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How Barca can afford a €89m splurge this summer

It’s fair to say that the question on many minds at the moment is just where Barcelona’s money for transfers is coming from considering new president, Sandro Rosell, yesterday revealed the club had failed to pay last month’s player wages.

“We found a club in debt, with liquidity problems,” Rosell said. “At this point we have to take a loan to pay the wages of the players. We’ll fix a loan of €150million [and] the banks know that we have a business plan that will allow them to recover the money.”

Yet, in the very same interview, Rosell goes on to explain that the club have as much as €90million still to spend on transfers should coach Pep Guardiola choose to:

“There will be €50 million to sign more players. This is the case every year. This is our plan for the future. Technically, as of now we have €50 million plus €15million for Chygrynskiy and €24million for Toure. In total, €89million.”

Barcelona have already spent £34m in securing David Villa from Valencia and spent around €90m last summer signing Ibrahimovic, Chygrynskiy, Maxwell, and Keirrison. So for the logical thinkers who watch football and fail to understand how clubs generating unfathomable amounts of money (Barcelona, Manchester United, Real Madrid etc) find themselves in stratospheric debt, yet continue to overspend, you are not alone – debt in football is such that even though Barcelona’s revenue was an incredible £311m last season, they find themselves needing to fix a loan to pay player wages (it’s also worth noting that Barcelona and Real are unique in so far as local banks are always willing to fund their endeavours).

So where does Baca’s money come from? Reading the excellent Swiss Ramble* provided a great deal of insight: match day revenue brought in £81m, which is interesting considering Arsenal (who’s Emirates stadium is nearly 40,000 seats shy of the Camp Nou’s capacity) amassed £100m in the same period. But this is perhaps more to do with ticket prices and average attendance than it is Barcelona missing a marketing trick – Laporta has certainly untapped Barcelona’s commercial potential in his tenure as president, hiring professionals at all levels from the top down and, crucially, creating a system of accountability behind the scenes. Two factors also aid the club in an exclusive way that teams in England have no hope of competing with: broadcasting rights and the tax bracket afforded to foreign players.

TV broadcasting rights earned Barcelona an amazing £135m and the reason is in Spain’s unique protocol of allowing individual rights to be negotiated by teams (as opposed to the collective bargaining in place in the Premier League). The danger for La Liga is a lopsided distribution of money (Barca and Real dwarf teams like Valencia and Sevilla who earn £30m and £20m respectively via the same means, who in turn dwarf the lesser teams). This perpetuates a cycle of prosperity for Barca: Barca earn more than anyone in the league through TV rights, which allows them to spend more, which means they sustain/improve on their level, which means they get the best deal the next year etc – other teams in La Liga simply cannot compete. The tax allowance of 23% for foreign players in the top bracket for their first five years in the country means wage bills are significantly reduced in comparison to England i.e. they can offer the same/ increased deals as an English team for less overall outlay because English players now pay 50% tax.

Much was made of Barca not having a shirt sponsor and instead partnering UNICEF but this should not detract from the overtly commercial inclinations of the club: Nike pay them a minimum of £30m a year and the club have a hefty list of sponsors (26 in all) on their website alone. This is all not mentioning how Barca own a significant portion of their players’ image rights, which inevitably reaps its rewards when the team boasts the world’s most sought after talent in Lionel Messi. So with all of these avenues (and more) of income contributing to the £311m the club made last year, what’s the figure of its debt? This is less clear; figures have swung from as low as £25m (as reported at Barcelona’s AGM), to £300m (as reported in the Guardian), to £420m (as reported by Sandro Rosell himself). Whatever the actual state of its debt, Barcelona remain in a much healthier position than the likes of Manchester United and Liverpool (Barca’s net interest payable is only £11.6m in their accounts whilst Liverpool’s is £40m and United’s, a staggering, £68m).

In fairness the furore surrounding the club’s debt has been overplayed because Rosell, for obvious reasons, would want to make them out to be in a worse situation than they really are; it buys him breathing room, a little understanding, and the ability to say ‘look how much I’ve helped the club from the staggering debt of 4 years ago’ when his tenure is up. Barcelona still turnover more than any other club and, along with a youth system that will probably supplement them for a long time to come, they remain very much able to incrementally add to their squad with a couple of marquee signings a year.

*For an in-depth and diligently researched account of Barcelona’s finances compared to Arsenal’s, click here


Click on image below to see the PORTUGAL babes at the World Cup

Article title: How Barca can afford a €89m splurge this summer

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