NEWS STORY. 17/07/2023
| 2022/23 ECONOMIC AND FINANCIAL SUMMARY (excluding the stadium remodeling project) |
| MILLION DE EUROS |
2021/22 |
2022/23 |
| Revenues (before results from disposal of fixed assets) |
721,5 |
843,0 |
| EBITDA |
203,0 |
157,6 |
| Profit after tax |
12,9 |
11,8 |
| |
|
|
| Equity at 30 June |
546,4 |
558,3 |
| |
|
|
| Cash and cash equivalents at 30 June |
401,5 |
128,2 |
| Net borrowings at 30 June |
-263,1 |
-46,7 |
| Debt/EBITDA Ratio |
0,0x |
0,0x |
| Debt/equity ratio |
0,0x |
0,0x |
| STADIUM REMODELING PROJECT (€ Million) |
| |
2021/22 |
2022/23 |
| Accumulated investment |
537,8 |
892,7 |
| Loan drawn |
800,0 |
800,0 |
The Board of Directors of Real Madrid C. F., chaired by Florentino Pérez on 17 July at midday, presented the annual accounts for the 2022-2023 financial year.
On the sporting front, the football first team won the European Super Cup, Club World Cup and Copa del Rey trophies and reached the semi-finals of the Champions League. As for the basketball first team, it won the Euroleague trophy and the Spanish Supercup. All these sporting achievements have been reflected in higher revenues, but also in higher expenses, both in personnel due to the bonuses paid to sporting staff and in operating expenses due to the greater number of matches played.
Operating revenues (before fixed asset disposals) for the financial year 2022/23 amounted to 843 million euros, an increase of 121 million euros (17%) compared to the financial year 2021/22. With the exception of competition revenues, given that the Champions League trophy was won in 2021/22, all other business lines recorded growth, especially marketing and stadium revenues, the latter still affected in 2021/22 by the capacity restrictions due to Covid-19.
In this financial year 2022/23, despite the still lingering effects of Covid-19 and the stadium capacity restrictions resulting from the ongoing refurbishment works, the Club manages to exceed for the first time and by far the pre-pandemic revenue figure (757 million euros in 2018/19). Stadium revenues, due to the works, were still 13% lower than in 2018/19 but revenues from the remaining business lines have already significantly exceeded those achieved in 2018/19, with marketing revenues in particular standing out (+12%).
The value of the ratio in the financial year 2022/23 has been set at 54%, a value close to 50%, which is considered the threshold of excellence, and well below the value of 70% which is the maximum level recommended by the European Club Association.
In the financial year 2021/22 the value of the ratio stood at 72%, which adjusted for the effect of Covid-19 in lost revenue, would be a value of 64%, which, in turn without considering the impact of sports trophies and other non-recurring expenses, would have been a value of 59%. In the financial years 2019/20 and 2020/21 the values of the ratio were 57% and 62% respectively, both years also being affected by the effects of Covid-19.
This shows that, despite the effects of Covid-19, the Club has managed to keep the level of the ratio under control at the levels recommended by the European Club Association.
In the financial year 2022/23 the Club obtained an EBITDA of EUR 158 million.
A comparison of EBITDA in 2022/23 with that of the financial years 2019/20, 2020/21 and 2021/22 shows the improvement achieved in 2022/23 in the operating efficiency of revenues versus expenses due to the gradual recovery of the activity after the pandemic, although the results of disposals in 2022/23 were lower than in previous years. In the case of player transfers, it is more difficult to carry out significant transfer operations, both because of the huge losses incurred by most European clubs due to Covid-19 and because of the evolution of the dynamics of the transfer market itself, with an increasing number of players finishing their contracts without being transferred. In addition, the comparison with 2021/22 has to take into account the capital gain realised in that year due to the Sixth Street/Legends deal.
The profit after tax is obtained from EBITDA after taking into account depreciation and depreciation expense, financial result and corporate income tax.
A profit after tax of EUR 12 million is obtained in 2022/23 compared to EUR 13 million in 21/22. Thus, in an economic context characterised by widespread and very significant losses in the vast majority of the most relevant European clubs in the period 2019/20 to 2021/22, losses that also persist in the results of relevant clubs announced so far relating to the financial year 2022/23, the Club closes in profit all the financial years of the 4-year period covering the financial years 2018/19 to 2022/23, which have been affected by Covid-19 and, in the specific case of the Club, by the completion of the remodelling works of the stadium. This has been achieved through cost containment and business improvement measures in all areas.
As a result of the profits made, the Club has increased the value of its net assets year on year to reach a value of 558 million euros by 30 June 2023. Having managed to remain in profit in the four financial years affected by the pandemic and the refurbishment of the stadium - 2019/20, 2020/21, 2021/22 and 2022/23 - despite the loss of income suffered, the Club has managed to increase the value of its net assets by €25 million compared to the situation as at June 2019 before the pandemic and the start of the refurbishment work, and to reach a value of €558 million as at 30 June 2023.
The cash balance as of 30 June 2023, excluding cash from the stadium redevelopment project loan, is EUR 128 million.
The comparison with the cash balance as at 30 June 2022 is determined by the impact on the cash balance in the financial year 2021/22 of the capital gain from the Sixth Street/Legends agreement recorded in that year.
During the financial year 2022/23, in addition to payments for player acquisitions and renewals and other investments, both current and outstanding from previous years, significant payments have been made, such as, among others, payments of bonuses for sporting achievements from the previous year, as well as the payment of the first full year (repayable over 4 years) of repayment of the ICO/Covid-19 loans.
In addition to the cash balance of 128 million euros, the Club has at 30 June 2023 undrawn credit facilities amounting to 265 million euros. These financial availabilities allow the Club to comfortably meet its expected payment commitment.
The Club's Net Debt, excluding the stadium redevelopment project, has reached a value of EUR -47 million as at 30 June 2023. This amount represents, in reality, not a debt but a net liquidity position, as the sum of cash and debtors for transfers is greater than the credit balances for investments, bank debt and advances.
The change in the net cash position compared to the previous year reflects the above-mentioned change in the cash position.
Compared to the situation prior to the pandemic (30 June 2019: net liquidity position of -27 million euros), the net debt at 30 June 2023 is -20 million euros lower, which shows that the Club has managed to offset, through the savings measures implemented and other business improvement actions, the loss of income of close to 400 million euros caused by the pandemic and its consequent impact on lower cash and therefore higher net debt.
The Debt/EBITDA ratio stands at a value of 0, given that the Club has no debt but a net liquidity position. In other words, despite the effects of the pandemic, the Club has a level of Debt/EBITDA ratio that represents maximum credit quality for financial institutions.
All this data demonstrates the robust equity position and high solvency that the Club maintains despite the pandemic..
Real Madrid's contribution to Tax and Social Security revenues in the financial year 2022/23 amounted to 342.4 million euros.
With regard to the Santiago Bernabéu Stadium remodelling project, the Club has continued with the implementation of the works in the 2022/23 financial year, estimating the completion of the essential part of the works for the end of the year 2023. The execution of the works has been carried out according to plan, being compatible with the holding of matches at the Santiago Bernabéu stadium.
The amount of the investment accounted for in the financial year 2022/23 was 355 million euros, including the financial costs incurred during the construction period. Thus, the cumulative investment until 30 June 2023 amounts to EUR 893 million.
As for the loan, the full amount of EUR 800 million was fully drawn down during the previous year. The first repayment of the loan will take place in the financial year 2023/24, on 30 July 2023, with a repayment of 34 million euros.
Foreseeable developments
A key fact that will determine the economic development of the next financial year 2023/24 is that the work on the stadium refurbishment is expected to be essentially completed by the end of 2023, so that for accounting purposes the investment is expected to be operational as of 1 January 2024, with the effect that from that date the investment will start to be depreciated and the financial costs of the stadium loan will cease to be capitalised.
The other relevant effect of the completion of the works is the increase in revenues, both from ordinary/vip capacity and from the commercial exploitation of the facilities (tour, events, bars and restaurants, shop). It is estimated that the increase in revenue from the full commercial availability of the stadium would start from January 2024 and would develop progressively. All this leads to estimate that the revenues of the stadium in 2023/24 will increase significantly compared to the financial year 2022/23, although they would still be significantly lower than the expected level to be achieved from 2024/25 when the different business lines are fully operational.
Logically, the increase in revenue will also result in a corresponding increase in operating costs related to the operation of the stadium.
In the sporting arena, the Club intends to continue reinforcing and developing its sporting model aimed at continuing to achieve the sporting successes in football and basketball that have distinguished the Club throughout its history and very significantly in recent years.
All of this must be underpinned by an economic model that pursues self-sustainable growth where, through a combined effort of growth/diversification of income and cost control, profitability is obtained and a financial structure whose solvency allows the Club to meet the investments necessary for the development of its activity.
