“The coronavirus is not going to kill Real Madrid”

Are you from Madrid?

Man, and I played in the lower categories of the club.

Do not tell me.

They had a very cool league then and I played for the García Navajas team… I'm talking about the 80s. I would be eight or nine years old…

What is the first Madrid that you remember?

Well, from the Quinta del Buitre. In fact, I was going to see them at Ciudad Deportiva just before they went up to the first team. As a child I was also going to see that great Madrid from the comebacks to the Bernabéu.

With that background … Do you promise to tell the truth and the whole truth?

(Laughs) Yes, yes… Before being a Madridista, I am an economist.

-How is Madrid in economic health?

-Before the pandemic, I was in a fairly good income and debt margin situation. But the impact of the pandemic has been brutal …

Clear.

I have been CFO and I usually only look at the box, which is the one that marks. And the club has had a cash outflow and loss of liquidity of 150 million euros in three and a half months of pandemic …

Isn't there still more than 100 million in treasury?

He has it because he has admitted debt. But the cash flow, removing the debt, is minus 150 million. The data is given by them.

What does that mean on a practical level?

Well, there was some income, and that between the drop in those income and the increase in expenses, 150 million have gone to you.

I get it…

And Madrid admits it, they are quite clear, honest and neat with the accounts. And for many of the sponsors they give the income as accrual, but they have not really entered the money. You have it in your accounting, but in reality you have not collected it, and that already in the box does not come out.

Those loans requested for a value of 205 million are striking. What reading does it do?

Well, it's easy, they are asked to cover that cash outflow that they have had. It is a short-term credit … By concept, accounting is always balanced, assets equals liabilities. The difference is that, if on one side you have a drop in income, on the other you have an increase in debt.

There is a credit policy available of 328 million. Can it be used for a great signing?

This indicates that there is a bank that allows you to have a negative overdraft for that limit. For what do you use it? Well, they are solution mechanisms for transitory problems. It is something normal that is used to avoid liquidity or treasury tensions. In case of losses due to force majeure … That Madrid has this policy indicates, in the midst of the crisis, that the club has solvency and that the markets and banks trust their situation. Credit comes from Latin I will believe … It means that if your accounts are created they lend you, and if not, they don't.

In the 2020-21 budget, the club foresees losses of around 100 million …

Normal. Actually, where the impact of the pandemic will be seen is in 2021. If the vaccine worked well and the season could end by going to the stadium, everything would be reduced a little … In any case, the great success of Florentino's management is that the money that represents the attendance to the stadium is a small percentage of the total of the income. His great contribution was to understand that having big stars, advertising contracts would skyrocket and that advertising money had to be distributed 50% between the club and players … And that was the great transformation of Madrid.

What impact has the stadium credit had?

I did not see a significant increase in debt. I think they take the loan in three parts … I think that on an income of 800 million, under normal conditions, it is an assumable loan.

Madrid separates the debt of the stadium from the rest of the debt. Can be done?

In accounting no, in the presentation of accounts yes. In fact they should. For me, you have to separate the investment in the stadium, which will have a payback of 40 years or so, from the rest of the income and expenses that are recurring. I would do this analysis separately, if not, you cannot compare with respect to the previous year, because the accounts would be distorted.

Wouldn't it be necessary to explain to the people that in spite of everything the stadium is a debt you assume?

Going into debt is neither good nor bad. What you have to see is what you take on the debt for. If you do it for something that generates a much higher return, as it seems to be the case, than what you pay in interest, the debt is worth it. What you have to take care of a little is liquidity, that you can face the payments to which you are always obliged.

Don't you see risk?

Man, what is clear is that Madrid is better than other clubs, such as Barça. For Madrid, the pandemic took him in a very solid position. Is Madrid going to be bad? Yes, but less than its competitors. The 2021-22 season should be of some normalization.

Revenues have fallen from 755 to 692 million, and for 2020-21 they remain at 616 …

It's tremendous, they have fallen 25% in two years. The decline in GDP has been 11 or 12%. Therefore, the impact of the crisis on football has been double that on GDP. It is not as much as in tourism or hospitality, but it is very hard. The important thing is to know that the coronavirus is not going to end football or Real Madrid. People will go back to the stadiums.

What is your recipe for getting out of this?

Well, we are at the expense of the vaccine. It is vital to get back to normal.

Will the pandemic change the model of football that we know?

Where the money really is is in the European competition, in relation to the Champions League. There is a project to do it instead of through UEFA on the other hand, and to tend towards an NBA model in which the clubs themselves manage it a bit. The great beneficiaries of this model in Spain would be Madrid and Barça …

Does Madrid tend to that?

If that project could be activated or accelerated at some point, it is now. It was already underway, is vox pópuli that there have been meetings and sketches of what the format would be like. UEFA is very nervous because it lives very well. I'd be nervous too. But it is clear that it is a model that makes sense, although it was not a pure free market but with conditions, as in the NBA or the NFL. I believe that just as the pandemic has speeded up the digitization process, it can also speed up this model of the football industry.

With the accounts that you have seen and that have to be approved in the Assembly, is it feasible to sign Mbappé this summer?

When we get to summer, the pandemic will be seen in a more relaxed way. Let's see if that is so. And if banks and markets are accessible and you can finance yourself at rates close to zero like now. I do not rule it out. What I do see is that Madrid will go to that market in a better position than other clubs.