FC Barcelona prides itself 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 the biggest clubs in La Liga and Spain is well established. Young players from all over the world dream of one day attracting the famous and iconic Blaugrana Jersey. Above all, the club is self-sustaining and is not “owned” by anyone other than the fans. Social, There is much to like about the club and, in theory, there is little chance that the club will not continue to be successful. After all, they are an institution if there ever was one. In theory, at least, they’re too big to fail.
Although the reality is completely different from this. Financial mismanagement of epic proportions meant that one of the club’s long-time players, Gerard Pique, was required to take a “significant pay cut” to help the club register three players for this season.
And despite Barcelona’s winning start to the La Liga season, the focus is on the mess that is their financial situation.
President Joan Laporta, elected just last year after the unpopular Josep Bartomeu stepped down, painted a grim picture at a recent press conference.
“As of March 21, 2021, the debt stood at 1.35 billion euros,” Laporta said. “Bartomeu was plugging holes in the short term and mortgaging the club in the long term. It leaves us a dramatic legacy.
“To the initial debt of €617m you must add €389m on players, €90m in litigation, €79m in advance television rights and €56m from the ‘Espai Barca’ project. In total, it is €1.35bn.”
The financial situation was so bad that the club had no choice but to release star player Lionel Messi for free. But how did it come about?
Messi mess – and the domino effect
Perhaps the greatest irony of the whole situation is that Messi had to leave because of the club’s financial mess. Eventually, the Argentine star’s regular new contracts with the club add to his wage bill.
To make matters worse, Bartomeu handed big money deals to several players at the club. The belief was that the revenue would keep coming in to pay for those deals. But then came the COVID-19 pandemic.
The truth is that Barca’s financial situation was in a mess anyway, but the impact of Covid-19 made things worse. Due to playing behind closed doors, they were no longer able to rely on match day revenue.
But to make things worse, a depressed market meant that there were no takers for the players in his squad – individuals whose wages were not on par with those of other clubs.
Such was Barcelona’s desperation to cut spending, however, that they began telling players they could leave for free. Still, the large salaries they were running on made it impossible.
Thus, Messi getting new deals helped shield the player from any transfer speculation. But this put a lot of burden on the wage bill and as a result, other players also received huge payouts.
To say that this is not a prudent way to run a business would be an understatement.
Yet the reality of the situation is that cash flow is not in a good shape. In such a situation the best way to raise money – the sale of players – is difficult as most big earners are reluctant to take a pay cut to move forward.
The few youngsters they sold on brought in some cash, but the long-term huge expenditure continues. This is definitely due to the big earners still being around.
This is the situation at present. But how and when do things get better?
The way forward for FC Barcelona
As things stand, the club is taking necessary measures to save money. In addition to the tussle, club legends Sergio Busquets and Jordi Alba are also in talks to take a pay cut.
The second way to raise money is admittedly simpler – win trophies. However, the sad reality is that Barcelona’s squad is in need of a significant overhaul, which – you guessed it – requires money.
Thankfully for FC Barcelona, it is cheap for them to bring in new 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 look promising.
Apart from Annu Fati, there are Pedri, Ricky Puig, Oscar Minguez and Ray Manaj who are currently part of the first team squad.
As things stand, Barcelona may need to fast-track more youth players over the next two seasons. Especially since they have minimal spending power and a low wage bill due to La Liga’s FFP restrictions.
Of course, the buying and selling of players is only part of the problem. The big issue – reducing the club’s debt – still remains. And Laporta seemed optimistic about achieving it, even though he offered little in the way of details.
“The situation is dramatic, but we have good news. Based on our credibility and experience, the strategic plan based on the assets that Barca has, makes this situation temporary. I think that in a few 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 is a big challenge but we are capable of overcoming it.”
Whether he is right or not, only time will tell. Until then, this current era of FC Barcelona shows the importance of prudent financial planning. Nothing or anyone is ever too big to fail.