Lately I have seen a few articles about Barcelona FC and thought I would chip in this evening with a few facts and figures as it is an interesting topic. How can one of the biggest football clubs in the world in one of the biggest leagues be in such a huge financial mess? A mess is an understatement as it is far worse than what people are saying and thought it is worth highlighting.
The easiest answer is debt using an unsustainable business model which at some point in the future would play a negative impact restricting the club from what they were used to doing and that was spending. A football club is first and foremost a business so they need to make a profit and cannot just be paying out more than they receive. That is not a business and is more of a charity except Barcelona is no charity and they have to pay taxes and cover their overheads.
In January of this year after the transfer window closed Barcelona had a negative salary cap of -€144 million which only means they will have reduced spending for seasons to follow. Who honestly does business like this as this is insanely bad and has a serious impact on the Clubs future.
Clubs have to abide by the Financial Fair Play regulations meaning they can only spend $5 million more than they earn over a 3 year period and the shortfall has to be covered by the clubs owners. Obviously when you see some of the figures that has not been the case with Barcelona and why they are now paying the price.
It is mind boggling to think the club was dumb enough to still chase players last season forking out €150 million on signings. The club is estimated to be €1.3 billion in debt and still owes payments on players transfers. They have used debt to cover those costs and are only making matters worse.
Back in 2019/20 La Liga enforced set spending caps on clubs prior to the season kicking off so their was no breaking of the rules. Covid was an exception to the rules and allowed clubs to spend more with no penalties. This is where the wheels really killed Barcelona as they carried on like they were still finnacially sound.
The Barcelona spending cap of €671 million in 2019/20 was reduced to €347 million in 2020/21 which is a cut of €324 million which was nearly 50%. The club tried and was still way over budget last season resulting in this season being even more restricted with a cap of €144 million.
What is alarming and a joke is the Club president stated the club will slash their current wage bill by €160 million from €560 million to €400m. This is why players have been asked to now take a 50% wage cut as they are still not anywhere near the €144 million required. All new signings had a maximum wage contract of €10 million and why Lewandowski signed for €9 million.
The salary cap for La Liga teams is made up from the following points
- Expected Revenue
- Profits and losses from previous years.
- Debt
- Overhead costs.
- External sources of revenue
Once this is all calculated then a salary cap is formulated for that season and why Barcelona are heading in reverse at speed. To make matters worse they sold 49% of their retail business which is all the clubs merchandise revenue so they will be earning 50% less from that side of things next season. This is desperation and to think if they were a public company they would have hit the wall in 2021 meaning they would have been bankrupt and liquidated. We know what that means in football terms as you lose the League status and would be penalised by dropping down into a lower league.
The merchandise sell off is not the end of this however as they have sold off 25% of their television revenue for the next 25 years. Pure madness as you are now earning less revenue from two sectors and that will impact the budget for the salary cap for years to come and not just this season.
TV revenue is big money but not big enough for Barcelona. Considering the Premier League teams make nearly double of those in Spain. Last year the average team in the Premiership earned close to €100 million which is double that of La Liga, plus considering Barcelona have sold off 25% of this anyway.
Barcelona have a new €280 million 4 year Spotify sponsorship deal for the stadium which will now be known as Spotify Camp Nou plus the teams shirts. There is nothing left to sell and even if they win trophies which is highly unlikely they are in serious trouble as Real Madrid has a salary cap of €770 million with even Sevilla having a €200m cap.
To me, Barcelona management aren’t doing well, how can a team be in debt and be signing massively? Seems they don’t want to clear their debt.
I think that Barca will come out just fine. They just raked in some commercial profits several days back. With the attractive personnel they have now signed,they will go far(or win) in competitions they play in,which will yield them some revenue.
Players are being sold as we speak.
I think there is a proper plan somewhere. I don't have hard facts, but we would be alive,by God's grace, to see how all these pan out.
I don't have any confidence in what they are doing and I say that as their President stated only 1 month ago they are cutting the salary cap from 560 Million to 400 million Euros not understanding they are still 260 million over budget. This hole is too big to get out of as they don't have enough income. La Liga has to make an example of them by being strict and docking points otherwise Barcelona will not be around in 5 years time.
That's crazy it's almost like Leeds United all over again. If Barcelona miraculously failed to make the Champions League it would be!
Such a poor business model in hindsight such totally depends on winning tournaments
Yes. they have no chance of coming right and will literally take decades to recover from this if ever. Next season they will feel more pain from their negative salary cap in January which even over 5 years is a loss of 28 million euros spend per season. No Champions League possibly as the other clubs should be stronger and have more depth due to a bigger budget. The new President of the Club sounds as bad as the old one and see this not ending well. I think they have been lucky to not have been docked points already and to still be in the league.
they just sold another "lever" to socios who own Chiliz. The token I bought from my Steem. It's madness. There is a great book called Barca by Simon Kuper who goes into detail about the mess they got into. Messi was the cause as anytime him and his father wanted a pay rise, he got it. After a while Messi's wages alone were 50% of the entire wage bill so it was no mistake whatsoever that they could not register him last year. He was crippling them.
Yes he was the start of their troubles. This new guy who has taken over is as delusional as the guy before as he thinks he can spend their way out of trouble. he is banking on Champions League tv rights which looking at their squad have no hope. They signed 2 players 3 weeks ago and they cannot be registered as they are already 100's of millions over their salary cap. What happens if one or two players are injured they are seriously in trouble.
Ah jesus, Spotify Camp Nou sounds terrible. These clubs would sell the players souls to the highest bidder if they could.
Unfortunately they have sold everything that had value and have nothing left to sell. Maybe the tv rights another 25% but then what? Every year things will only get more desperate as they swindle things away. They need to start selling their young players and turn a profit instead of buying every player they can.
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I don't know how and why people handle business in such a bad manner, what the club is still enjoying is the name and nothing more
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They are in serious trouble and cannot see them surviving from this. The guy in charge is as bad as who was before him.
This is complicated, the club is so relaxed, I know they are so confident about something
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Because they were allowed to get away with it for years before La Liga steeped in. La Liga own the contracts to every footballer playing in Spain and not the clubs. Barcelona have players who have signed up who are not allowed to be part of the squad and these were free transfers. Barcelona will have to be sold at some point and don't know how that will work as they are owned by 140 000 club members and is not a public company. This is not going to end well. Every member will have to pay over 11 000 Euros each just to keep them afloat and not everyone has that sort of money as they are regular fans.
This is a clear picture of selling your future just to finance the present and an indication that they cannot afford to fail.
My biggest problem now is that Laporta doesn't seem to have learned much from the Bartomeu debacle, he's putting everything on the line hoping that if Barca starts winning trophies, then the big bucks will start flowing again and that's extremely risky.
I was expecting them to be a little quiet this window, but instead they're throwing money they don't have around while mortgaging their future for it. I hope they don't become another Leeds United.
I don’t see how you can justify paying footballers that much money it’s not as if they are doing anything for society that can justify that value these clubs don’t care they just get restructured when they default and leave the debtors hanging
If you think barcas financial situation is bad then Spain itself you’ll fall off your chair
Running up debt because you know the euro is devaluing might actually be the smarter play rather than trying to be responsible! The EU now has slightly positive interest rates in nominal terms and they bearly holding on
I think they are banking on going back to negative interest rates or they’ve locked in that rates already
Well,this got to be true that some wrongly judged and false assumptions are what made the club to tread low grounds, yet what I see that the organisational level failed greatly to manipulate their cards properly.
I think, it all happens when a club operational directors put forth their own interests to flow safe, and they did, frequent undisturbed ill practices accumulated and the rest of financial losses came visible and we sense that easily from the analytics and charts.
Hopefully the club bounce back someday..
So sorry for Barcelona, I just hope they come back stronger. Those debts are not easy to battle.
The rate at which they are still buying top players thoughtlessly still send chills down my spine
I feel like they are compeltely selling off their future in the hopes that the success will give them more revenue. I think that in two years this club can not exsist anymore. Very good investigation from your side! :)
There is terrifying news from (COPE) that the association approved 517 million euros and not the 667 that Barcelona had aspired to from the crane income .. and this makes him unable to record some of his deals.
If the news is true, the club will have to reduce wages on the one hand, or reschedule some contracts, and perhaps sell a new part of the rights or the studio.