Real Madrid has registered its second-highest profit in the past two decades, despite marginal increases in revenue amid one of the worst seasons on the pitch in the Spanish LaLiga football club’s recent history.
Real has reported its financial results for the financial year ending June 30, 2019, with net profit rising 23.1 per cent year-on-year to €38.4m ($42.4m). The 2018-19 season saw Real win the Fifa Club World Cup, however the club only finished third in LaLiga while exiting the Uefa Champions League and Copa del Rey at the Round of 16 and semi-final stages, respectively.
Operating revenues for the 2018-19 financial year, without taking into account gains obtained through player transfers, reached €757.3m, only 0.8 per cent higher than the previous year’s figure of €750.9m. Real said that business growth compensated for the smaller revenue generated from the club’s shortened Champions League campaign.
Looking forward to the 2019-20 financial year, Real has projected revenue of €822.1m, as well as pre-tax profits of €41.4m. The increase in revenue is likely to be driven through LaLiga’s new broadcast rights cycle, plus sponsorship deals signed by the club.
In May, Real and German sports brand adidas finally signed their kit partnership extension for a further eight seasons, from 2021-21 to 2027-28. The new deal is thought to be worth about €135m per season based on a fixed fee and a percentage of shirt sales – more than twice the value of the current agreement, worth about €52m per season.
Real also noted that 2018-19 was a busy year in terms of progress on the redevelopment project for the Estadio Santiago Bernabéu. In May, Real awarded Spanish building and infrastructure company FCC Construcción the contract to handle the project.
Majority-owned by Mexican billionaire Carlos Slim, FCC’s contract is said to be worth around €475m. Meanwhile, in April, Real signed off on a deal that will see US financial services giants J.P Morgan and Bank of America Merrill Lynch lead the financing for the redevelopment.
Real has secured a €575m loan for the transformation of its stadium. The financing has been structured by J.P Morgan and Bank of America Merrill Lynch with the collaboration of Banco Santander and Société Générale. CaixaBank will be the agent in the transaction. Real said the contract of execution and financing of the Santiago Bernabéu project will come into effect in the 2019-20 financial year.
The club’s 2018-19 results have been submitted for approval at an ordinary general assembly scheduled for September 15.