Often venerated as one of the greatest and biggest football clubs of all time, Real Madrid with time has shown how influential and powerful they are, both on and off the pitch. During the economic turmoil caused due to the pandemic, clubs and European leagues are failing to make the ends meet for their growth. Even huge clubs like Real Madrid and FC Barcelona too are succumbing to the wrath of the pandemic.
Real Madrid is known for spending big on players and infrastructure, but they are now facing a disastrous financial situation, leaving them far behind in terms of the wealth of European clubs especially the big six in England. In order to find a way out of this tricky situation, Real Madrid bosses backed the idea of the European Super League to cut out the risk of financial burdens and gain monetary freedom.
It all began in 2009, when Real Madrid president Florentino Pérez, commenced plans for super league competition, as he thought the UEFA Champions League was obsolete and problematic for the sport. He believed was an obstacle preventing clubs from growing their businesses and developing infrastructure. Ever since he has been in contact with the owners and bosses of the biggest European football clubs. According to Perez, the need for a new competition increased in 2020 since the biggest clubs started to fall prey to financial turmoil due to the COVID-19 pandemic, mounting massive debts. Real Madrid was one of the hardest affected institutions that been received a huge financial blow in Spain. With this development, Perez felt it quite imperative to make the concept a reality, for his club was in the deep sea of debts.
Mounting debt on Los Blancos
Before proceeding any further, it should be known beforehand that the 13-time Champions League Winner released the latest financial report back in January 2021. This report revealed that the club was under a tremendous debt of about €901 million. Madrid is in the short-term debt of €203 million, which places them in a far better position than their rivals FC Barcelona, who owe €126 million alone for transfers across 19 different clubs. It was assumed that the historic club was saving up for signing a big player like Kylian Mbappe or Erling Braut Haaland by signing zero players during the previous two transfer windows. However, the latest financial report suggests that the chances of Real Madrid signing a Galactico are bleak.
From the debt of €901 million, the Spanish champions have a net debt of €355 million. The amount of €114 million from net debt is attributed to the renovation of their spectacular Santiago Bernabeu stadium. The renovation project will cost the club a colossal €796.5 million including loan interest. This project is supposed to come with a multipurpose potential that is said to bring annual revenue of €1 billion.
To mitigate the financial burden, Real Madrid decided to sell Achraf Hakimi, Sergio Reguilon, and Oscar Rodriguez, while the likes of Gareth Bale and Borja Mayoral were loaned out. On top of these departures, Luka Jovic and Martin Odegaard were sent off as loans during the winter transfer window.
How European Super League would have cooled financial distress?
With all the things considered, especially their financial position, it does not come as a surprise Real Madrid along with Barcelona and Juventus are at the forefront of the idea of the European Super League. Europe’s top clubs expect guaranteed income and revenue. The Super League was envisioned with a return far more than the Champions League.
The founding clubs were expected to receive more than €10 billion in uncapped solidarity payments during their initial commitment period, along with a gain of $400 million for each founding member merely to establish a secure financial foundation, which turned out to be four times more than what Bayern Munich earned after winning the Champions League in 2020. With the plan drawing significant interest, with American investment banking giant JP Morgan pledging $5 billion for its establishment, things didn’t work quite the way they expected. The backlash from fans in England forced the big six in Premier League to withdraw from the lucrative project, while AC Milan, Inter Milan, and Atletico Madrid also decided to walk away from the breakaway league.
The collapse of European Super League is a big blow for Real Madrid. The Spanish club risks falling behind in Europe against other top clubs despite having the biggest pull in the world. A difficult summer transfer window lies ahead for Florentino Perez. On top of the economic turmoil, Real Madrid is likely to lose a number of players in the summer with the likes of Sergio Ramos, Raphael Varane, Marcelo, Isco and Lucas Vasquez rumoured to be leaving the club. Despite the impending challenges Real Madrid would be facing if their best players leave the club this summer, including a possible exit for Zidane, Perez remains hopeful that the plan of ESL will eventually be executed.
“We’re going to continue working. The project is on standby,” said Florentino Perez after nine of the 12 founding clubs withdrew from the proposed plan.