Barça CEO Gives us A Look At Barcelona’s Financial Crisis

FC Barcelona’s in a massive financial crisis due to the previous board making a series of bad decisions. The club does not have the money to make any major signings, or other investments.

Have a look at the press conference by the CEO of the club, Ferran Reverter:

Reverter: The Due Diligence is done to know the financial situation of the club in March 2021, when the new board entered. We looked at the contracts and expenses, to better understand how the situation was in March to know the club’s commitments to short, medium and long term.

Reverter: We have found a series of activities that we have had to deepen. There were indications, due to lack of documentation, that we have had to go down one more degree. That is why we have made a ‘forensic’ of espai Barça, department of purchases and player contracts. This is done to find signs of something illegal and is then passed to the legal department.  This investigation is not over, and we will finish it in the next few weeks and make decisions

Reverter: We found negative equity, if it was an private company it would be in a state of bankruptcy that. We found zero operating cash flows so we had difficulty paying payroll. Debt and future commitments were 1,350 million euros for which we had to make an urgent refinancing.

Reverter: “There was also a breach of commitments with banks, ratios of the League, UEFA and others, which limited the registration of players. Also deteriorated facilities that led to a precarious situation at Camp Nou and Ciutat Esportiva.

Reverter continues: The ‘Espai Barça’ project was undervalued and seriously lacking. And also a lack of governance and internal control that left a club unemployed that in April could not continue operating because there was no cash.

Reverter now explains the evolution in recent years of income, expenses and net result: Operation like Arthur-Pjanic, for example, cost the club about 8.5 million

Reverter: “During this period (2016 to 2020) income grew by 30% and expenses went up by 55%. When Barça had to prepare for the biggest project in its history (Espai Barça), they were already losing money.

Reverter: The club lost money because of four reasons : 

1. Salary increase (+ 61%). 

2. Management expenses (+ 56%).

 3. Financial expenses (x6). 

4. Covid impact (108 million

Reverter: “Without the decisions of this board, the salary mass would be 108% of income, that is, 835 million. In four years, with only four players, Barça added a salary mass of 1,400 million euros. More than 300 million euros per season with only four players. “

Reverter added that there is an inverted pyramid with very veteran players with long contracts and young players with one-year contracts, which made negotiations very difficult.

ABOUT THE CLUB’S DEBT

Reverter: There is an increase in debt between 2017 and March 2021 of more than 500 million that never went through the Assembly.

Reverter: There was a lack of financial planning. We believe that when they signed they did not plan how they could pay. In the case of Griezmann, the same night they signed him they saw that there was no money and that night they looked for a loan which has opening commissions.

The Coutinho operation, which costs 120 million, ends up costing 16.6 more in financial costs. They bought players without knowing if they could pay them

Reverter explains that the Covid-19 affected Barça in 43 million in the 2019-20 season and in 65 million in 9 months of 2021. Television did not have an impact, no less money was entered.  In March 2020 the League stopped and eleven games went to the following finaciap season.

Regarding the net financial debt, he says that the club went from 159 million to 673 – increased the debt by 514. For two and a half years Barça only generated one million euros to pay for the entire investment, all that was done was on credit

REVERTER EXPLAINS THE CLOSING OF THE 20-21 SEASON:

 631 million revenue

 1,136 million of expenses

 -51 million of net financial result.

The Covid impact is 92 million according to the criteria of LaLiga

We owe much more (1482) than we have (259) + what other owe us (772)

ON THE MOOD OF THE BOARD

I see a lot of serenity in the board, we are making the right decisions. I have said it and emphasized it, we have a very important asset that is the Barça brand, which has more than 122 years of history and belongs to its partners. If we work in this direction I have no doubts. When a club like Barça is going to look for money in this situation and they are given it, it is because we have incredible credibility. The price of 1.98% is a reference at a EU level. Several clubs called to see how we did it

ABOUT SIGNINGS

1st we have to do our job. We have done a large part, lowered the wage bill, but we have to keep working. If that happens we will be able to sign star players. Barça has ‘Fair Play’ and  next year if we do our job well, the players we want will be able to come.

He adds : Yes, we can sign and renew. The renewals of Pedri and Ansu Fati are on the right track. The last departure of an important player generates a positive Fair Play of more than 20 million so Barça could sign if it considers it.

ABOUT THE GOODBYE OF MESSI

First, I will say that I will not speak very deeply about this issue because our president has already spoken. I would say two things. Many people think that we knew reality when we entered but we did not know it.

He adds : There is no doubt that Messi has been the best player ever. We are monitoring how it can affect us. We followed up in the first weeks with the jerseys. Surprisingly, other jerseys like De Jong or Memphis that we were compensated for by sales…

ABOUT THE SUPERLEAGUE

Two things. In the strategic plan we are quite conservative. The Super League is a thing for the future. For us it is a matter of trying to make a more attractive competition.

ABOUT MAKING PROFITS AGAIN

We want to generate profits again next year. At the end of this year. It is complicated because it is a Covid year but we work on different levers. We have made a conservative plan for the opening of the Stadium. Our team calculate that we would open an average of 60% of the Stadium. We estimate that from the fifth year the club will have net equity again. We will generate profits from year one.

ABOUT THE ESPAI BARÇA AND ITS COST

It may cost 800 or 950 but the figure will not go much from there. But you have to add Palau with about 300 or 400 million, and then add the Campus, we will go to the Assembly with a maximum limit of 1,500 million euros to accept the credit

REVERTER ON HOW TO SOLVE THE FINANCIAL CRISIS

Reverter: Barça has had many crises throughout history, but they have always come out ahead. This board has a plan, which investors have accepted, which wants to make Barça continue to be the best club. Barça has to continue betting on what has made it great.

We have focused on the short term with what we could solve now, when there’s still Covid. Regarding debt, we changed the financial structure and changed from short to long. We took a refinance of 595 million at an interest rate of 1.98% in 10 years.

In the face of non-compliance, we have opted for the reduction of the wage bill and bet on the young people of La Masia. It is a decided bet. With the facilities we have started to reactivate the investment to update the facilities

La Masia and the style of Barça, we must add sporting excellence and high performance, as well as modernizing our facilities. Espai Barça is crucial for FCBarcelona. And finally seek new income, which we will achieve by focusing on our fans around the world.

We have more than 400 million fans, we are number 1. We have to get to know them and change how we interact with them. All this has to be done with sustainability