FC Barcelona are one of the legacy clubs of Spain and La Liga. But their perilous financial situation shows that even the biggest institutions can fail.
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FC Barcelona pride themselves on being ‘mes que un club’ or “more than a club”. And indeed, in many ways the Spanish giants are just that. Their status as one of La Liga’s and Spain’s biggest clubs is well established. Young players around the world dream of one day pulling on the famous and iconic Blaugrana jersey. To top things off, the club are self sufficient and not “owned” by anyone but the fans, the socios. There’s plenty to like about the club and, in theory, there seems very little chance that the club will not continue being successful. After all, they are an institution if there ever was one. In theory, at least, they are too big to fail.
The reality, however, is quite different. Financial mismanagement of epic proportions meant Gerard Pique, a longstanding player of the club, needed to take a “significant pay cut” to help the club register three players for this season.
And despite Barcelona making a winning start to the La Liga season, the focus is back on the mess that is their finances.
President Joan Laporta, elected only last year after the unpopular Josep Bartomeu stepped down, painted a grim picture in a recent press interaction.
“As of March 21, 2021, the debt was 1.35 billion euros,” Laporta said. “Bartomeu was plugging holes in the short term and mortgaging the club in the long term. That leaves us a dramatic inheritance.
“To the initial debt of €617m you have to add €389m on players, €90m in litigation, €79m in advance television rights and €56m from the ‘Espai Barca’ project. In total, it’s €1.35bn.”
So bad were the finances that the club had no choice but to let star player Lionel Messi leave on a free. But how did it come to this?
Perhaps the biggest irony of the entire situation is that Messi had to depart due to the club’s financial mess. After all, the Argentine star’s regular new contracts with the club added to their wage bill.
To make matters worse, Bartomeu handed big-money deals to a number of players at the club. The belief was that the revenue to pay off those deals would keep coming. But then came the COVID-19 pandemic.
The truth is that Barca’s finances were a mess anyway, but the impact of COVID-19 made things worse. They were no longer able to rely on matchday revenue due to playing behind closed doors.
But to make things worse, a depressed market meant there were no takers for their squad players – individuals whose wages other clubs were unable to match.
Such was Barcelona’s desperation to cut spending, however, that they began telling players they could leave for free. Even then, the big wages they were on made moves impossible.
Thus, Messi getting new deals did well to protect the player from any transfer speculation. But it significantly burdened the wage bill and, as a result, saw other players earn massive paydays too.
To say this isn’t a prudent way of running a business would be an understatement.
Yet the reality of the situation is that cash flow is not in a good state. The best way to raise money in such a situation – the sale of players – is hard given most big earners are reluctant to take a pay cut to move.
The few youngsters they did sell brought in some cash, but the long-term big spending is ongoing. This is, of course, due to the big earners still being around.
This is the situation in the present. But how and when do things get better?
As things stand, the club are using any measures necessary to save money. Besides Pique, club stalwarts Sergio Busquets and Jordi Alba are also in negotiations for pay cuts.
The other way to raise money is, of course, simple – win trophies. The sad reality, however, is that Barcelona’s squad requires a significant overhaul, which requires – you guessed it – money.
Thankfully for FC Barcelona, there is a cheaper for them to bring in newer players – La Masia. The club’s famed youth academy has fallen by the wayside in recent years, but the latest batch of players to break through do look promising.
Besides Ansu Fati there’s Pedri, Riqui Puig, Oscar Mingueza and Rey Manaj who are currently part of the first-team squad.
As things stand, Barcelona might need to fast track more youth players over the next two seasons. Esepecially since they have minimal spending power and a reduced wage bill due to La Liga’s FFP restrictions.
Of course, the selling and buying of players is part of the problem. The bigger issue – reducing the club’s debt – still remains. And Laporta sounded optimistic over achieving this, even though he offered little in the way of details.
“The situation is dramatic, but we have good news. The strategic plan based on our credibility and experience, on the assets that Barca have, makes this situation temporary. I think that in a couple of years, the club’s economy will be healthy.
“We are not scared at all. We are highly motivated and positive and morale is high. It’s a big challenge but we are capable of overcoming it.”
Whether or not he is right is something only time will tell. Till then, this current era of FC Barcelona shows the importance of prudent financial planning. Nothing or no one is ever too big to fail.
