UEFA puts Real Madrid and Barcelona in grave financial danger after rejecting sales of €360M and €266M

The Spanish giants have been shaken by UEFA's recent rulings.

UEFA puts Real Madrid and Barcelona in grave financial danger after rejecting sales of €360M and €266M

The Spanish powerhouses, Barcelona and Real Madrid, shocked by UEFA. (credits-GettyImages)

UEFA shocked both Real Madrid and Barcelona on Saturday. The European football body excluded a particular type of sale by clubs as a part of the Financial Fair Play (FFP). They have told the clubs that the cash generated by the sale of future revenue streams – including broadcast deals and other media assets – will not be considered as legitimate profit in their FFP consideration. This puts both clubs in an unhealthy financial situation, as both raised funds recently through the sale of future revenue streams.

Barcelona sold a number of potential revenue streams last summer for almost €700 million, and UEFA has considered this as debt. Barcelona attempted to claim a part of the €266 million sale of 25 years’ worth of future income to US investor Sixth Street as legal revenue for its FFP calculation in the most recent fiscal year. UEFA promptly rejected the sale from being a part of the FFP. The club was fined €500,000 for their inaccurate and dishonest accounting.

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According to UEFA, Real Madrid’s €360 million sale to US investor Sixth Street of future revenue from the renovated Bernabeu is also a debt. Real claimed to have achieved an operational profit of €7 million this year; however, after deducting the sale from Sixth Street as debt, the club really suffered enormous financial losses of €37 million.

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However, both Barcelona and Real Madrid passed FFP this year. This was because current rules talk about the gross profit and loss of the previous 4 years as the stipulated time. Clubs will be examined yearly over a calendar year under the new FFP standards. Clubs will be allowed to lose up to €60 million over the course of three years. However, this puts Barcelona in jeopardy as they aimed to clear FFP by raising €400 million of cash from the sale of future income streams, which now has been classified as debt by UEFA.

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UEFA also fines Manchester United under FFP

Old Trafford
Manchester United fined by UEFA. (credits-Reuters)

Manchester United have been fined approximately £257,000 by UEFA. UEFA has labeled it a “minor” breach of Financial Fair Play (FFP) regulations. These breaches took place over a four-year period between 2019 and 2022.

United made an error in the break-even analysis. Uefa adjusted for Covid-19 losses during the 2022 reporting period. This allowed United to recognize only €15m of the €281m of revenues lost due to the pandemic. This was due to using an older method of FFP analysis.

A United statement said: “While disappointed by the outcome, Manchester United accepts this fine for what Uefa acknowledges to be a minor technical breach of its previous financial fair play rules. United have thus even controlled their spending this summer to comply with the FFP rules.

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