“We have passed from being in a terminal condition and moved into the intensive care unit,” the Barcelona president Joan Laporta said last week.
That message was aimed at the blaugrana socios being asked to activate two new ‘economic levers’ which could see the club’s board soon raise €700 million in new funding.
“Activating these levers will move us out of intensive care into a ward where we can receive more treatments, and soon leave the hospital,” Laporta predicted.
At Thursday’s extraordinary general assembly at the Camp Nou, Laporta went for a more positive and uplifting metaphor — describing Barca as a Formula 1 car that had been in for repairs, but now that the levers would be like fuel to get the vehicle racing again at top speed.
“We want a Barca that can compete head to head with those state-owned clubs, or those clubs owned by billionaires,” Laporta said in his address. “We want to compete with the strength of our brand and the strength of our members. We don’t want to be held back by those who put obstacles in our way.”
The votes were called to give Laporta and his directors permission to sell 49.9% of the club’s Barca Licensing and Merchandising (BLM) arm, and up to 25% of its La Liga TV revenues over the coming years to one or more partners. Both were passed by big majorities — 88% for BLM and 84% for the TV revenues.
There is still a big leap between this authorisation to take out more mortgages on the club’s future, and Barca really being able to move on from its huge debts and start to compete to win the biggest trophies and sign the most expensive players.
These are medium-term goals, but shorter-term deadlines are looming for Barca — including June 30 for the close of the club’s financial year, July 31 for La Liga’s salary limit calculations, and the closing of the summer transfer window on August 31.
The decisions made as each of these dates pass will be crucial for the exact make-up of Xavi’s squad for the 2022-23 campaign. Most importantly, perhaps, the reaction to Thursday’s vote will affect big transfer calls, including whether Frenkie De Jong is sold to Manchester United, and if Robert Lewandowski can be signed from Bayern Munich.
Everyone in football knows that Barca’s current board inherited an awful financial situation from their predecessors led by Josep Maria Bartomeu.
Laporta and his executives have made some progress over the last 15 months, including restructuring much of their €1 billion-plus debts, and moving out high earners including Lionel Messi. But the club is still living beyond its means. As things stand it is set for a further loss of at least €150 million when the current financial year ends on June 30.
(Photo: Eric Alonso/Getty Images)
That was not supposed to happen, after Laporta and his executives pushed record losses of €481 million into the 2020-21 accounts. That was to clear the way for a better future — and the budget announced last summer predicted a net profit of €5m for 2021-22.
Those reckonings were wrong. The team made the quarter-finals of the Europa League, not the Champions League. Such underperformance led to an unexpected investment in new players in January, including €60 million Ferran Torres, to ensure they qualified for next season’s Champions League and get the payout that comes with that. Commercial and match-day income at the Camp Nou has remained well below pre-pandemic levels, amid a hectic turnover of executives in many departments at the club.
The proposals to ‘activate levers’ at Thursday’s EGM was part of another attempt to turn this situation around and show a sizeable profit in this year’s annual accounts. The club’s voting socios were not given many firm details of the amount to be raised, or from whom, or what they would giving up in the future. But they agreed to let the board sell stakes in club ‘assets’ which could potentially raise €600m to €700m before the 2021-22 accounts are signed off.
The first ‘lever’ involved Barca Licensing and Merchandising (BLM), a separate company owned by the club which was formed in 2018, when Bartomeu’s board took back control of the club’s merchandising and retail rights from Nike.
The club’s vice-president for finance Eduard Romeu says that Barca have already spoken to “eight or nine” potential partners who could take a minority stake in BLM, potentially help run its activities, and share in its profits. The Athletic understands these companies include American online retailer Fanatics and European group Investindustrial.
Romeu said that the club has rejected €275 million for 49.9%, but industry sources doubt whether they will get a better offer. Legal issues with Nike dating back to Bartomeu’s time as president are another complicating factor. Everything at Barca tends to get complicated.
The other ‘lever’ voted through on Thursday was to cede a maximum of 25% of Barca’s TV revenue from La Liga games in an unspecified number of future seasons.
Romeu has claimed that this could raise as much as €540 million, but the expectation is now for around €250 million at most. This may or may not come from investment fund CVC, who have partnered with most other Spanish clubs in a similar arrangement organised through La Liga.
Barca sources told The Athletic their club has been speaking to CVC about a “parallel offer” which would release the same amount of money, but on much better conditions. La Liga sources said Barca are still welcome to come into ‘LaLiga Boost’ but that the terms for all clubs must be the same.
The tricky part is that everyone has been here before. Last October, blaugrana socios gave the board permission to sell a stake in Barca Studios, which was also set up under Bartomeu, and produces audiovisual content for the club’s own channels or to sell to other broadcasters.
The club’s 2021-22 budget included €50 million from that source, and club officials spoke of the possibility of generating €200m or more. Romeu said this week that offers for a share in this company had been received but rejected as too small. Sources say that the department’s most senior executives departing due to differences of opinion with Laporta’s board have made it much more difficult to attract the right partner at the right price.
Nevertheless, the hope remains that over the next fortnight the club can quickly finalise various complicated deals with different partners to raise at least €500 million. That would turn the current heavy losses in their 2021-22 accounts into a big profit, and make the club’s short and medium-term financial situation look healthier. Longer-term the situation is not so clear — given their new ‘partners’ would take a significant chunk of their revenue each year far into the future.
Most immediately, there would be less need to raise significant money from transfers by June 30. It is all very last minute, and quite chaotic, but in the simplest terms, it means Thursday’s vote means it is less likely that De Jong goes and more likely that Lewandowski comes. But nothing is certain — and the exact reverse is among the many possibilities of how the summer might play out.
Close Barca watchers will also know that Laporta and his directors have so far shown creativity in finding money to sign players, then often had problems registering new arrivals within La Liga’s salary limits.
This is because, besides the club’s historic debts, the squad’s ongoing salary bill remains way out of control. Barca’s total wage bill in 2020-21 (with Messi, Antoine Griezmann etc) was €617m. Their budget for wages in 2021-22 was €470m, but in the end, the total was €90m more — €560m.
(Photo: Xavier Bonilla/NurPhoto via Getty Images)
Romeu said last week that ideally the figure for next season should be €400 million — similar to that of 2021-22 La Liga and Champions League winners Real Madrid. La Liga’s next calculations, based on figures which Barca say they will submit by July 31, may mandate even bigger cuts.
The easiest way to lower the wage-bill, and what happens at most clubs, is to sell a player, or multiple players. And Barca currently have a full XI of squad members who Xavi is not counting on for next season. The problem is that Samuel Umtiti, Martin Braithwaite, Miralem Pjanic, Neto Maura, Clement Lenglet and company do not have much of a market, and are generally happy with their current lives and hefty wages.
Barca have already made some progress this month, by selling youth team forward Ferran Jutgla to Club Bruges for €5 million. They could raise similar sums for squad players Oscar Mingueza or Riqui Puig, but this would not add significantly to the coffers, or make much difference to the wage bill.
A complicating factor is that under La Liga’s rules, clubs who have broken their salary limits in previous seasons must devote the majority of any money raised to paying off existing liabilities. La Liga president Javier Tebas reminded everyone this week of his organisation’s rule of 1 to 3 for teams in this situation — “If Barca sell players for €100m, they can spend €33m on new players,” Tebas said.
A more straightforward method to free up space on the wage bill is to get existing players to take pay cuts, or at least defer a part of their salaries into the future. This happened last August when Gerard Pique’s ‘generosity’ allowed for Memphis Depay and Eric Garcia to be registered. Further ‘gestures’ from Sergio Busquets and Jordi Alba allowed for Sergio Aguero to make his La Liga debut. Again in January, Umtiti’s surprise contract extension meant Ferran Torres and Pierre-Emerick Aubameyang could start to play.
(Photo: Alex Caparros/Getty Images)
New players such as Ferran and Auba have also agreed to heavily weighted contracts — whereby they cost the club less now but will earn significantly more in the future. These manoeuvres have helped Xavi to get a better team on the pitch, but arguably are also just piling up more issues for the future.
La Liga have reacted to blaugrana sporting director Mateu Alemany’s ingenuity during the January window by giving the club an unprecedented ‘limit’ of -€144m. That shows the scale of the challenge facing Alemany and other executives in freeing up more space this summer.
Despite this, Barca have already agreed to sign two free agents — former Chelsea defender Andres Christensen and ex-Milan midfielder Franck Kessie — and the 19-year-old playmaker Pablo Torre from Racing Santander. As things stand none of these players can be registered. Nor can the club renew Ousmane Dembele’s contract, even if the French attacker agrees to a new deal. That is before even considering more expensive transfer targets like Lewandowski, the Leeds winger Raphinha or Sevilla centre-back Jules Kounde.
Recent weeks have seen further pressure being applied to Barca’s biggest earners to take further cuts. Romeu has openly said that the contracts of the ‘captains’ (Busquets, Pique and Alba) are “inflated, out of proportion”. The board would love these thirty-somethings to move elsewhere, but Xavi sees them as important for the team, and the three Catalans are very comfortable at the Camp Nou.
Last week brought local media claims that Xavi had told Pique he was not counting on him as a key player for next season. The Athletic understands that neither coach nor player, who share an agent, were the source of these interestingly timed stories. Instead they form part of a populist move by the club hierarchy to make it look like they are being strong in protecting the club’s interests. Some believe that the players have been taking advantage of the club for many years and such messaging is backed up by Laporta’s strong stance over a new contract for 17-year-old midfielder Gavi.
Laporta reiterated last night that a deal was close to being finalised for Gavi but a few weeks ago he gave a pointed interview to L’Esportiu in which he put pressure on the player and agent to accept the contract offer on the table.
“His agent has had the renewal offer on the table for a long time,” said Laporta at the time. “We don’t have any news they have accepted it. The news that we do have is that they are comparing and at some time will say something. We have said our position and for now, it’s not been accepted.
Laporta said “within the salary levels, it’s more than acceptable. (But) we will not go out of these levels, because I don’t want Barca to continue in the line that those before us were on that has taken Barca to ruin.”
Laporta said last night that Gavi’s new deal is close to being finalised (Photo: Pedro Salado/Quality Sport Images/Getty Images)
It may be the case that Pique, Busquets and Alba cede to this pressure, and space is freed up on the salary scale that would allow for, say, Christensen and Kessie to be registered. But to actually pay any fee for someone like Raphinha, or take on a new top star like Lewandowski, at least one current big earner would have to be sacrificed.
This brings us to De Jong, who is next on the scale behind the ‘captains’, and a player who the board believe could raise enough money to make significant additions to the squad. Some of those close to members of the first team believe that blaugrana directors are attempting to create an environment in which the Dutchman would accept an exit, through a drip-drip of stories in the local media. However, another source who knows the Dutchman well says he thinks the pressure will not work.
The vote passing may ease that pressure in the medium term, but the June 30 and July 31 deadlines are still relevant. If no money is raised from the ‘levers’ (BLM, Barca Studios or future TV rights) over the next fortnight, the only way to avoid big losses in the 2021-22 accounts will be the transfer market. Selling players is another of the ‘levers’ that Barcelona could turn to.
Barca’s myriad financial issues mean that time is not their friend. Atletico Madrid waited until the last minutes of last summer’s window to get the terms they wanted to take Antoine Griezmann back. Other clubs will know their hand in negotiations should get stronger and stronger as the weeks progress, and that anything might happen. Last summer Laporta kept saying that Messi would remain at the Camp Nou, until he suddenly said that was going to be impossible.
Many around the Camp Nou — in the dressing room, boardroom and stands — are exhausted by all the talk about financial problems, enormous debts, wage cuts and salary limits. There is also a lot less said currently about trusting the La Masia model, and more about how Barca need to be able to spend money on ready-made stars.
“I don’t need the details, just do it, let’s get out of this hole and start signing big players again,” a senior socio told The Athletic last week when asked to sum up the general mood among the fanbase. It was also striking that, of the 4,478 ‘compromisario’ socios chosen to represent the club’s more than 150,000-strong membership in Thursday’s vote, which took place virtually, just 646 and 586 actually took part in the two votes. Many of those present in the Camp Nou’s Auditori 1899 did want to share their views, including former club presidents Joan Gaspart and Enric Reyna, and one-time Messi agent Josep Maria Minguella. All three said they were upset the club had got into this state but none seriously criticised Laporta’s policies.
The two new ‘economic levers’ that are now available for the board do not necessarily mean Barca can now definitely sign Lewandowski, or Raphinha. Just like if the socios had voted ‘no’ it would not have meant De Jong or somebody else definitely had to be sold by June 30. The sense is still of improvisation, of reacting to events as they happen, rather than having a clear long-term strategy.
What is clear is that there is still lots to do. Barca remain in ‘intensive care’ and there is no single magic cure. Xavi clearly wants to make big changes to the squad this summer, but building a really competitive squad for 2022-23 remains a huge challenge for Laporta, Romeu, Alemany and all their colleagues.
The only thing that is certain is that Barcelona are in for another very long summer. Thursday’s overwhelming backing for Laporta’s plans is a step in the direction they want to take, but the end destination remains very uncertain.
(Photos: Getty Images)