Is All What it Seems With Barcelona’s Riches?

Posted By Peter Taberner on January 28, 2020

Barcelona can feel satisfied that its finances are on track, after finishing top of the Deloitte Money League for the first time in the club’s history.

Yet there are suspicions that Barca’s record accumulation of over 800 million in the Deloitte survey might not tell the full story.

The Blaugrana’s spiralling finances can be mainly attributed to the reclaiming of its licensing and merchandising operations and bringing them in house. That alone generated 63 million for 2018/9. Coupled with the continued rise in broadcasting rights, Barcelona had its best year ever.

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REPORT CLAIMS HUGE BARCA DEBTS

The website Culemania, which focuses on Barcelona news on and off the pitch, reported in an article in December 2018 that the club’s gross debt had reached a colossal 888 million. These were debts that were registered with the club at the end of its financial year on June 30.

  • Short-term debts were the biggest liability, totaling 492 million.
  • The long-term debts of the club reached 192 million, while short-term accruals stood at 192 million.
  • Provisional debts were calculated at 16 million .

However, the net debt was sliced down to 504 million. This was due to outstanding loans owed to Barcelona which climbed to 236 million.

Additionally, there are investments which return 148 million back into the club’s coffers.

Costly recent signings Ousmane Dembele and Philippe Coutinho, whose transfer fees reached 325.6 million, are significant reasons why the debts have grown. Liverpool are still owed 93.3 million euros for Coutinho, the report asserted.

OFFICIAL REPORTS PAINT DIFFERENT FINANCIAL PICTURE

Barcelona’s Annual Report for 2018/9 revealed that the total assets were an equal match with equities and liabilities, at 1.35 billion.The club’s official statement on its last financial year placed the current debt at 217.2 million .

Turnover reached a record level of 990 million, with an after tax profit of 11 million.

Dr Daniel Plumley, an expert on sporting and financial performance at Sheffield Hallam University, reflected:

“The Deloitte survey won’t tell the whole story, but its not designed to, as it only measures revenue and not debts. From Barcelona’s annual financial report, reviewing the 888 million debt figure reported, there is a lot of subjectivity. Its not unusual for a club to be in debt. And its not a bad thing in style if you base it on the ability to repay the debts or interest payments. Substantial net debt positions becomes a problem, only if there is not the revenue to balance it out.”

NOU CAMP REDEVELOPMENT ANOTHER FINANCIAL BURDEN

The Espai Barcelona project, or Space Barcelona in its English translation, is set to renovate the iconic Nou Camp stadium. The plans are to increase the capacity by only a modest amount to 105,000 from the current 99,000.

Yet the new stadium will have a much more modern feel, with an open façade alongside three concourse rings and a new roof around the whole arena.

As with many new stadium projects, the cost is to surpass the original estimate.

Jose Maria Bartomeu, the President of the club, has revealed that that budget for Espai Barcelona has surged to 685 million. This is up from the original estimate of 600 million.

Dr Plumley opined on the stadium plans: “In the short to medium term there will be a financial strain due to the redevelopment. It’s a circumstance that will go on for around 10 to 15 years. Barcelona are going through with the redevelopment to grow future revenues, it’s a short term hit for the long term gain. The stature of Barcelona as a club in world football is obviously huge. They will be able to generate significant returns from the project.”

In the club’s financial statement for 20017/18, it was revealed that 72 million would be budgeted for the Espai project.

PLAYER SALES AND FFP TROUBLES RUMORED

Reports have suggested that if Barcelona’s finances are that much in peril, player sales might be forced upon the club.

Philippe Coutinho, currently on loan at Bayern Munich, Samuel Umtiti and Ivan Rakitic have all been mentioned as players who Barcelona would like to depart the club.

There have also been murmurs that the Catalans are in danger of violating UEFA’s break even Financial Fair Play (FFP) rule.

Barcelona have spent lavishly in the transfer market in recent years. Since 2017, the total outlay on players has been 800.3 million.

The club also has the liability of the biggest wage bill in world football.

Figures from KPMG’s The European Champions Report revealed that Barca’s staff costs reached a staggering 575.8 million for 2018/19. That is 69% of total revenue.

Unsurprisingly, Lionel Messi is the highest earner at the club, with a contract for a reported 586,000 per week.

Yet these figures are off set by the rising turnover.

Barcelona’s goal for the current financial year is to surpass the one billion euro mark in revenue, which would be a record for any sporting institution.

Dr Plumley continued: “The wage bill is not really a problem at the moment, in the context of revenue that has been created, being upward of 800 million euros. The revenue is commensurate to wage growth. Over the past few seasons Barcelona have made big signings in Greizmann, Dembele and Coutinho, who will all be on high salaries. If you are going to cut the wage bill, then the ones who are on high wages who are getting older would make a difference. Someone like Ivan Rakitic would fit that profile, as their residual value becomes lower. Retaining the key superstars, and focusing on young players is a more financially viable path.”

AGING STARS A FINANCIAL CONCERN 

Barcelona could face huge structural playing staff issues over the next few years.

So many of their mainstay players, who have been part of arguably the best sides in the club’s history, are coming to the end of their careers. Gerard Pique is 32. Sergio Busquets is 31 and Jordi Alba has just entered into his thirties. Ivan Rakitic is 31. Luis Suarez will be 33 this month.

More worryingly is that Lionel Messi will also be 33 this year. He is a void that will be borderline impossible to fill.

It remains to be seen whether young signings such as Frenkie De Jong and Arthur are going to be good enough to ensure the club’s success in the long term.

There are also the Barca youth academy protégés, such as Carles Alena and the 17-year-old Ansu Fati, that might save the club from entering into the transfer market.

Yet potentially there might have to be further huge spending to keep the team competitive.

Barcelona just might need that billion euro budget.

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