The transfer window is open, and the football fans around the world feel the excitement in the air. Every club wants to bring the best players for their squad, at the best possible prices. FC Barcelona and Xavi have a very clear idea of the transfers that they want to make, and the club has the financial ability to pay for them. Moreover, according to many reports, those players made it very clear that they want only Barcelona.
Suddenly, many football fans from outside the FC Barcelona fanbase started to wonder how the economic ability to make these transfers happen? All of a sudden, the financial status of FC Barcelona is really interesting to them. With a debt of more than 1B Euros, how can the club afford to pay so much money?
Well, for that, you will have to understand how the financial structure work in the club. It’s not similar to clubs in other countries. In the next article, I intend to break it down in the clearest possible way for you to understand.
Myth Number 1 : The club is on the verge of bankrupcy
The first thing that you need to know, is that FC Barcelona is a members club, so the financial structure is different. The club is not a public company, it doesn’t sell a stock in the stock market, and you don’t always know all the ‘numbers’. We as fans are nurtured by the media. But there’s a lot of bias.
Why is that? Because FC Barcelona is first of all a political organization. The president in elected every few years, and he will have to survive and maybe get elected.
And because of it’s huge influence, there are many big investors that have lobby within the club. For example, Bartomeu and Rosell, former presidents, had a support from Grupo Godó, that own many media channels. Therefore, even at the worst times, you couldn’t see a lot of criticism towards them in the local newspapers.
Myth Number 2 : The club’s debt prevents paying big money
News Flash: Most clubs in the big leagues have ‘debts’. Make no mistake, the financial trouble of the club is a big one, and for a while now. But since their arrival to the office, the current board is constantly reducing the debt.
When Laporta and his board first arrived to the office, there was a serious economic trouble. Most of the 1.7B Euros debt back then was short-term debt, and the club had no cash flow. With that severe problem, the club couldn’t pay it’s employees and fix security issues in the Camp Nou. So one of the immediate actions that the board did was to refinance the short term debt and make it long term. In other words: The club took a loan in order have cash flow. And that action allowed Barcelona to pay the employees, fixes and have the economic ability to pay for transfers.
Every company in the world have long term money that they have to pay others. The thing that works best for Barcelona is the fact that this is a huge organization that generates a lot of money. That why huge companies and banks have the confidence to invest in the club.
So the long term debt is a concern, but as long as Barcelona generates enough money to finish the financial season with a revenue, we’re ok.
Myth Number 3 : The club owes the players money
Here we’re talking about a choice of words and what is the idea that you want to send. On paper you can say that the club owes a lot of money to the players for last years’ salaries. It’s true, but it’s also false.
For years, Barcelona paid a lot of money for transfers. Coutinho, Dembele and Griezmann alone cost more than 500m Euros in Transfer fees, commisions etc. And the club did take loans to finance some of the operations. Moreover, the Barcelona board thought that the fact that they generate most money allows them to pay a lot more than other clubs.
But then came 2020 and Covid-19, and the club found itself in immediate need for money. In that period, the club deferred the salary of many of the squad players. The idea was to postpone the payment and pay it in the end of the contract.
So yeah, the club owes money to players. But it’s not like that payment was due and wan’t paid. It was an agreement that allowed the club to have money in difficult situation.
This money is part of the long term debt that was already refinanced. So it doesn’t hurt the financial stability of FC Barcelona in any way.
Myth Number 4 : Released Messi and suddenly have money to pay?
Well, that’s an important one. First of all, the financial status of FC Barcelona is improving, as the club finished last season with a revenue.
But the problem with Leo Messi was never a problem of cash flow. It was a problem of the FFP and the salary cap of the club. And the problem is still there, until the 2nd economic lever deal will be done.
The La Liga FFP rule is different from any other country, and it’s a fairly new rule. A club can only pay a certain percentage of its revenue as a salary. And if you’re paying more than that, then the La Liga will trigger the 1:3/1:4 sanction on you. With that rule, if Barcelona generates 100m Euros, it can only spend 30m for transfers and salary cap. But if the salary cap will be higher than what the club pays by July 30 (Possible once the 2nd economic lever is a reality) – than Barcelona will be free of these sanctions.
At that point, the club will have both the cash flow, and the freedom to pay for bigger transfers.
Myth Number 5 : The club sell its long term assets for short term success
Personally, this is my favourite myth, and it comes from fans of clubs that were literally bought by billioners. But I do agree that it’s not an ideal solution. However, it’s a necesseraly one.
First of all, selling 25% of the La Liga broadcast money is basically less than 5% of the general yearly income of the club. Therefore, the club is selling a low percentacge of income for a big money that will help in the short term. Moreover, the club has the right to buy back these rights once the club will be in a better economic situation. And it’s important to remind ourselves that in few years the new Camp nou will be ready. The idea is that the stadium will pay for itself with lease money, stores and live concerts during summer time.
Why not just play it cool and let the debt reduce? Theoretically, it’s possible to do that. But in the meantime, the team will not be able to compete for all titles. And that would hurt the club more in the long run. Moreover, Laporta and the board have to succeed on the field in order to stay at the office.
A decade ago Milan was a club that many players wanted to play at. But few bad years and now the club are a shadow of themselves. The Seria A title didn’t prevent players from looking to leave Milan in order to move to bigger clubs.
It can happen to Barcelona if the club will fail for 2-3 more years. That’s why Laporta knows that he has to make this team competitive, and soon.
You can say that the board are going ‘All In’ with the squad that they are building. The idea is that a success on the pitch will generate more money for the club. That money will be invested in the long term debt, and the club will work year by year to stay competitive and in the meantime work on reducing the debt.