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Summer Reading!

Well, Madridistas, we here at Managing Madrid hope you are enjoying the summer!  As one of the off-years from the World Cup and Euros, 2011 leaves us with little to talk about except the rather slow transfer market, although we will try to get some content up.

In the meantime, our more cerebral readers will enjoy this in-depth analysis of Real Madrid's financial situation and our ability to meet the new Financial Fair Play (FFP) guidelines.  These new UEFA rules, if you haven't been paying attention, are designed to improve the financial situation of Europe's debt-ridden clubs and reduce their dependence on the largesse of owners.  Having come into effect on June 1st, the regulations state that from now until 2014, clubs may post an aggregate loss of €45m, which can be subsidized by owners only in the form of permanent investment in shares.  From 2014 to 2017, the total permitted loss will drop to €30m.  If clubs fail to meet these guidelines by 2013-2014, they will be banned from UEFA competitions such as the Champions League and Europa League, which are incredibly lucrative and prestigious, beginning in 2014-2015.  

The Swiss Rambler, an accountant with a keen interest in football economics, breaks down in exquisite detail Real Madrid's remarkably healthy financials and compares them to our rivals, discussing our ability to meet the FFP goals in the future.  Despite our enormous outlay on transfer fees over the last five seasons, given our record profits (only Arsenal made more in pre-tax profits and that was distorted by property sales from the land under their old stadium) we should have no problem adapting to the rules.

Real Madrid actually stands to benefit immensely from FFP, which the Swiss Rambler does not discuss, because we already spend within our means.  Our revenue is so immense that our spending, while outlandish in absolute terms, is relatively restrained.  Our wages are well within UEFA's guidelines and even their 50% recommendation as a percentage of revenue.  Other clubs, however, are not so fortunate financially.  Barcelona is operating at a heavy loss and will have to rein in transfer spending, while the nouveau riche or those looking to reinforce significantly - clubs such as Manchester City, Chelsea, or Málaga and Racing Santander closer to home in the first group, and Manchester United, Juventus, Liverpool and so on in the second - will have a very difficult time catching up to Real Madrid. 

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