How Barcelona is almost getting out of debts – THREAD explaining the 2 Economic Levers of Barcelona that were approved
Barcelona FC debt reached a whopping 1.7 billion euros including almost 390 million euros related to player salaries and more than 670 million euros owed to banks. Some 40 million euros were linked to membership losses, while the impact of the pandemic was 91 million euros.
What was done
After taing over office from Bartomeu, Joan Laporta refinanced the club’s debt and worked to reduce salaries by about 200 million euros increasing the focus on promoting youth players to the first team, which was the case with the likes of Pedri González, Gavi Páez and Nico González. Also, key was reducing salaries of some of its highest-paid players and signing free agents who were cheaper on the market.
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An analytical view into the Barcelona Economic Lever deal
Just because Barcelona now have money & more is likely on the way, it doesn’t mean we should immediately be reckless with it. Chase your priority targets with the extra leeway but let’s be smart about it, too. Remember what got us in this mess in the first place. Spend Smart.
Also don’t sell under value. All our key players are super young. It’s okay if it takes 3 seasons to build the team. With the finances now comfortable in the short term, selling anyone below their value would just be bad business, and we can’t fall back into bad habits.
Hope I’m wrong but all these financial deals Barcelona are making still feel like deals with the devil. Of course, I’m not an expert so will gladly be proven wrong – even better. However, there’s almost always a catch in everything.
Just to make it clear – not saying this is all bad. I’m saying I don’t know whether it’s good or bad but in business, you rarely get stuffs ‘for free’, let alone a huge influx of live-saving cash. So yeah, hoping for the best but also that we didn’t sell our soul to the devil.
Here’s the thing; you don’t just go from ‘we’re critically broke’, to ‘we’re back and we’re signing the world!’, within the span of a few hours. The cash injection, short term, is helpful but, in doing so, we’ve also mortgaged part of our long term future – which is never ideal.
Point is, reckless spending got Barcelona into this rut, and it cannot happen again. Laporta and his advisors obviously know way more than me, but hearing wild transfer rumours (which could well be a concoction of the media) and outlandish fan sentiments, isn’t particularly helpful.
THREAD explaining the 2 Economic Levers of Barcelona that were approved
1. BLM or Barcelona Licensing and Merchandising
Barcelona will sell 49% of the BLM to a *foreign* company WITH A BUY-BACK option for around 300M. Now on an average the BLM makes an income of around 60-65M.
This income will increase from this season because of the Spotify deal AND as Joan Laporta said, since a foreign company will be having shares, this BLM business will GROW OUT OF SPAIN INTO OTHER PARTS OF THE WORLD, which will increase the income even more.
So if the BLM income increases from 65M to 90M because of more foreign growth and sales because of the Spotify brand attached, then Barça will own 51% of 90M, i.e., 46M which is just 19M down from the original.
This is why Joan Laporta said that the BLM deal is THE BEST ONE. And he gave a nice remark.
“Do you want to own 100% of 10M or own 10% of 1B?” So the long term loss for BLM is very minor and also there’s a Buy-Back clause and Joan Laporta said they intend to buy back within 2026.
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2. LaLiga TV Rights
Barcelona will sell 25% of their LaLiga TV Rights for 25 years for around 500M. Now the TV Rights make an income of around 165M per year, 25% of which is 41M per year for 25 years, i.e, around 1B loss of future income.
BUT, Joan Laporta confirmed that this 25% sale of TV Rights will be COMPENSATED by the income generated by various business plans that includes the Espai Barcelona project (New Stadium and Facilities) and the 25 Year Spotify Deal for the stadium’s title rights.
As per RAC1, Spotify will give 20M per year for the title rights of Camp Nou for 25 years, i.e, a income of around 500M. So now the loss of future income from the 25% sale of TV Rights becomes 1B – 500M, i.e. approximately 500M, which will be further compensated by Espai Barça.
So as it seems, Barcelona will actually lose around 400-500M of future income from the sale of 25% TV Rights. Compare this to the horrible CVC deal which wanted to take 25% TV Rights for 50 years for just 270M! Barça would’ve lost MUCH MORE MONEY if they went the CVC way.
Laporta said that this (400 – 500M) loss of future 25% TV Rights income is manageable and can be neutralized as they have a solid business plan in place which projects a revenue of 1.25B in 6 years.
Remember: Barcelona is ONE OF THE TOP 2 clubs in terms of raw revenue, so this 400 – 500M loss from 25% sale of TV Rights shouldn’t be any problem if Joan Laporta and his board manage and use the money wisely.
Summary of Joan Laporta’s Second Reign as Barcelona President so far.
- Spotify deal – €250M+
- 49.9% of BLM – € 200-300M
- 25% of TV rights – €500M
- €160M in salary reductions
- €95 million in sales
- Fati, Araújo, Gavi and Pedri renewed