Real Madrid has announced record revenues for 2016/17. It was a year that saw th
ID: 348492 • Letter: R
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Real Madrid has announced record revenues for 2016/17. It was a year that saw the team winning La Liga, the Champions League, the Club World Cup and the European Super Cup. Full details will be available at the start of October when the financial results are submitted to the club's membership for approval but the club has already released highlights Based on a current exchange rate of 1.19 euros to the dollar Real's revenues cleared the $800M mark for the first time-an increase of nearly 9% on the previous year. Real recorded a net profit of $25M against $36M the year before. The team also continued the trend of not carrying any net debt- rather the net position is an asset. For the 2016/17 the overall net debt position was -$12M versus-$15.6M the year previous. Although full financial details are not yet available, there is the 2016/17 budget that was approved a year ago and that can be used as a performance benchmark. Revenues are $51M higher than budget while pre-tax profit missed the budget by $28M (budget $59.6M; actual $31.3M). Expenses blew through the budget and within the Real Madrid press release, there is a partial explanation.Explanation / Answer
The reading is about the financial performance of Real Madrid soccer team for the year 2016/17 and its planned budget for the 2017/18 season.With the back-to-back wins of various championships, Real Madrid has announced record revenues for 2016/17 amounting to 800 M $ which is an increase of 9 % over the previous year. However, the net profit is 25 M $ in the year compared to 36 M $ the year before. The team improved its net debt position from - 15.6 M $ in the previous year to -12 M $ in the current year.
The approved budget for 2016/17 can be used as a benchmark to compare the current performance. While revenues are 51 M $ higher than the budget, pre-tax profit is lower by 28 M $. This is due to the increase in the expenses, particularly related to the bonuses paid to the sporting personnel. The team made more money and spent more money which highlights the additional costs of winning amounting to approximately 50 M $.The team didn't undertake much of transfer activity in the year and spent 44.6 M $ in transfer fees while it recouped just 35.7 M $. However, the overall impact is small after accounting for profit on player sales and amortization charge for incoming transfers.
The meeting is scheduled in October to review and approve the budget of 821 M $ and a net profit estimate of 57.8 M $ for the year 2017/18 before any profit on player sales.With the departures of some players to other teams and a substantial loan fee for one of the players, it will allow the club to spend big in the transfer window, improving some players' contracts or simply looking at pocketing the profit.
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