FC Barcelona: where does all this money come from?

FC Barcelona has recruited a lot of heavyweight players this summer, even though it is described as a club in a catastrophic financial situation. How is this possible?

How can a club said to be in ruins spend so much money on the mercato? This is the question that many soccer fans have been asking since the beginning of the mercato, when Barcelona has already spent more than 100 million euros on Raphinha and Lewandowski, and is about to drop a new check of about 55 million euros to sign Jules Koundé. Where does this money come from? How can a club on the verge of collapse recruit so much?

Twice this summer, Barcelona has sold percentages of its revenue related to its TV rights of La Liga. This is where all the money comes from. First 10%, then 15% recently, to the company Sixth Street, accustomed to this type of operation, having already worked with other clubs like Real Madrid in the past. In total, the club has recovered 519 million euros through this double sale. Of course, not everything will be destined for the mercato, since there are other expenses to cover, starting with the debts to be repaid, but the Laporta-Alemany duo has recovered quite an envelope to be able to enjoy themselves without counting too much money.

Since Joan Laporta took over a year ago, the club has managed to get rid of several undesirable players and, above all, has reduced its wage bill considerably. The various departures, sales and/or loans of players such as Lionel Messi, Philippe Coutinho or Antoine Griezmann among others have reduced the wage bill by more than 150 million euros in the space of a year, and this should continue. The goal of Barça, whose total wages currently amount to about 550 million euros, is to approach a healthier situation like that of Real Madrid, which runs at 400 million euros. Significant savings have therefore been made, and allow the club to breathe a little easier financially. Joan Laporta has also set a maximum salary of 10 million euros per year for new recruits and those who will come later.

The strength of Barça is partly its prestige. And Chelsea knows it well, since Barcelona managed to buy Raphinha and will do the same for Koundé, offering less money to Leeds and Sevilla than what the Blues offered. The players dream of joining Catalonia and are ready to insist on their club, just as they are also ready to make efforts from a salary point of view and decline more important offers elsewhere. Robert Lewandowski, who was paid 12 million euros net in Munich, will be paid “only” 9 million euros in Barcelona, for example. It should also be noted that Mateu Alemany is a fine negotiator – a reputation he already had long before arriving at Barcelona – and he always manages to get the best deals for his clubs. This makes a difference, whereas during Bartomeu’s tenure, Barça used to overpay, both in transfers and salaries.

It should also be noted that the recent problem of FC Barcelona has not necessarily been the lack of liquidity, since such a club can always find solutions to have cash available, whether through the sale of assets as the case mentioned above, or even via agreements or loans with investment funds and financial entities. It was mainly this wage bill that was a concern, especially with regard to the financial fair play rules of La Liga, which prevented the club to register its players easily.

Dangerous financial operations?

Barcelona is not completely out of the woods. Until now, the Barcelona team was subject to the 1/4 3/4 rule of the national financial fair play. That is, the managers could only reinvest 25% of what was generated, to build the workforce. These are rather strict rules that we have talked about many times on Foot Mercato, and that in a way handicap the Spanish clubs, but on the other hand, allow them to stay in the green financially. There is no doubt that if they had been implemented during Bartomeu’s mandate, Barça would not be where they are today. Now, thanks to the above-mentioned operations, Barça is on a 1/1 basis, which means that it can reinvest everything that is recovered. But not more, necessarily. Only, the wage bill is still too high and at the time of writing, the new recruits can not be registered with La Liga.

Therefore, it will be necessary to part with players, with Frenkie de Jong being the number one candidate to pack his bags. Other assets could also be sold during the summer, such as the production company Barça Studios or BLM, the company that manages the club’s merchandising. However, unlike the TV rights of La Liga, which ultimately represent only a small part of Barça’s budget, these operations could be less interesting financially speaking. Laporta’s bet this summer was clear: to recover large sums this summer to invest and be competitive, even if it means sitting on potentially higher future revenues. Risky? Yes and no. The TV rights revenue for such a club is still quite small as explained above, since Barça receives about 150 million euros per year from La Liga. Barcelona will sit on 37.5 million euros every year for 25 years. That is almost double the amount for which these rights were sold. But on a budget of about 800 million euros and that may approach the billion as before the covid very quickly, this is not huge. Clubs of the caliber of Barça earn much more money from merchandising, ticketing and sponsorship contracts than from television revenues. Losses” that could be compensated by good results in sports (especially in the Champions League, which is particularly remunerative) and the increase in TV rights of La Liga. But in this unpredictable world of soccer, you can never be sure. Especially since there is a huge debt to pay and an Espai Barça to finance…

 

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