122 million not justified that raise doubts about the ‘Fair Play’ of Madrid

2023-07-12 19:10:02

BarcelonaA journalistic investigation of The Telegraph has put the focus on the fair play of Real Madrid and the calculation of the salary limit to prepare the white team. According to the English newspaper, up to 122 million euros of the item “other management expenses” that are included in the latest economic report of the Whites, made known in October, are not justified. This is a significant amount of money, because it represents a fifth of the ordinary expenditure of the entity chaired by Florentino Pérez, who has described the publication as false.

He Telegraph asked Madrid if these 122 million, in whole or in part, would correspond to repayments of an agreement with the private capital group Providence, but did not get an answer. In the 2017-18 season Madrid signed the first of these deals whereby the American company gave them money in return for the sale of future revenue streams and since then it has expanded both in terms of duration as well as value. The club recorded these matches as income rather than debt and, according to the British rotator, although this would not be an illegal operation, the fact that Madrid have never explained in detail how these amounts are returned to Providence or how much is paid each year would raise doubts about compliance with UEFA’s financial controls. Because? Because these types of agreements, since they are not considered a loan, contribute to establishing a higher overall income figure, a basic fact when calculating the salary limits. “It would be accounting engineering, but it would not be illegal,” sums up economist Ivan Cabeza, who describes the operation as “leverage.”

Inland Revenue considers this type of payment in exchange for future income to be financing and should therefore be accounted for as debt. On the other hand, Madrid includes it as income and this ends up having an impact when defining the fair play and the preparation of the template.

Madrid’s European rivals do not have games without justification

According to the research, Madrid’s European rivals do not have an unwarranted game so large in their financial results. In fact, Madrid’s “other operating expenses” item has increased from 17 million in 2017 to 46 million the following year and reached 135 million in the 2021-22 season. Of this money, the Whites have justified 13.5 as part of a payment to the League made by all the clubs in the competition.