous year, which means that, during the 2020/21 financial year, the Club has reduced its net debt by € 195 million ”.
“With respect to the situation prior to the pandemic (June 30, 2019: net liquidity position of € 27 million), the net debt as of June 30, 2021 is € 73 million This shows that the Club has managed to compensate, through the savings measures implemented, most of the loss of income close to € 300 million caused by the pandemic and its consequent impact on lower treasury and therefore higher net debt. The Debt / EBITDA ratio stands at a value of 0.3. All these data show the robust financial situation and high solvency that the Club maintains despite the pandemic, “says the Merengue entity.
Renovation project of the Bernabéu
Regarding the remodeling project of the Santiago Bernabéu stadium, In the 2020/21 financial year, Real Madrid indicates that “the execution of the works has not been made compatible with the holding of matches at the Santiago Bernabéu stadium, given that, by not allowing public attendance due to the Covid pandemic -19, the Club, after obtaining the pertinent authorizations, has held the matches of the sports competitions of the first football team behind closed doors at the Alfredo Di Stéfano stadium ”.
“The amount of the investment accounted for in the 2020/21 financial year was € 166 million, including the capitalized financial costs during the construction period. Thus, the Accumulated investment until June 30, 2021 amounts to € 279 million “.
“During this fiscal year, in the month of July 2020, the second disposition of the loan amounting to € 275 million, which makes a total of € 375 million of loan drawn on June 30, 2021 (the first draw of € 100 million took place in July 2019) ”.
Outlook 2021-22
With respect to next exercise, Real Madrid's forecast “is that public attendance at the stadiums will return, although it is not yet known what percentage of the capacity will be able to be used throughout the season. Regarding the economic situation, current forecasts indicate that recovery from the situation prior to the pandemic will not be immediate. In this context, the Club will continue in the effort to expense containment done so far ”.