Barcelona: How the legendary club saved its money

Barcelona: How the legendary club saved its money

Distributing payments, selling assets, contracting with Spotify … In debts amounting to 1.35 billion euros a year ago, FC Barcelona turned the situation around and became one of the most important in light of the summer transfer window, in particular by recruiting Ravenha and Robert Lewandowski. In March 2021, the club was “in accounting bankruptcy”, with massive debts, cash flow problems and a huge wage bill, according to then-CEO Ferran Riverter, who resigned in February. Today, Barcelona extended Ousmane Dembele for two years, and managed to attract Frank Kessie (AC Milan) and Andreas Christensen (Chelsea) for free, as well as Ravenha (Leeds) for 70 million euros, without particularly forgetting Lewandowski (Bayern Munich) for 50 million. euro.

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debt spread

With 25.5 million euros reported through departures versus about 120 million euros spent on recruits, the balance is negative 94.5 million, a problem that was initially mitigated by debt distribution. Barcelona’s biggest problem was not debt, but its urgency: it had to pay it off before 30 June 2021. But Joan Laporta, president-elect four months ago, and his management team negotiated with their creditors to settle this debt over several years, a way to save time. But part of it is not scalable, Barcelona was forced to take a new loan from another bank, Goldman Sachs, for 595 million euros.

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Contract with Spotify

The loan contracted with Goldman Sachs also allowed FC Barcelona to obtain cash to carry out the daily operations of the club, such as paying salaries in arrears, or making some moves during the winter transfer window, such as signing Ferran. Torres (Manchester City) for 55 million euros. But to quickly gain more cash, the Catalonia giant began selling shares of its assets. The club sold 10% of its income from the television rights of the Spanish championship to the American company Sixth Street for 25 years for 207 million euros on the spot. The five-time Champions League winner plans to part ways with another 15 percent for €330 million.

In the tubes for several months, the sale of 49.9% of the shares of the Barça Licensing and Trading franchise, approved by the socios (supporters-shareholders) in mid-June, could be a big pay off. Finally, the sponsorship contract agreed with Spotify, which notably includes the “naming” of the Camp Nou that has been renewed in the future, will bring in about 435 million euros for Barcelona. This is the biggest sponsorship deal in the club’s history.

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A viable long-term strategy?

Thanks to this new cash inflow, combined with a drop in payroll, the Catalan club is hoping to raise its salary limit so that it can enroll its new recruits in La Liga. Because at the moment, Kessié, Christensen, Raphinha and Lewandowski cannot play an official match in the Blaugrana shirt.

But by selling assets for extended periods of time for a large amount of money up front, Barcelona is burying the dust under the rug, pushing the problem away. The club is counting on the economic recovery after Covid-19 and on the future income generated by the new stadium to pay off its creditors: its debts, the loan from Goldman Sachs, the agreement with Sixth Street … but also a loan of 1.5 billion euros contracted to carry out the renovation work of the Camp Nou. A loan to be repaid within 30 years, based solely on the excess income generated by the operation of the new stadium.

By selling its assets, Barcelona is following a trend: in Spain, for example, 17 La Liga clubs signed an agreement with the CVC investment fund, and Real Madrid sold 20% of the operating income of the future Bernabéu stadium. to Sixth Street. For 360 million euros In addition, FC Barcelona is still among the clubs with the most revenue in the world (582 million euros according to Deloitte in January 2022). So its ability to absorb its debt was established.

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