Barcelona’s 2014-15 season is widely regarded as one of the Blaugrana’s greatest ever campaigns. Success on the pitch was spearheaded by the terrifying trio of Lionel Messi, Neymar, and Luis Suarez who between them netted an unprecedented 122 goals in all competitions. To put that into perspective, that is more than Cordoba, Almeria, Eibar, and Granada managed throughout the entire league season combined.
The club achieved its second continental treble winning the La Liga title, the Copa Del Rey, and the Champions League – defeating Juventus 3-1 in the final hosted in Berlin.
Off the pitch, it appeared there was plenty to celebrate too. FC Barcelona’s managing board released the club’s financial statement and for the first time since its inception in 1899, total income topped the €600m mark, recording a €15m after tax profit.
Although a €15m profit may sound like a sustainable result, the club was in debt, and the increased spend on wages essentially wiped that out and plunged it a further €41m deeper into the red to a staggering €328m.
The wage bill for the dominant campaign reached 73% of income generated, which was three per cent above the maximum recommended operating level for top-flight La Liga clubs.
The financial result pushed the clubs EBITDA (earnings before interest, taxes, depreciation, and amortisation) to a ratio of 3.2. According to a La Liga rule, clubs could not exceed an EBITDA ratio of 2.75. The warning was heeded by the Barcelona hierarchy and 12 months later this was reduced to 1.94.
With the situation dramatically improved and the club still boasting a talented and bountiful squad, the future of the Catalan giants at the end of the 2015-16 campaign was on a sound footing and looked like it would stay that way for the long term.
Or so we all thought.
Six years on, and Barcelona find themselves at crisis point with financial records that are more akin to a Stephen King horror novel than the vastly superior sporting outfit their reputation relies upon.
The headlines can easily be misread. For example, Barcelona is the fourth richest sports team in the world (worth a reported $4.76bn). However, the fact is that the club is comfortably in over the reported €1.3bn debt of 2020-21.
The road to financial disaster has been brewing over the last few years and can be broken down to three key areas.
Transfers: Splashing the cash in the transfer market is a must for a club the size of Barcelona. The requirement to appease fans, the manager, sponsors, and to attract future commercial partners means any club with aspirations have to ‘put their money where their mouth is’.
In Barcelona’s case, the last few seasons may be chalked off as just a little unlucky. Ousmane Dembele signed from Borussia Dortmund for big money (totalling around 125 million Euros) but injuries and uninspiring performances has depreciated the Frenchman’s market value which was similar to the situation with midfielder Philippe Coutinho.
COVID-19: During the height of the pandemic, the club reported a loss of €97m for the 2019-20 season. The club pulled in 24% less revenue from the stadium and operational revenue from the season before and saw a €35m reduction in television money coming in. In total, for the 2019-20 campaign, the club had a budget of €1.047bn but brought in €855m, representing a missed target of 18% and that was just for one season during the crisis.
Wages: Barcelona’s big problem has been wages. The likes of Frenkie de Jong on £470,371 per week has led the club to spending almost all of their received income on player wages.
Last season, La Liga made it clear that things had to change at the club after breaking Financial Fair Play Rules, and incoming Barcelona president Joan Laporta had to make the difficult decision to let cult hero Messi leave in order to help save the club and reduce the wage bill fast.
So how are they making signings now? In the summer transfer window Barcelona spent upward of €150m in the transfer market. Former Leeds winger Raphinha, Polish superstar Robert Lewandowski and French defender Jules Kounde have all been brought in which seems a bit much for a club with a bank account boasting more holes in it than a block of Swiss Cheese.
The club has even found it challenging to register these players for the new campaign, as it’s only allowed to spend 25% of what it saves by transferring players off its wage bill.
However, Barcelona have been able to make these signings by carefully balancing the books by utilising two things: Offloading the expensive flops from the wage bill and replacing them with new players on more respectable wages and something known as ‘extraordinary income’ – basically any sponsorship or player deal the club can do.
The first ‘extraordinary income’ came from a vast sponsorship deal with Spotify and the second a risky strategy of selling off what is now a total of 25% of their broadcast rights to San Francisco-based investment firm Sixth Street Partners for 25 years.
This was controversial after the club declined to take part in a deal between CVC capital partners and La Liga to buy a stake in the broadcast rights for the next fifty years. It means the club will no longer receive €41m from broadcast rights per season but has just had a large, undisclosed injection of cash.
The club has also sold off a 24.5% stake in its content hub for $100m and plans to sell 49.9% of Barca licensed merchandise as soon as it can.
We have on our hands a Barcelona rights fire sale, but it means the club balances its books in the short term and bring in the star names the club is synonymous with.
It is a risky strategy in the short term. However, as long as Barcelona remain competitive, continue to qualify for the Champions League, and maintain their global appeal, then the tactic of selling off long term assets for short term cash could well mean Barcelona stay at the upper echelons for the foreseeable future.
Why do clubs accrue such huge debts?
In light of the situation at Barcelona, Ian Waterhouse explains why football clubs rack up massive debts
Football at the top level is big business. Clubs across Europe and the world have to battle with each other to stay competitive, relevant, and appeal to an ever-growing global market which if they can unlock, can create further riches from which to beg, borrow, and steal – not literally.
Enormous pressure comes from the sponsors, fans, and the media to build for the long term with the caveat of instant success demanded. Rivals must be crushed before they can become a viable threat and winning trophies is a must. However, this in itself creates an issue as there is only one Champions League and one League title – per nation – that can be won each season.
The problem is exacerbated by the fact that the owners of some clubs have bottomless pockets of cash which inevitably pushes the asking price for players from sellers up. When the selling clubs become buyers the asking price for lower quality players is increased, creating a vicious circle led by the richest and inevitably leads those clubs who wish to compete but do not have the same resources into debt, relegation woe, or both.
The value for a smaller club breaking into the top-flight also has its risks. For example, in 2020, the brand value of the English Premier League was €8.5bn, meaning each club in the division could essentially use that as borrowing power to make signings. However, dropping out of the league suddenly leaves a club facing huge wages bills they cannot afford to pay.
A Nou attack
Barcelona’s attacking of trio of Lionel Messi, Neymar, and Luis Suarez may have left the building some time ago, but head coach Xavi has forward options that looks set to continue to compete with the best.
Unsurprisingly, the main source of goals is expected to come from new acquisition Robert Lewandowski. The former Bayern Munich and Borussia Dortmund man has guaranteed goals wherever his career has taken him and although he may be entering his mid-thirties, he is still regarded as arguably the most consistent and lethal frontman in the world.
Another new signing is Brazilian right winger Raphinha and he looks likely to be the man to supply the ammunition, as well as chipping in with a number of goals too. Bought from Leeds United, the 25-year-old was in imperious form for the Premier League outfit with his 11 league goals arguably the difference as the Elland Road club beat the drop last term. Barcelona will be looking to Raphinha to exceed double figures in both goals scored and assists in support of Lewandowski this season.
Completing Barcelona’s new look attacking line up looks set to be Ansu Fati who will likely occupy the left wing. There are big hopes pinned on the young Spaniard who has already been at the club since 2012 and successfully graduated from the youth ranks. Injuries hampered his impact last season but an injury-free campaign this time around and we could see something special. If all goes well, these three could be the next deadly attacking trio at Barca in the years to come.