How Real Madrid Became Richest Football Club In The World ?

Real Madrid have overtaken Barcelona to become the undisputed most valuable team in world football after financial reports of 2021/22 season were finalized. Real Madrid are currently valued at $5.1 billion according to recent Forbes and audit firm Deloitte. We breakdown the reasons why Real Madrid became the richest football club in the world.

To figure out a complete picture behind Real Madrid’s absolute dominance on and off the field we have to go back as far as 2009 when Florentino Pérez became the club president. He has turned Real Madrid fortunes both on the field success and made them commercial giants like Manchester United. There were several factors which Perez used in clubs favour to bring them where they are in 2022 value at $5.1 billion becoming to richest sports club the world.

In 2009 Real Madrid signed flurry of big name signings like Cristiano Ronaldo and Kaka on world record fee. How could they afford such marquee and expensive signings without the backing of oil/arab money ? Well it came down to the reason we are going to discuss below.

Constant Revenue Stream

Real Madrid yearly revenue comes from sources like gate receipt, TV money, sponsorship deals and prize money from the competition they play in.

Gate Receipts:

Real Madrid has the second highest average attendance in European football and with stadium overhaul completed in 2022 the capacity is increased 85,000 from 81,000. The increase is not as big but its mainly premium seats are added which will bring large chunk of extra revenue selling hospitality packages. Real Madrid are making around €146 million a year current but it is expected to reach around €165 million a year from 2022/23 season with new capacity of refurbished stadium.

Big Chunk of La Liga TV money:

La Liga has changed their TV money distribution system to much more balanced compared to previous eras where Real Madrid and Barcelona got the majority of it automatically. But even with the new so called equal share, Real Madrid and Barcelona still make much more then compared to other 18 clubs in the league thanks to historic pyramid payments. Just like Ferrari in Formula 1.

See Also: La Liga TV money distribution system

Real Madrid can take home as much as €160 million from TV money with the current La Liga TV distribution system that is on par with what Premier League winners usually get.

Spain’s Tax Laws:

Real Madrid and other spanish teams enjoy a massive advantage over their European rivals in terms of Spain’s tax laws. In Spain, foreign players who come to country for the first time can enjoy a massive tax relief and they have to pay only 23% of tax on their earnings for first 5 years in the country.

That means if Real Madrid were to pay and up and coming young player like Aurélien Tchouameni $8 million salary it would cost them $10 million a year. While if Tchouameni were to sign for Man United on same contract it would cost Manchester United $16 million on the same contract. That is $6 million more then what Real Madrid have to pay and over 5-year contract period it comes $30 million difference. Now multiply that to 4-5 players and difference become more then $100 million and that is why Real Madrid can afford high rated players even if they wont play regularly.

See Also: Tax on footballer salaries in European leagues

Privileges to be Non-Profit Social Trust:

Real Madrid is not your typical profit oriented franchise like what Manchester United have become under glazers with their massive debt. Real Madrid are in the list of clubs with highest debt just like Man United. But they do not have to generate certain amount of money every year just to survive. Most of Real Madrid’s debt is with Spain’s local banks and with Real Madrid being symbol of country and too big and important for the country and combine that political and social pressure Banks do not raise interest rates over longer period of time giving Real Madrid a rather easy ride compared to other institutes in debt.

Incredible Success On The Pitch:

Real Madrid have won Europe’s premium cup competition, UEFA Champions League 14 times in their history. More then double of their nearest rivals AC Milan (7) and Bayern Munich (7). Over the last 8 years they have won the competition 5 times making them the most successful team in European football. Now that success on the pitch also translate off it as well.

See Also: Champions League Prize Money Distribution System

Real Madrid has earned around $1 billion in champions league money over the last 8 years. That $300 million more then any other club in the same time.

Record Breaking Kit Suppliers and Shirt Sponsorship Deals:

Real Madrid has the biggest kit deals in the history of football. They became the first team to earn over €​100 million from their kit suppliers contract with Adidas. With merchandising factored in it could be as much as €​152 million a year with their current contract with adidas.

See Also: Biggest Kit Deals in Football

Add their Fly Emirates deal worth €70 million a year and you are looking at over €200 million a year minimum from only these two deals.

Apart from these, Real Madrid has adopted Man United commercial success blueprint. They are now in sponsorship deals with over 100 brands worldwide. Those deals can double their yearly revenue from just sponsorships similar partnerships.

See Also: Richest Football Clubs

So if we take look these factors in it is no surprise Real Madrid have outranked every club in terms of revenue generation. As the things stand it will be difficult for any other club to catch them in terms of financial growth over the next few years. Only one club can get to them and that is Manchester United who have topped Richest Football Clubs list for 11 years out of last 22. But their on the field issues have kind of stagnated their progress off it.