Real Madrid in good shape financially ahead of possible signing of Mbappé. Barcelona still struggles

MADRID — Signing Kylian Mbappé likely would not be a problem for Real Madrid financially, as it remains the Spanish club with the highest spending limit at 727 million euros ($786 million).

Barcelona's financial struggles continue, though, with its cap being reduced to 204 million euros ($220 million), the Spanish league said Tuesday. The Catalan club could be in a delicate situation going into the next transfer window. Atletico Madrid has the second-highest cap at 303 million euros ($327 million).

Each Spanish league club has a different spending limit based on factors such as revenues, costs and debts. It is proportional to roughly 70% of a club's revenues. The limits denote the maximum amount each club can spend on players, coaches, youth systems and other areas.

Also read: France’s PSG star Kylian Mbappe agrees to join Real Madrid: Report

Clubs that are overspending need to find ways to either reduce costs or attract new investment.

Barcelona's cap, which was at 270 million euros after the summer transfer window, has been gradually reduced after it had been boosted by financial maneuvers that helped the club restructure its debts and gain space to sign new players. If it can't restructure its finances again, the club will be in danger of not being allowed to register its players to compete.

Madrid has a much brighter outlook, with enough cap space to add Mbappé and possibly others. The club hasn't made many blockbuster signings in recent seasons and is free to spend now if it wants to.

Mbappé told Paris Saint-Germain last week that he will leave the French club at the end of the season, opening the door for another attempt by Madrid to sign him. Madrid made a big push to sign the France star in 2022, with one of its offers rejected by PSG reportedly reaching nearly 200 million euros ($216 million).

Only four other clubs have spending limits surpassing 100 million euros ($108 million) — Sevilla (152 million euros, $164 million), Real Sociedad (144 million euros, $155 million), Villarreal (143 million euros, $154 million) and Athletic Bilbao (100 million euros, $108 million).

Alavés has the lowest cap at 31 million euros ($33 million), just behind the 33 million euros ($35 million) of Las Palmas.