The Telegraph reports that Real Madrid are failing to explain €122m in operating expenses, which could pose a fairness issue over Financial Fair Play.
An increase of 800% in five years. In its latest public accounts, Real Madrid shows 135 million euros in payments in a category called “other operating expenses”. The Telegraph, studying the data of other clubs of similar stature, wanted to know what this corresponds to. But the British daily has not obtained any explanation from Real for 122 of these 135 million euros.
In all likelihood, all or part of this 122 million euros would be used to pay a US investment fund in relation to an agreement on a sale of part of the marketing income. During the 2017-2018 financial year, it was in particular a question of a cash contribution from the Providence group in exchange for a percentage of the income concerned.
A fairness issue?
For The Telegraph, there is no indication that this expenditure of 122 million euros is hiding anything illegal. On the other hand, the British daily explains that there could be a problem of equity in relation to the financial fair play of UEFA (and that of LaLiga in Spain).
To have the possibility of investing without restriction on the transfer market, or of managing a very large wage bill, UEFA relies on turnover. But loans are not supposed to be counted as a source of income.
By recovering cash in a sales agreement from part of the revenue, a club can artificially inflate its turnover over a given period and therefore obtain more margin in terms of investment and payroll. Of course, this implies an increase in expenses afterwards. But with this mechanism, there is officially no loan or debt. According The TelegraphUEFA declined to comment on the situation.
