A year ago, FC Barcelona president Joan Laporta complained about “dramatic financial situation” of the Catalan club. With a debt of 1.35 billion euros, Barça painted a “worrying economic and patrimonial situation”. An abyssal debt, a “accounting bankruptcy situation” and a huge payroll, so many elements leaving the club with little choice.
But now, a year later, FC Barcelona has become one of the most active clubs in the summer transfer window, recruiting Raphinha and Robert Lewandowski, each for several tens of millions of euros. USAHow could the club reverse its economic situation? Franceinfo: sport interviewed Luc Arrondel, economist specializing in football and research director of the National Center for Scientific Research (CNRS).
By lowering the wage bill
Last year FC Barcelona’s biggest problem was the payroll. Indeed, La Liga imposes a salary cap that depends on the club’s income. “As revenues had dropped significantly due to the closed doors due to Covid, FC Barcelona went a bit out of the way with regard to payroll, which, I remind you, is practically the largest in Europe. So if the club wanted to get into the nails of La Liga, it had to cut its salary,” to start Luc Arrondel, economist specializing in football. This is in particular what explains, since a year, “the departure of Lionel Messi and the loan of Philippe Coutinho at Aston Villa”, continues the economist.
By selling assets
In the Spanish league, clubs must be able to prove their income before the start of the season, which is different from Financial Fair Play or the DNCG in France. “If FC Barcelona wanted to spend more on labor costs, it had to increase its cash flow. It had permission from the ‘social’ [les supporters-actionnaires] to sell 49.9% of the shares of their trading company, which manages their commercial income”, details of the economist. The process is in full swing, but has not yet taken place.
The “social” have also validated “sale of 10% television rights to an American investment fund, Sixth Street, for just over 200 million euros”, adds Luc Arrondel. The Catalan club would also consider parting with another 15% in exchange for 330 million euros.
But this choice to “family jewels” is not without consideration. “Selling 10% of the television rights to the investment fund increases their income in the short term, but decreases it in the long term. It is a calculation that will help them get through the current difficulty,” the economist analyzes.
By selling its assets, Barca is following a trend. In Spain, for example, 17 La Liga clubs have signed an agreement with the CVC investment fund and Real Madrid have sold 20% of the operating income of the soon to be renovated Santiago-Bernabéu stadium on Sixth Street in exchange for 360 million euros. “We see a trend in Europe, namely the arrival of investment funds in football, not by buying clubs, but by buying shares in leagues, leagues, etc. This is what we also see in France, where there is a need for cash The league has sold 13% of its future television rights. Just like the Spanish league.”confirms Luc Arrondel.
In hopes of an economic recovery
FC Barcelona mainly relies on the economic recovery after Covid-19 and counts on the future revenue generated by its new stadium to repay its debts. “Before the Covid, the counter brought him 150 million euros”, further specifies the economist specializing in football. The goal seems achievable as Barcelona remains one of the most revenue-generating clubs in the world, with €582 million according to figures released by Deloitte in January 2022.
In addition to ticket sales, the club also relies on revenue from the Champions League, which “have also risen considerably in recent years and they can go up to a hundred million euros if you continue to the end of the competition”, adds Luc Arrondel. In addition, Barça and Spotify signed an agreement last April, making the Swedish giant the club’s main partner. This contract, which includes the “naming” of the renovated Camp Nou, will net Barça around €435 million. This is the largest sponsorship deal in the club’s history.
Through debt restructuring
Besides the wage bill, the biggest concern for Barca was their huge debt (including financial debts, transfer debts and other debts) up to 1.35 billion euros. Without forgetting the urgency of repayment before June 30, 2021.
But Joan Laporta, who had been elected president four months earlier, and his team of leaders have negotiated with their creditors to pay off this debt over several years, a way to save time. “The problem is that when you have short-term debt, there really is a debt load that is significant. Spreading it out can help you get over it. to have a larger payroll and thus be able to buy players with a larger envelope”, explains economist Luc Arrondel. Find out now whether the strategy will prove to be just as profitable in the coming years.