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Analysis:
Translation of the pages 6 and 7 in the Real Madrid financial statement 2008/09.

Player salaries compared to total revenues:
The percentage is the coefficient between the total player compensation and the total revenues of the club (before amortization of assets).
This is the most commonly used financial indicator in order to measure a club’s financial health and its’ operational efficiency and thereby its’ future prospects.
The increase in income has been accompanied by an effort to curb costs and to improve the efficiency which is shown by the improved ratio revenues/player compensation which has been reduced to 46% for the season 2008/09. This not with standing higher costs associated with indemnifications to injured players and non players (e.g. sacked coaches) for the season 2008/09.
Real Madrid is located below the 50% mark which is considered the mark of excellence and way below the 70% mark which is the maximum ratio recommended by the UEFA.
The graph shows a horizontal line at the 70% mark with the comment “maximum level recommended by the UEFA”.
Page 7:
Net Result before amortizations and the results from player transfers (EBITDA before player transfers)
To see a definition of EBITDA check the wikipedia: definition of EBITDA
The EBITDA (before player transfers) constitute the operating profit which the club achieves once the revenues have been deducted of the recurring player’s compensation and the rest of the operating costs. This is the source of resources which the club dispose of in order to make future investments in players and in installations which are defined in its’ development project as well as in order to comply with its’ financial obligations.
As one can observe in the budgetary liquidation account issued by the Memoria de las Cuentas Anuales for the season 2008/09 a EBITDA of 93 million Euros has been achieved slightly inferior to the result the previous year. One has to note though that the club has had to absorb loses of 14 million euros from insolvencies, risks and contingencies not present in the previous year. As well as one major one time write-off of 11 € million Euros net in indemnifications. If one adjusts the EBITDA for these effects the comparable number for 2008/09 versus 2007/08 would have been 118 € million Euros. The 93 € million euros of EBITDA represent a pre-tax profit of 23% on the gross revenues of 407 million euros. Of every one 100 euros of revenues the profit obtained is of 23 euros once the costs have been covered.
The final result shows that the positive evolution continues which corresponds to a development in the economic management whose objective is to improve the profitability by a combined effort of increasing the revenues and containing the costs.

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Analysis:
Translation of the pages 4 and 5 of the Real Madrid financial statement 2008/09.

Page 4:
Consolidated statement corresponding to the financial year ending on the 30th of June 2009.
Revenues (amortization of assets – primarily player transfers).
In continuation we will present the financial statement of Real Madrid FC SAD including the evolution in the results of the campaign 2008/09.
The revenues for the season 2008/09 grew 11% year over year and reached 407 million euros €.
Thereby the objective for the budget of revenues of 400 million euros was reached.
This income stems from the 3 principal revenue streams of the club: stadium , television , and marketing.
Income from player transfers is not included in these numbers but are included in another part of the statement and can be found under the account dealing with the return on investment of capital investments.
The revenue streams which have contributed the most to the overall increase in revenue for the season 2008/09 have been television and marketing. On the other hand the revenues from the stadium after 2 years of strong growth have remained flat year over year for the season 2008/09.
The contribution by the members (socios) both when it comes to membership fees as well as season ticket subscriptions represent 10% of the total revenues.
Over a 10 year period 1999-2009 the revenues have grown by an average of 26% year over year.
When it comes to the future development – the strengthening of the brand through investments in great players and the exploitation of these player’s images through the 3 revenues streams and the continued expansion internationally continue to be some of the main weapon which the club posses in order to remain competitive and to maintain its’ position among the world’s leading clubs.
Page 5:
The composition of the clubs revenues (before amortization of assets).
1999/2000:
Total revenues of 118 million Euros:
26% marketing
40% stadium
34% television
2008/2009:
Total revenues of 407 million Euros:
32% marketing
29% stadium
35% television
4% friendlies and overseas tournaments

The club has achieved to obtain a balanced structure of revenue streams with about a third stemming from each of the major areas stadium, television, and marketing.
This diversification of revenue streams brings economic stability to the club cushioning against possible fluctuations in income due to the inherent unpredictability of the results on the field and the larger development in the macroeconomic outlook.

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