If the big clubs start to slip on transfer stage payments, what happens then?




By Tony Attwood

In terms of football, the Spanish newspapers are full of one story.  And it isn’t the financial collapse of Real Madrid and Barcelona.  Rather it is the fact that the Spanish FA (RFEF) are making some pretty major changes to the way in which football if refereed.  

And what makes this of particular interest is that also under investigation is the Head of the Referees Technical Committee (CTA) Luis Medina Cantalejo who is seen as an ally of the Spanish FA  President Luis Rubiales.  

Now of course PGMO and all its allies in the English media will ignore this on the grounds that it is just something that happens to foreigners, and that there is nothing wrong with refereeing in the Premier League, despite our regular revelations concerning how some referees are constantly biased.   

But behind such machinations, there is the financial future of Barcelona and Real Madrid.   Both clubs are now having difficulties in submitting their accounts to the League because both clubs have been accused of selling future revenue to outside agencies and then including that income in the current year’s finances.

In short the club might lose £100m in one year, but then sell their broadcast income for the next three years for £150m, and so show that they made a profit of £50m this year.  Uefa has banned such accounting practices.

Now we have become used to this sort of game from Barcelona who seen by any normal use of financial analysis, to be insolvent.  But it seems Real Madrid, on the quiet, have been up to the same tricks.

Certainly, both clubs have been rebuilding their stadia at quite a pace, as both grounds have gradually deteriorated over the years.  

This is the season of the newly updated Santiago Bernabéu Stadium’s grand opening, although as the summer window shuts the kind of Real Madrid team that might play in it has been the subject of concern.

Only one of their top ten big money transfers was this year, and that on top of only one last year.   Indeed in this financial year Real Madrid have made only one money transfer, and that at about £17m for a Turkish midfielder Arda Guler.

As the Telegraph points out, “to replace Ballon d’or winner Karim Benzema, they have signed on loan the 33-year-old striker Joselu, once of Stoke City… and recalled Brahim Díaz from a three-year loan at AC Milan.”  And neither of those players started in any of the opening games of the season.

Meanwhile, players have been lost, as contracts have been allowed to run down, while older players have been kept in the squad.

Of course in the past this was unthinkable because of the fear that Barcelona would simply step up and wipe Real Madrid off the map.   But as we have noted before, Barcelona have been fined by Uefa for similar FFP activities.   They are now trying to recover by selling Ousmane Dembele to PSG while removing Ansu Fati from the salary expenditure by loaning him to Brighton and Hove Albion.

We have, of course, covered Barcelona’s activities of future selling their TV rights, but even this hasn’t really helped their FFP situation.   Real Madrid however seemingly ignored the Spanish authorities’ warnings to Barcelona and are themselves trying to include in current revenue to the tune of  €44 million the money they have received as an advance on future income from the US investment company, Sixth Street.   As with Barcelona, Uefa said that was not on.

Meanwhile, the stadium rebuild has been financed by loans, which now need to be paid back with interest.  At the same time, The Daily Telegraph suggested that in the accounts “20 per cent of the club’s costs in its results for 2021-2022 were unaccounted for.”    But whatever the explanation, Real Madrid, along with Barcelona are not in the transfer market as they once were.

Thus many people who are involved in football finances are seeing the establishment of the Saudi League as something that is happening exactly at the right moment.   Clubs in all leagues are dependent on the price of players rising.  

Indeed the transfer market is a bit like Britain’s house market.   A house might cost £200,000 to build, but sells for £250,000 and then three years on is sold by the first owners for £300,000   But by then all house prices have risen by a third, so as long as one needs a house, there is not real profit.  

But if house prices suddenly fall, people who have bought at the top of the market using borrowed money can be left in difficulty.  They might not be able to pay the loans back, and no one wants to buy at anything like the price gained before.

That was the position when the Saudi market opened up, and that will be saving some clubs.  But once the Saudi teams have their players, that market will calm down, and it is quite possible that like the Chinese League before it, it will eventually crash.  We could be in for interesting times.  Especially if the Spanish FA find that their two big clubs have been breaking the rules.

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