The reconstruction of the Barcelona squad is really underway. Favorite son Xavi ended last season quite well as head coach. Now, he brings several newcomers to end the suffering of the fans.
However, despite the glitz and glamor of the new signings, questions remain about the plausibility of Barcelona’s transfer fee. As of now, Barcelona remains billions in debt. Additionally, rumors of differing salaries lead to conspiracy theories about the club’s financial dealings. Many fans feel that something strange must be going on behind the scenes.
In fact, stories of the club on the verge of bankruptcy hit the social media circuit. Recent reports of a more than $500 million decline in annual revenue do not favor the escalating debt crisis.
However, not everything is what it seems in Barcelona. These tragic stories of doom and gloom can be quite far from reality. Simultaneously, Barcelona is preparing for a resurgence with increased transfer spending.
A Much Needed Revival
Yes, success in the field has been quite rare in recent years. The drop in revenue, combined with questionable transfer decisions, left the club on shaky ground. LaLiga rules stipulate that clubs can only spend a certain amount of money on players. This figure comes from the current income and expenses of a club. For Barcelona, the club stands at -$150 million. Therefore, the Catalan cannot sign new players until this figure is positive again.
The only way to do it is to generate more income.
Okay, this looks like an insurmountable mountain. Remember, Barcelona is one of the giants of world football. Despite their financial difficulties, this is a much easier task than for other clubs. In fact, it is comparatively pocket change in the grand scheme of things.
So these are the basics of how Barcelona rebuild their squad.
Barcelona works to rebuild its squad
First of all, Barcelona restructured its debt. Short-term liabilities became long-term. This provides stability for the club to find its balance. The general connotation of debt is negative. However, when handled properly, it can turn into something positive. Changing the length of the loan reduces monthly payments. Consequently, the banks will not execute or claim the full amount of these debts in the short term.
Secondly, Barcelona wants to reduce its current wage bill. Fortunately, many players took significant salary cuts, often reaching the maximum allowed in LaLiga at 50% of previous salary. The reason is that many players do not want to leave the club. Frenkie de Jong is the outstanding case. The Dutchman does not want to leave the club, but he does not want to accept a salary cut either. Barcelona probably want to take their salary from the club, and the player is simply a guarantee for that.
Lastly, and most importantly, there is the sale of business assets. When people talk about assets in terms of football clubs, they usually think of the players themselves. However, a club the size of Barcelona has more to offer the business world than the talent of its players. For one thing, the club sold 10% of all television revenue over the next 25 years for more than $250 million. Immediately, this ends with the $150 million that LaLiga stipulated as purchasing power for his squad.
But, the sales don’t end there. Club president Joan Laporta is currently negotiating further business deals to put the club back at the top end of the football transfer market. Another 15% of future Barcelona TV deals are up for sale for some $330 million. Meanwhile, 49% of the clubs’ merchandise goes for another $200 million.
This might not be the reading that many of Barcelona’s enemies want to see and selling future profits may be a risk. In the short term, however, these moves give Barcelona the space they need to sign whoever they feel they need this summer and should see them on a more secure financial footing for years to come.
PHOTO: Joan Gosa/Xinhua via Getty Images
