As difficult as Atletico Madrid’s 4-1 loss in the UEFA Champions League final was to handle for its fans, the club’s path to financial solvency could prove even more challenging given its daunting debt load.
After an historic and improbable Champions League run, the team does not appear willing or able to re-sign key players with expiring contracts. David Villa, Jose Sosa, Tiago Mendes, Cristian Rodriguez, Diego Ribas and goalkeeper Thibaut Courtois—thought of as the heart of the locker room—are all out of contract and will likely be looking for new homes.
By playing it cheap and allowing top players to flee, Atletico appears to be thinking purely economically in an effort to face its crippling finances head on.
Atletico’s Bleak Financial Picture
Atletico has racked up more than €500 million of debt. Compare that with approximately €26 million in EBITDA (earnings before interest, tax, depreciation and amortization) and you can see why the club is galaxies away from paying off its creditors, barring a miraculous restructuring.
The club alone has a €100 million tax bill, which exists only after convincing the Spanish government—which received bailout money from other European countries during the financial crisis—to let it fall behind on tax payments.
Atletico has recently locked in partnerships with Nike and the Azerbaijan tourist board, which has helped keep it afloat, but the problems will likely persist for the cost-ridden club.
It is estimated over 90 percent of Atletico’s annual earnings are used to pay player and staff salaries. That doesn’t leave much, if any, profit to service the debt or help make a dent in repaying the loan principal.
THE ROAD TO RECOVERY
While the Champion’s League run helped add nearly €40 million to the top line through television revenue and prize money, the club is still a long way from standing on firm financial footing.
Going forward, it appears the club’s only shot at keeping the lights on and helping finance its relocation to a new 70,000-seat stadium in 2016 is to do what it has historically done: sell the best players to the English Premier League and find cheaper replacements.
Atletico in the past has sold top players Fernando Torres, David De Gea and Sergio Aguero to the Premier League for healthy sums, and it’s widely believed that top player Diego Costa will be the next to take flight in an estimated €39 million deal between Atletico Madrid and Chelsea. Chelsea also has its sights set on left back Luis Felipe as another transfer target for approximately €20 million.
All financial figures converted with XE Currency Convertor using May 26, 2014 rates