Box office investigation / Spain / FC Barcelona / SOFOOT.com
Since the beginning of the summer time switch window, FC Barcelona have already spent greater than €100m on Rafinha and Robert Lewandowski, signed Andreas Christensen and Frank Kessie on a free switch and prolonged Dembele. A wasteful summer time that even Julian Nagelsmann questions, who himself doesn’t perceive how Barca, over-indebted six months in the past, can afford to screw up at any price. Slightly reality checking.
by Anna Caro
How can Barca spend a lot cash within the switch window whereas being closely in debt?
To have the ability to signal all these gamers, FC Barcelona needed to promote property. That is, to promote the property the membership already owns to non-public firms. In this case, Barca bought 25% of its TV rights to Sixth Street for the following 25 years, in two successive gross sales of 10% on June 30 and 15% on July 22, for a test of just about €600 million.€. In return, the membership undertakes to pay what it receives as tv rights from La Liga to the American funding fund, i.e. 25% of €166 million (what Barca at the moment will get) over 25 years, so greater than €1,000 million. Agreement beforehand validated by socios at a common assembly. Selling property, as Real Madrid managed to do by promoting 20% of the long run non-sporting working earnings of the under-construction Santiago Bernabeu for €360 million. Or because the League 1 golf equipment did by promoting 13% of their future TV rights. A option to improve earnings within the brief time period whereas lowering it in the long run. Thus, after the 2 back-to-back gross sales of these TV rights stakes, added to a really profitable Spotify sponsorship deal valued at €70m a 12 months over 4 years, Barca have the cash and might afford to recruit massively this summer time. And it nonetheless has a option to increase funds: the sale of 49% of Barça Studio, which manages the complete media universe across the membership, authorized in October by socios and is estimated at 300 million euros.
As defined, the sale of property has grow to be a standard follow on the earth of soccer. The precept permits golf equipment to have fast money to finance transfers and present wants. On Barca’s facet, the contract signed with Sixth Street stipulates that the membership can purchase again its shares at any time and that the inflation of the tv rights goes to the membership. However, 25% of TV rights signify 5% of Barca’s annual earnings, so a approach should be discovered to make up for this loss. The Blaugrana are relying on a number of issues: the financial restoration after Covid with a full Camp Nou all through the season (€150 million for tickets per season earlier than the pandemic), a extra aggressive staff that may deliver extra income and the long run income of Espai Barça, the stadium renovation mission . This additionally obliges the membership to sporting success, in any other case it could not have the ability to compensate for this loss.
Last season we keep in mind that a number of gamers needed to take a pay reduce to ensure that new signings to be registered in La Liga. The drawback, then, is much less Barca’s concern to fund wages than to suit into the claws set by wage cap of the league. This supervision of wages is a function of the Spanish championship, which relying on the earnings (promoting, sale of gamers, sponsorship contracts, earnings from tv rights, subscriptions, tickets, competitors bonuses, and so on.) minus the structural prices (salaries of non-sporting workers, working bills, buy of gamers, and so on.) of every membership, determines the utmost quantity of potential wage bills. The quantity of it wage cap, which incorporates bonuses, wages and the annual amortization of transfers, is scalable in line with will increase and reduces in earnings. In regular occasions, Barca had round 550-660 million euros wage cap set by La Liga, the best within the league. For years, Blaugrana have a excessive wage however this was not an issue as wage cap nonetheless surpassed him. But the financial mismanagement of latest years with enormous salaries given to some gamers and the drop in earnings attributable to Covid has induced Barca to endure extra losses than anticipated. The membership thus ended its 2020-2021 season with €481 million in internet losses. Slightly calculation: in December 2021 wage cap subsequently it was… -€144 million.
Under these situations of wage cap unfavourable, Barça had very restricted leeway to recruit and register their gamers within the league. According to La Liga guidelines, the membership was topic to the 1/4 rule, which means that for each euro spent, they have to save 4. A option to reorganize the accounts, however one that isn’t viable in the long run, because the Catalan membership shall be pressured to lose gamers with huge wages to finance these of others. Therefore, FC Barcelona’s aim is to go from a wage cap of -144 million euros to at the least 500 million. For this he wants to seek out 700 million euros. To have the ability to enroll their new gamers, Barca piled on wage cuts, the departures of Coutinho and Griezmann, the extension of Dembele, the sponsorship cope with Spotify and … the sale of the well-known TV rights. A set of things that allowed Barca to complete within the inexperienced on June 30 and subsequently see their wage invoice elevated by La Liga. With the sale of the final 15% this Friday, the membership raised the €500 million that Javier Tebas requested firstly of the summer time to signal gamers and will subsequently signal new gamers with out issues. Today, FC Barcelona’s wages are estimated at €560 million by the membership’s financial director, and this could improve additional with the newest transfers. However, with this improve in wage cap added to additional participant departures and the potential for promoting half of the Barça Studio, Barça needs to be again on their ft on the finish of the summer time. Knowing that president Joan Laporta nonetheless desires to cut back wage prices to 400 million, betting on the departure of gamers with huge salaries like Frenkie de Jong (and his 20 million euros deliberate for this season) and a strict wage scale: no person no participant earns greater than 10 million and a big a part of the wage is said to particular person and collective efficiency.
If Julian Nagelsmann was very irritated throughout his press convention, it’s undoubtedly as a result of he has in thoughts this picture of Joan Laporta, who lamented “dramatic monetary scenario” of the membership, in money owed of 1.35 billion euros. Barca had the duty to repay a part of this debt earlier than June 30, 2021 and failed to take action, prompting the Catalan president to say “accounting chapter” . Freshly elected, he and his staff rushed to barter with the organizations they owed cash to rework this short-term debt into long-term debt and pay it off in just a few years. Another a part of the debt completely needed to be paid on time, so Barca took out a €595 million mortgage from Goldman Sachs final August to pay it off. All this to keep away from chapter. This inflow of cash additionally made it potential to finance the switch of Ferran Torres this winter. However, the membership once more went into debt to the tune of €1.5 billion for the Camp Nou renovation. Today, Barca restructured its debt and is now out of hazard of chapter.
by Anna Caro