Real Madrid are securing their position as the number one club in the world

Real Madrid already has the title secured for 2023/24, and to solidify their chances of repeating next season, they are planning some major offseason moves. La Liga president Javier Tebas has practically confirmed that Kylian Mbappe is moving to Madrid as part of a deal speculated to be worth around €500m. Brazilian starlet Endrick is all set to move to Madrid, and there is speculation that Lenny Yoro and Alphonso Davies could be coming to Los Blancos ahead of the season.

Mbappe is, clearly, a huge signing, and if that wasn’t enough, Real Madrid’s management are working hard to sign Florian Wirtz next summer. Wirtz had a phenomenal season in the Bundesliga for Bayer Leverkusen, scoring 18 goals and 19 assists. His pricetag as of right now is reportedly €110m, a price that could increase if he performs similarly next season. If Wirtz is as good as he appears, and Madrid manage to sign him, they will have the deadliest attacking duo from 2024/25 onwards.

Real Madrid are unique beyond the state-backed clubs in Europe in being able to handle transfers and player salaries of this calibre financially. Most European leagues distribute their TV rights depending on how each team finishes in the league table. Meanwhile, in LaLiga, clubs are have an agreement based on market share, while the La Liga prize money for each position differs. For 2023/24, Real Madrid are expected to have a revenue just barely short of €1b. As a comparison, Cadiz has an estimated revenue of around €230 million.

Most of Madrid’s revenue comes from broadcasting rights, sponsorship, advertising income, ticket sales and revenue from game days. Regarding sponsorships, due to Madrid’s international fanbase, their jerseys and the Santiago Bernabeu stadium are prime business targets. While there is less freedom around sponsors and advertisement deals due to laws and regulations, Madrid still manages to fetch the best deals from betting companies, sports brands, car manufacturers and airlines. Betting ads and sponsorships are being phased out as lawmakers introduce stricter regulations, causing a near-complete ban, which may impact the total revenue as these types of sponsorships are typically lucrative. For Madrid, a ban on betting companies is less of an issue since they would still attract top prices from advertisers; it’s more of an issue for smaller clubs, which would benefit from lucrative betting sponsorships.

Compared to other countries in the world, Spain is one of the strictest countries. Another tough market for sports betting companies to operate in is the United States. A country that only recently legalised online sports betting and has since seen an explosive increase and gradual rollout of sports betting across different states. So far, there are no explicit bans on advertisements in the US, and many American companies have branched out and targeted European leagues and clubs in pursuit of further growth. While politicians are discussing restrictions, no-one of real authority is entertaining the idea of a complete ban, which might be the right thing to do when considering the impact gambling bans have had in Spain.

In Spain, the Audio-Visual Communication Act prohibits gambling ads on TV outside of 01:00 and 05:00, with the principal goal of protecting minors and promoting safe gambling. Initially, these restrictions were part of temporary COVID-19 measures, but they were later introduced as permanent rules for gambling ads. According to Juego Digital officials, the restrictions have effectively slowed the growth of gambling in Spain and allowed the country to grow the industry responsibly and sustainably.

At the same time, the DGOJ reported growth despite the advertising blackout, throwing doubt at JDigital’s claims about the effectiveness of the restrictions. For two consecutive quarters in 2023, there’s been a 50%+ increase year-on-year in Gross Gaming Revenue (GGR). These numbers highlight the controversy as leagues and clubs miss out on millions of euros in sponsorship deals, which puts local clubs at a disadvantage compared to the competition. Italy is facing a similar dilemma with a total ban on all gambling ads since 2018. Several other EU member states are discussing various measures around advertising, but none are as harsh as Spain and Italy.

The disappearance of betting companies in sponsorship deals removes an easy and lucrative option while failing to contribute towards JDigital’s goals of reducing problem gambling—the growth of online betting has remained unaffected. Some teams like Real Madrid and Barcelona are unaffected since they already get the most money from their advertisement deals. But these deals would benefit smaller clubs like Cadiz. Instead, they are taking a financial hit due to restrictions, which might hamper the growth of LaLiga and football in general.