Barcelona’s debts are staggering, even by mega-club standards
The first thing you should know about Barcelona’s shocking debt is that football’s finances are tricky. The other thing is that it is common for soccer mega clubs to have hundreds of millions of dollars in debt at some point.
Manchester United has owed nearly $ 700 million since the American Glazer family bought it in a leverage-hostile takeover in 2003. Chelsea owes more than $ 1 billion technically to its Russian oligarch owner Roman Abramovich, who bought the club that same year but always did, writing off his investments as debt.
Real Madrid and Barcelona routinely have several hundred million dollars with different creditors. It’s just how they work. It is a financial brinks manner that forms the bedrock of the football business. Debts are rarely paid back, only services and restructuring.
Still, Monday’s report in Spanish newspaper El Mundo reported that Barcelona’s debts had risen to nearly $ 1.5 billion (with $ 887 million due in the near future) was appalling for the sheer size.
Particularly impressive was the amount still outstanding for transfers for players who either arrived years ago or have already left. Again, it’s not uncommon to buy players on credit, but the volume is staggering here too. Barca have $ 238 million in pending transfer fees to other clubs while they owe just under $ 72 million. It owes $ 48 million from the purchase of Liverpool’s Philippe Coutinho, and there is still $ 58 million left unpaid for Ajax’s Frenkie de Jong.
That doesn’t mean Barcelona owe Ajax and Liverpool directly. According to the Dutch magazine Voetbal International, Ajax and Liverpool sold these debts to a third party who guaranteed the transfer, paid the selling club in a lump sum – minus a commission – and collected the remaining installments from Barca.
A few years ago, Barcelona made a concerted and public foray through new business offices around the world, a significant investment in new digital products and a planned stadium renovation to be the first club to generate € 1 billion in sales. Barca were narrowly out in 2018-19, the last full season before the pandemic. In the past season, however, the income decreased, while the expenditure remained stable and hardly decreased from the previous year. Barca expect a small profit for the current financial year, but their spiraling debt poses an existential threat to the club – especially with so much of it coming due soon.
But it still spends a whopping 74 percent of sales directly on his payroll, above the 70 percent cap in La Liga and well over the 50 percent recommended for a healthy football club. In a way, Barcelona would have Breaking revenue records because it also had obligations to the largest payroll in any sport.
The pandemic got into that delicate balance and threw it off balance, costing the club nearly $ 243 million in projected revenue. It’s no wonder some voices at the club suggested that given his reported $ 94 million pre-bonus salary, letting Lionel Messi run in her contract battle last summer – or better yet, him – wouldn’t have been so bad for sale.
At the start of the pandemic, Barcelona players agreed to defer up to 70 percent of salary, but that really only added to the debt. Due to the precarious finances, the club cannot afford much-needed reinforcements in this January transfer window.
Even so, manager Ronald Koeman, accused of seeing a flawed team in this difficult campaign, says the squad has not been affected by the news of the crisis. “We trained well today and the players don’t look concerned,” he said ahead of Wednesday’s Copa del Rey game against Rayo Vallecano.
However, given that this is Barcelona, the matter has inevitably become political. The financial chaos is central to the club’s presidential election, which was not postponed until March due to the resurgence of the pandemic in Spain. The last president, Josep Maria Bartomeu, had to resign to be responsible for the sporting and financial results.
Victor Font, a front runner who had already promised to get Messi to stay when his contract expires this summer, took the opportunity to promote a plan in the SPORT media company. He said he would cut costs and refinance short-term debt to avert bankruptcy. At the same time, the model of the club, which is exclusively owned by fans, is maintained by avoiding the sale of a stake to an investor.
He can be successful. Or someone else could. But this whole episode will remain remarkable even if Barca stave off ruin again. After all, it will have been the richest, most admired, and enviable club in football that came closest to its demise.
Because Barcelona is determined to find out how close it can fly to the sun.
Leander Schaerlaeckens is a columnist at Emox News and a lecturer in sports communications at Marist College. Follow him on Twitter @LeanderAlphabet.
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