The defending Champions League title holders Real Madrid made the transfer for James Rodriguez official on Tuesday giving them three of the four largest transfers on one team. The $108 million deal in the Financial Fair Play world is a bit suspicious. Teams have to sell to buy, but Real Madrid are working backwards. However, they know that big name clubs often go unpunished by UEFA so there is little concern over the relatively young regulation.
Real Madrid topped the Forbes list of most valuable franchises this year. Last year they reported revenue of $690.37 million, but were supposedly $794 million in debt. Since then they have signed Gareth Bale, Toni Kroos and Rodriguez. However, they also gained more revenue from their shirt sponsor deal and individual television rights. The reported debt measured their total liabilities, including money owed in a land deal.
Financial Fair Play was set up to level the playing field and keep wealthy owners from giving large sums of cash to highly successful clubs. If clubs can show they are moving in a positive direction, they are often allowed to breeze by any sanctions. Real Madrid has been known to pay transfer fees in installments which helps their standing within the rules. Swiss Ramble has reported that Real Madrid’s debt is lower than some teams in the EPL.
Still Marco Ruiz of AS.com reported last year that floating assets versus short term debt puts Real Madrid in a deficit of about $135 million. Liquid assets may outweigh the negative working balance, but buying players for this much is an abuse of their funds. It is clear that Real is in debt. They will need to sell Isco and Angel Di Maria to look better in the eyes of Financial Fair Play.
Of course, Di Maria is probably off to another club under the investigation of UEFA in PSG. They will have to sell off to sign Di Maria after getting a three-year fine last year. Of course, that could be reduced to just one year if they are on good behavior.
Despite convoluted books, Real Madrid is one of the biggest clubs in Europe and UEFA always wants them active in the transfer market. They have bought who they want in this window and are hoping to sell off players. However, the Financial Fair Play sanctions have yet to punish any of the big name clubs. Don’t expect any crazy punishments for Real Madrid.