Barcelona’s debt is staggering even by mega-club standards
The first thing you need to know about the shocking amount of debt Barcelona have found themselves in is that football finances are complicated. The other thing is that it’s common for football mega clubs to have hundreds of millions of dollars in debt at any given time.
Manchester United owe nearly $700 million since the American Glazer family bought it out in a hostile leveraged takeover in 2003. Chelsea technically owe more than $1 billion to their Russian oligarch owner Roman Abramovich, who bought the club the same year but still listed his investments in debt.
Both Real Madrid and Barcelona are regularly indebted to various creditors in the hundreds of millions of dollars. It’s just the way they operate. It is a financial strategy that is the basis of the football industry. Debts are rarely repaid, only services and restructured.
Nonetheless, Monday’s report in Spanish newspaper El Mundo that Barcelona’s debt had ballooned to almost $1.5 billion (with $887 million to come in the near future) was surprising for its size.
The amount still to be paid on transfers of players who arrived years ago or already left was particularly astonishing. Again, it’s not uncommon to buy players on credit, but again the volume is mind-boggling. Barca have $238m in unpaid transfer fees to other clubs, while they owe just under $72m. He owes $48 million for his purchase of Philippe Coutinho from Liverpool, and there is $58 million left unpaid for Ajax’s Frenkie de Jong.
That doesn’t mean Barcelona owe Ajax and Liverpool directly. According to Dutch magazine Voetbal International, both Ajax and Liverpool sold this debt to a third party who guaranteed the transfer, paid the selling club in a lump sum – less a commission – and will collect the remaining installments from Barca.
A few years ago, Barcelona undertook a concerted and public push through new commercial offices around the world, a major investment in new digital products and a planned stadium renovation, to become the first club to reach a billion euros. euros of income. In 2018-19, the last full season before the pandemic, Barca fell narrowly. But last season revenue fell while expenses remained firm, barely down from the previous year. Barca expect to make a small profit in the current financial year but their spiraling debt poses an existential threat to the club – especially as much of it is due soon.
But he still spends a gargantuan 74% of his income directly on his wage bill, above La Liga’s 70% cap and well above the recommended 50% for a healthy football club. In a way, Barcelona had breaking earnings records as he also had obligations to the biggest payroll in all of sport.
The pandemic has slammed into that delicate balance and upended it, costing the club nearly $243 million in projected revenue. It’s no wonder some voices inside the club have suggested that letting Lionel Messi walk away in their contract dispute last summer – or better yet, selling him – wouldn’t have been such a bad thing, considering of his $94 million salary, before bonuses.
Earlier in the pandemic, Barcelona players agreed to defer up to 70% of their wages, but that only added to the debt. And shaky finances mean the club cannot afford a much-needed reinforcement during this January transfer window.
Still, manager Ronald Koeman, tasked with seeing a flawed side through this difficult campaign, says the team is unaffected by news of the crisis. “We trained well today and the players don’t look worried,” he said ahead of Wednesday’s Copa del Rey match with Rayo Vallecano.
But this being Barcelona, the matter inevitably became political. The financial mess is at the center of the club’s presidential election, which has just been pushed back to March due to the resurgence of the pandemic in Spain. The last president, Josep Maria Bartomeu, was forced to resign to answer for the spiral of results, both sporting and financial.
Victor Font, a favorite who had already promised to keep Messi on when his contract expires this summer, has capitalized on promoting a plan in the SPORT media. He says he would cut costs and refinance short-term debt to avoid bankruptcy. While preserving the fully fan-owned club model by avoiding the sale of a stake to an investor.
He can succeed. Or someone else could. But this whole episode will remain remarkable even if Barça once again avoid ruin. After all, it will be the richest, most admired and most envied football club that has come closest to its demise.
Because Barcelona are determined to find out how far they can fly towards the sun.
Leander Schaerlaeckens is a football columnist for Yahoo Sports and a professor of sports communication at Marist College. Follow him on Twitter @LeanderAlphabet.
More from Yahoo Sports: