NEWS | 02/12/2020THE IMPACT OF COVID-19 HAS LEAD TO A REDUCTION OF -13% (-€106 MILLION) IN INCOME FOR THE 2019/20 FINANCIAL YEAR
THE CLUB MAINTAINS A SOLID EQUITY SITUATION WITH A NET EQUITY OF €533 MILLION AND TREASURY OF €125 MILLION AS OF 30 JUNE, 2020
REVENUES OF €617 MILLION ARE BUDGETED IN 2020/21, AROUND €300 MILLION LESS THAN IF THERE HAD BEEN INCOME GROWTH AS IN YEARS PRIOR TO THE PANDEMIC
|ECONOMIC-FINANCIAL SYNTHESIS 2019/20 (excluding stadium remodelling project)|
|Income (before result of disposal of fixed assets)||757,3||714,9|
|Profit after tax||38,4||0,3|
|Equity as of June 30||532,8||532,9|
|Treasury as of June 30||155,7||125,3|
|Net debt as of 30 June||-27,1||240,6|
|Debt / ebitda ratio||0,0x||1,4x|
|Debt / equity ratio||0,0x||0,5x|
|STADIUM REMODELLING PROJECT: SITUATION AS OF 30 JUNE, 2020 (€MILLION)|
|REVENUE BUDGET 2020/21 (€ MILLION)||616,8|
After the Real Madrid CF Board of Directors' meeting on 2 December, 2020, it has agreed to call an Ordinary General Meeting for 20 December, 2020, in which the results corresponding to the 2019/20 season will be submitted for approval, among other matters.
In the economic sphere, the 2019/20 financial year has been marked in its last three and a half months by the effects of the health pandemic caused by COVID-19 and it is foreseeable that these effects will persist throughout the 2020/21 financial year.
In terms of sporting results, the first football team won the league title and the Spanish Super Cup in 2020, while the basketball team won the Copa del Rey trophy.
With regard to the Santiago Bernabéu stadium remodelling project, in 2019/20 the works have been carried out as planned, compensating for the stoppage of activity decreed by the Government in the period from 30 March to 13 April with the greatest ease to carry out the works, which has meant that matches at the Santiago Bernabéu stadium have not been played since 14 March. The accumulated investment amounts to €113.7 million and the first drawdown of the loan for an amount of €100 million has been made.
Likewise, the merger by absorption has taken place, effective 1 July, 2020 and therefore already within the financial year 2020/21, of the Club Deportivo Tacón women's football, by Real Madrid CF, a merger that had been approved by the Extraordinary General Meeting held on 16 September, 2019.
The impact of COVID-19 has led to a reduction in income of -13% (-€106 million), and once the costs directly associated with said income (€16 million) have been discounted, represents a loss of -€91 million caused by COVID-19 in the 2019/20 financial year.
To mitigate the impact of the lost income, the club has implemented cost saving measures.
In terms of personnel costs, the players and coaches of the first Real Madrid football and basketball squads, together with the main executives of the different club divisions, have voluntarily agreed to lower their remuneration for this year by 10% (this reduction would have been 20% if the league competition could not have been completed).
Likewise, in operating expenses, a savings plan has been established through which an expense reduction has been obtained, in addition to the one derived from the loss of income, equivalent to 8% of the total annual expense.
After the cost-saving measures adopted to mitigate the impact caused by COVID-19, the club closed the 2019/20 financial year with an economic result in balance (€0.3 million).
In financial terms, the impact caused by COVID-19 on the treasury as of 30 June, 2020 (-€154 million), is almost 50% higher than the impact of lower income, as the club has to take on, in addition to the loss of income indicated above, postponement of collection of certain sponsorship contracts and membership fees.
To offset this impact, the club obtained new long-term bank financing during the months of April and May 2020, of which €155 million correspond to four loans with a maturity of 5 years and €50 million correspond to a credit policy with a maturity of 3 years. The operations have been formalised independently with the five national banking entities with which the club operates and are endorsed by the ICO within the line approved by the Government to facilitate the liquidity of the companies.
As of 30 June, 2020, the club has a net worth of €533 million, a treasury of €125 million (excluding the treasury of the stadium remodelling project) and has funds available in long-term credit policies in enough amount to meet its payment obligations in the difficult economic environment that will extend throughout the 2020/21 financial year.
Real Madrid's contribution to Tax and Social Security income in the 2019/20 financial year amounted to €286.4 million.
The club contributed €3.3 million in donations for the purchase of medical supplies to combat the pandemic, destined for the Comunidad de Madrid, the Madrid City Council and the Centre for Health Supplies. The club also made the facilities of the Santiago Bernabéu stadium available to the health authorities as a warehouse for supplies.
In 2020/21, revenues of €616.8 million are budgeted, which represents a decrease of -14% compared to the 2019/20 financial year, which was already affected by the pandemic in the income of its last four-month period, and of -25 % compared to the 2019/20 budget prior to the pandemic, which was €822.1 million.
The loss of income due to the effect of COVID-19 in the 2020/21 financial year affects the different lines of business, mainly in the stadium, where income from match attendances has not been budgeted, and in commercial activities, where it is reduced to the Income from the stadium tour and shops is minimally expressed, although there are still uncertainties about the degree of final impact that income will suffer depending on the evolution of the health situation until the end of the year.
If the pandemic had not occurred and the income growth trend of previous years had been followed, the budget for the 2020/21 season would have reached a figure close to €900 million, that is, a difference close to €300 million with respect to what was budgeted as a consequence of the pandemic.
Despite the savings measures that are being implemented, the after-tax result will be significantly affected by this significant loss of income, although the club will try to materialise opportunities for improvement to try to balance the result as was achieved in the previous year.