Spreading out payments, sale of assets, contract with Spotify… In debt to the tune of 1.35 billion euros a year ago, FC Barcelona has reversed the situation and has become one of the most in view of the summer transfer window, notably by recruiting Raphinha and Robert Lewandowski. In March 2021, the club was “in a situation of accounting bankruptcy”, with abysmal debt, cash flow problems and a huge wage bill, according to then-Barca chief executive Ferran Reverter, who resigned in February. Today, Barça extended Ousmane Dembélé for two years, managed to attract Franck Kessié (AC Milan) and Andreas Christensen (Chelsea) for free as well as Raphinha (Leeds) for 70 million euros, without forgetting especially Lewandowski (Bayern Munich) for 50 million euros.
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Spreading of debt
With 25.5 million euros reported by departures against around 120 million euros spent on recruits, the balance is however negative 94.5 million, a problem initially alleviated by spreading the debt. Barça’s biggest problem was not so much the debt, but its urgency: it had to repay it before June 30, 2021. But Joan Laporta, elected president four months before, and his management team negotiated with their creditors the smoothing of this debt over several years, a way of saving time. But part of it is not scalable, Barça had to take out a new loan from another bank, Goldman Sachs, for 595 million euros.
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Contract with Spotify
The loan contracted with Goldman Sachs also allowed FC Barcelona to have cash to carry out the club’s day-to-day operations, such as paying late salaries, or making a few moves during the winter transfer window, such as the signing of Ferran Torres ( Manchester City) for 55 million euros. But to gain even more cash quickly, the Catalan giant has started selling shares of its assets. The club sold 10% of the income from the TV rights of the Spanish championship to the American company Sixth Street for 25 years, in exchange for 207 million euros immediately. And the five-time Champions League winner plans to part ways with another fifteen percent in exchange for 330m euros.
In the pipes for several months, the sale of 49.9% of the shares of its Barça Licensing and Merchandising franchise, approved by the socios (supporters-shareholders) in mid-June, could also pay off big. Finally, the sponsorship contract agreed with Spotify, which notably includes the “naming” of the future renovated Camp Nou, will bring in around 435 million euros for Barça. This is the biggest sponsorship deal in the club’s history.
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A viable long-term strategy?
Thanks to these new cash inflows, combined with a drop in payroll, the Catalan club hopes to see its salary limit raised in order to be able to register its new recruits with La Liga. Because for the moment, Kessié, Christensen, Raphinha and Lewandowski cannot play an official match in the Blaugrana jersey.
But by selling assets over long periods in exchange for a large sum of money up front, Barca are burying the dust under the rug, and only pushing the problem away. The club is banking on the post-Covid-19 economic recovery and on the future income generated by its new stadium to repay its creditors: its debt, the loan from Goldman Sachs, the agreement with Sixth Street… But also the loan of 1.5 billion euros contracted to carry out the renovation works of the Camp Nou. A loan to be repaid in 30 years, drawing only on the excess income generated by the operation of its new stadium.
By selling its assets, Barça is following a trend: in Spain, 17 La Liga clubs have for example signed an agreement with the CVC investment fund, and Real Madrid has sold 20% of the operating income of its future Bernabéu stadium. to Sixth Street in exchange for 360 M EUR. In addition, FC Barcelona is still among the clubs that generate the most revenue in the world (582 M euros according to Deloitte in January 2022). Its capacity to absorb its debts is therefore established.
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