The numbers behind the impending financial crisis and desperation at Barcelona

It is no secret that Barcelona are in a financial crisis and must make major cutbacks to their first-team squad ahead of the new season.

Star player Lionel Messi is not currently registered to play for the club next season despite a verbal agreement on a new contract, while none of Barca’s four summer signings – Sergio Aguero, Eric Garcia, Memphis Depay and Emerson Royal – also cannot be registered before sales.

The Blaugrana must make savings of around €200million ahead of the new campaign if any of those five players will be involved next season as their economic fears risk becoming a nightmare.

The Catalan giants were forced into making drastic savings last year when Luis Suarez, Arturo Vidal, Arthur Melo and Ivan Rakitic were all moved on, along with wage reductions across the squad.

This summer will be even more complicated with yet further slashes to the club’s wage budget and players no longer will to continue to accept wage reductions.

A report in The Athletic last week highlighted that the club’s wage budget for next season was to be just £138million (€160m) – a quarter of their budget from the 2019/20 campaign of £579 million (€671m).

La Liga impose the caps upon all 42 clubs across the top two divisions of Spanish football – with the budget for each club based on their earnings, revenue streams, profits and losses, overhead costs, investments and debt repayments.

The league places the restriction upon each club based on their audit of the club’s health and finances, in a move to each the growth of clubs sustainable and to ensure outgoings are justified by their income.

La Liga chief Javier Tebas has said of the situation: “When a club goes over its salary cap, it can only include players who represent 25% of the savings.”

“If Barcelona sell a player for €100m, they can only spend €25m. If they want to bring in a player who costs them €25m a season in salary, they must earn €100m, either by transfer or salary reduction.

“Barca are currently exceeding their salary cap. The efforts made to reduce the wage bill are on the right track, but there will not be a special rule for Messi. I hope they can include Messi’s wages, but to do so, they will have to leave out someone else.

“Barca have always been at the limit in terms of wages. When the pandemic came along, they did not have a buffer.”

Social media account Swiss Ramble – a blogger covering the business of football – has now outlined how the club have ended up in their drastic situation via a detailed analysis.

In 2020, the Blaugrana still had the biggest wage bill in world football – their €443million wage bill was €42million more than Manchester City, who were second.

The Catalan club had been justifying this with their revenue being the highest globally in 2019/20 with their €715million meaning they topped the Deloitte Money League.

That revenue dried up when Covid struck – with the club reporting losses in 2020 of €203million due to no matchday revenue or stadium tours, whilst this figure is likely to have increased further this year after a full season without fans.

Other revenue streams have been falling too – they have not won the Champions League in six years while their keynote partnership with Rakuten has fallen from €55million to €30million.

Real Madrid posted a profit of €2million in 2020 while Barca recorded a €128million pre-tax loss and indeed, Barca have been a total of €203million worse off than their El Clasico rivals in this regard over the past three years.

La Liga supremo Tebas said of the comparison: “Real Madrid have made a commendable effort to ensure their losses aren’t the same as Barca, who take the trophy for losses.”

Another element is the player amortisation deals – the most recent accounts show the club are paying out €174million in instalments for previously completed deals, more than any other club in the world.

That ties into Barca spending significantly more in transfer fees – €960million – in gross terms than any other European club, and €159million more than Juventus, second on the list, and €202million more than Chelsea – the highest-ranking English club.

Crucially, this has been financed by bank loans and credit rather than the money naturally generated by the club itself and again they have the highest transfer debt in world football – standing at €323million in 2020, a jump from €64million two years earlier.

This was in line with the club’s gross financial debt which grew to €480million from just €68million in two years – comprised of €279million in bank loans and €201million bonds.

Essentially, the club’s spending continued to multiply rapidly even when cash income was relatively steady – meaning that the club debt rocketed with each loan merely kicking the problems down the road.

In another world high, Barca have the most short-term debt – defined as what must be paid back in the next 12 months – at a whopping €731million. Atletico Madrid are next on the list at €432million – showing the scale of what must be paid back.

Whilst a lot of this debt can be further delayed by yet more loans – which would of course increase overall debt – it is an outline of the scale of savings that must be made.

The club have taken a €525million credit line from the Goldman Sachs bank last month which will be repaid at an interest rate of three percent over the next 15 years.

Some low-key exits have been processed this summer – Carles Alena, Junior Firpo and Jean-Clair Todibo have all been sold for combined transfer fees in the region of €28million, while Francisco Trincao has joined Wolves on loan with a €25million option to buy.

Matheus Fernandes has been released but is suing the club over his dismissal while Juan Miranda was paid a significant sum by Barca to leave the club – the Spain Under-21 international has joined Real Betis.

Yet these are all marginal and relatively insignificant savings, with the club needing to move on higher earners.

Samuel Umtiti and Miralem Pjanic have both rejected severance packages from the club, who see them as entirely dispensable and a drain on club resources.

Ousmane Dembele – out of contract next year – would have been sold this summer but is injured until October and an exit now looks almost impossible this window.

Which Barcelona players would be a success in the Premier League? Comment below

Philippe Coutinho is another who has been plagued by injury problems and due to his wage packet, the club would accept a relatively minimal fee for their club record signing.

Antoine Griezmann is perhaps the most feasible exit as he has lost status due to the Aguero and Memphis signings, commands a high wage and would be wanted by many rival clubs – including his former team Atletico.

Yet these are five players who will each prove massively tricky to move on, and savings may almost certainly need to be made through other avenues.

Sergio Busquets and Jordi Alba are two other high earners who could be moved on but neither are likely to want an exit and both are still important members of the first-team squad.

Questions may now be raised over the future of first-team stars who the club would in normal circumstances laugh off approaches for from other clubs – goalkeeper Marc-Andre Ter Stegen, midfielders Frenkie de Jong, Ilaix Moriba and Pedri and the talented teenage forward Ansu Fati may be among those who elite European clubs are now eyeing up for moves.

Barca are desperate and are on the verge of a financial crisis which could easily lead to a sporting one – do not rule anything out.

Rival clubs are aware of their desperation and will look to capitalise upon it; the Catalan club know that the longer time ticks on as the season closes in, the weaker their position will become.

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