A battle Real Madrid’s soul – with 122 years of history at stake

Florentino Perez has big decisions to make about Real Madrid’s future – Shutterstock

The biggest decision in the history of Real Madrid lies ahead for the club later this year with president Florentino Perez promising structural change and the end to what would be 122 years of members owning one of the most famous sporting names in the world.

The club, which is coming to the end of a refurbishment of the Bernabeu that cost around €1.175 billion, funded by debt, has total borrowings of €2 billion. It has chafed against the decline of its pre-eminence in the transfer market although its success in the Champions League in the last decade has far outstripped the days when it could assemble a team of the world’s most famous players without rivalry from fossil-fuel funded rivals.

The club have won five of the previous 10 Champions League editions and are well-placed to reach another final when they play their semi-final second leg at the Bernabeu against Bayern Munich on Wednesday. Perez, president of the club for 21 of the last 24 years, is 77, and life for Real after he finally leaves office is by no means certain. The club has struggled to find a way to compete for the biggest players against the wealth of the Premier League, and clubs funded by Middle East fortunes, in particular Manchester City and Paris Saint-Germain.

Real Madrid won their first European Cup in 1956 with a 4-3 victory over Remis – Getty Images/Popperfoto

Even the arrival of Kylian Mbappe as free agent this summer, if that is indeed what the Frenchman choses to do, will in part be made possible by a new regional change to the income tax law which will permit foreign workers to pay lower rates: 24 per cent against 45 per cent.

While Spanish football was boosted by another tax measure, what became known as the “Beckham Law” in the 2000s, named after David, a Real signing in 2003, this latest law change will specifically help satisfy the kind of demands Mbappe might make.

Yet the question of how Real could shift its constitution from one of Spain’s four member-owned clubs, to something closer to a plc – a “sociedad anónima deportiva” under Spanish sports law – is a fraught question. Selling a part of the club to raise capital would raise huge issues as to how the club’s 92,000 members might be recompensed, if indeed they are at all. Membership has long been closed to new applicants and members’ cards are passed down from one generation to the next.

Nevertheless, it seems unrealistic to expect Real, as well as their rivals, the heavily indebted Barcelona, to continue without doing something to address borrowings. Real did not respond to Telegraph Sport’s report in July last year that €122 million (£103 million) in the club’s most recent financial results, around 20 per cent of costs, is unaccounted for. The club did not confirm these payments, directed into a sub-category of “other operating expenses”, were to service agreements for the sale of future marketing income.

In the summer of 2022, Real’s headline revenue was bolstered by the sale of €360 million (£306 million) of 30 per cent of revenue over 20 years from the remodelled Bernabeu to the US investor Sixth Street.

The redeveloped Santiago Bernabeu is the a shimmering jewel – but what cost has it come at? – Getty Images/Guillermo Martinez

Selling a share of Real would almost certainly involve the advice of Key Capital Partners, the advisors who also share personnel with the A22 group that advises what remains of the European Super League. Perez remains a supporter of the breakaway league, with Barcelona counterpart Joan Laporta, more than four years since its other nine of its original members abandoned the project within days.

It has been suggested that Real would propose selling a minority stake in the club to investors. However, the capital raised would require a law change for it to be used by the club rather than paid to the current membership. One of Key Capital Partners’ financiers, Anas Laghari, is expected to be elected as a senior member of Real Madrid – a compromisario – when the results from last Sunday’s elections are announced.

The Spanish newspaper Vozpópuli has reported that Perez’s financial advisors are already working on plans to sell part of the club. According to these plans, for a fee of around €50, each socio would have the right to a share worth between €50,000 and €80,000. It seems unlikely that many would give up that opportunity which would mean a sell-off of part of Real would, as it stands, be to the benefit of members rather than the club itself.

Vozpópuli also reported part of the club would have to be ring fenced in order to protect the 30-year deal with Sixth Street that Real regard as an investment but Uefa sees plainly as debt. Any plans are expected to be outlined by Perez by the end of the year and will be a key issue when the next presidential election comes around in 2025.

Given that Barcelona’s debt is now around €3 billion including its new stadium build it would seem unlikely that the Catalan club would not follow the same model were Real to be successful.

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