Real Madrid, Tottenham likely to generate profits despite transfer spending spree
According to Forbes.com, not only did Real Madrid and Spurs spend a lot of money but they also recovered a lot by selling players.
With a very large helping hand from Real Madrid courtesy of the world record fee for Gareth Bale, Spurs managed to recoup almost all of their transfer outgoings, the report said.
However, on a straight money-in and money-out basis both Real Madrid and Spurs are likely to move into deficit rather than profit but financial treatment differs for each type of transaction, the report added.
When paying a transfer fee to acquire a player the cost is not accounted for in the year of the transaction but rather it is amortized over the period of the player's contract and it is assumed that the buying club will benefit from the player's labors over the entire contract period, and so the transfer fee is pro-rated over that length of time, the report further said. (ANI)