About Barça's Financial Troubles
"The club is on the verge of bankruptcy”. "Laporta is facing an impossible task". Here's why these takes are highly exaggerated.
DEBT VS REVENUES
The main media focus are the 1.2 billion euros in debt, of which 730 million is short-term. Those figures may seem gigantic, but everything is relative.
First, the net debt (total debt minus cash & other instruments that could be quickly converted to cash) is 488M€. A less concerning figure.
Secondly, what really matters is the ability to generate revenues in relation to that debt. And the club has lots of assets (to licence or sell) and room to grow revenue.
- Barça's brand is internationally renowned, powerful and could be deployed across several categories of products & services.
- If Messi ends up staying at Barça, it would be a huge boost from a financial perspective. Most sponsors are ready to pay a premium to have their brand associated with Messi's image.
- Let's not forget that the pandemic is what made things worse. As soon as things go back to normal, fans will be allowed inside the Camp Nou and Match Day revenue will start growing until reaching its previous level (an average of 73€ per seat, for an average attendance of 54K spectators per game).
- Also, there's the Super European League project. Although I disagree with it (more inequity among European clubs), it'll be a big revenue booster in the future.
The main challenge may be the debt restructuring. The economic context (low interest rates) provides a favourable context for the bonds issuance promoted by Laporta : there's currently lots of money flowing in the markets, looking to be invested, even for small (but safe) returns.
COST CUTTING
When football players' wages represent 75% of your annual budget (FIFA & LaLiga's guidelines recommend a 70% cap), there's no other way around it : radical measures will have to be taken in terms of squad composition.
I assume the club will have to release some high earning players for below market fees or maybe even for free (similar to what was done with Rakitic, Suárez & Vidal) to get them off the books. Sacrifices will have to be made.
(Update : Indeed, sacrifices were made…)
Luckily, Koeman was also able to seamlessly bring a good generation of young players into the 1st team. Young players with great potential... and low wages (relatively speaking).
BARÇA CORPORATE
This would be my main concern. I still don't fully understand why the former board & all the candidates to the elections seemed to agree on the *SALE* of 49% of Barça Corporate, a subsidiary that combines 4 entities with high revenue potential : Barça Studios, Barça Licensing & Merchandising, Barça Academy & Barça Innovation Hub.
A sale is definitive and means having external shareholders dictating their choices. I don't know why other options that don't imply a loss of ownership weren't considered. Like selling the rights to the revenue generated by Barça Corporate for a fixed number of years (here's Real Madrid selling the rights to their sponsorship income for 4 years to Providence).
CONCLUSION
The club may be forced to make sacrifices (sell players at a loss, find legal loopholes to force them out), to take radical measures (sell the stadium's naming rights, for which bids of ~200M€ were already made) or to make a wild commercial push ("Barça toothpaste", "Barça Beer"), but it won't go bankrupt.
I don't see anything that wouldn't be solved by applying common sense, conservative management and the ruthless techniques used for classic corporate turnarounds. And I trust President Laporta to take the necessary measures.
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