The financial crisis still casts a shadow over Barca

Barcelona may rejoice with the La Liga title in the 2022/23 season, but the club’s financial future is still in a state of alarm despite many solutions being taken.

Barca faces a precarious financial future despite winning La Liga last season.

In the 2020/21 season, information about Barca ‘s financial crisis appeared. The way the future strategic planning and poor transfer policy of former President Josep Bartomeu made the “Catalan Giants” then owed nearly 1.5 billion euros and was on the verge of bankruptcy.

“He spends money as fast as the speed of light,” current Barca president, Joan Laporta, commented on his predecessor. The economic situation of the Camp Nou team at that time was also affected by the Covid-19 pandemic and the club’s huge salary fund, leading to the farewell of Lionel Messi in the summer of 2021.

After more than two years in office, Mr. Laporta has implemented many economic levers to keep Barca stable to continue to fight in the arenas. Last season, this team even won La Liga. But, are those measures really effective and long-term?

Economic levers

After taking over as president of Barca in March 2021, Mr. Laporta said: “Taking this responsibility from him (Bartomeu – PV) is scary. The financial situation of the club is very bad right now . However, my team has the reputation and experience to put an end to this situation.”

Accordingly, in the summer of 2022, Barca decided to sell 25% of the television rights for the next 25 years to the investment company Sixth Street for about 500 million euros. To put it simply, “The Catalunya Giant” gives up a portion of the profits from television money for the next quarter of a century in exchange for a lower number but immediately available.

This income helps Barca comply with La Liga’s Financial Fair Play (FFP) Law, which limits a club’s spending relative to its total revenue. That is why Barca could spend 150 million euros last summer to recruit Robert Lewandowski, Raphinha and Jules Kounde.

Despite financial difficulties, Barca brought in Kounde, Lewandowski and Raphinha in the summer of 2022.

Not long after, Barca sold a 49 percent stake in the club’s media company, Barca Studio, through two separate deals with Socios and Orpheus. 200 million euros earned through this deal plus the money from the sale of television rights are partly deducted by the team to repay the debt.

Also during the above period, Barca signed a shirt and stadium sponsorship contract worth 435 million euros with Spotify company. The deal includes sponsorship rights for Barca’s men’s and women’s teams, and also includes naming rights to the Camp Nou stadium.

In parallel with the above economic levers, Barca negotiated a salary reduction with the players. Gerard Pique is the most prominent case with the acceptance of playing without pay. However, many players oppose this policy like Jordi Alba or Samuel Umtiti.

In April 2023, Barca also successfully called for a grant of 1.45 billion euros to upgrade the Camp Nou stadium. The agreement between the Catalan club and investors lasted nearly 30 years with the club completing installments with interest until 2052.

Barca estimates that when the reconstruction is complete, the Camp Nou stadium will bring in a profit of 200 million euros a year for the club. Revenue will come from ticket sales, food and beverage business and events outside of football. “Camp Nou will be one of the best venues in the world when the renovation is complete,” Laporta president said in May.

The economic leverage of President Laporta can only help Barca in the near future. Photo: Reuters.

Short term only

Under the leadership of Mr. Laporta, Barca’s financial situation has improved markedly compared to Bartomeu’s time. According to the Catalan team’s financial report, Barca ended the 2021/22 season with a negative revenue of 7 million euros before tax, much better than the negative 63 million in the 2020/21 season.

Income from the sale of TV royalties, the sale of shares of the media company Barca Studio and sponsorship from investors will certainly help the financial situation of the Camp Nou team in the 2022/23 season. That is not to mention Barca’s other leverages such as the 49.9% stake in Barca Licensing and Merchandising (BLM) subsidiary company being for sale.

This summer, Barca can also make more profit from selling players. Midfielder Frenkie De Jong, who receives the club’s highest salary (more than 500,000 euros/week – PV), is being sought by many big men in the transfer market.

However, despite being liberated somewhat by leverage, Barca’s long-term financial “health” has not improved. Besides the huge debt, Barca’s salary fund for the 2022/23 season is at about 350 million euros, more than the provisions of the Financial Fair Play (FFP) of La Liga to nearly 150 million euros.

Therefore, Barca could not register new contracts renewed a few months ago as defenders Ronald Araujo or Gavi into the first team list. Notably, both are important and possibly pivotal components for the Catalunya giant’s future. Barca must partly thank the club’s highest-paid pillars, Jordi Alba and Sergio Busquets, for leaving the team this summer.

In order to operate stably and stably, there will come a time when Barca cannot find more investors or sell shares of subsidiaries, but must really make money from the club’s business activities. According to Athletic, operating profit of the Camp Nou team, excluding investments and income outside of football, reached minus 146 million euros in the 2021/22 season, the second lowest in La Liga.

Returning to the present, Barca fans can be very excited with the La Liga championship in the 2022/23 season. However, let’s not forget that the financial situation of the Catalunya Giants is dire and that President Laporta’s solutions so far are only temporary. It will take a long time with a comprehensive overhaul of the club’s business strategy and Barca’s finances to fully recover.

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