Barcelona's losses a real outlier in La Liga

Tweeting from his Zurich fastness, the authoritative Swiss Ramble reviews the 2019/20 accounts of Barcelona.

The club swung from €4m pre-tax profit to €128m loss (€97m after tax, due to €31m tax credit). Revenue dropped €135m (14%) from record €990m to €855m, including €21m reduction in gain on player sales. This was only slightly offset by expenses falling €7m.

Revenue fell €123m (14%) from €852m to €729m. Largest decrease in broadcasting €50m (17%) to €248m, followed by marketing & advertising €40m (11%) to €323m, competitions €33m (29%) to €81m and season tickets €6m (9%) to €55m.

Even though Real Madrid and Atleti saw profits fall in 2019/20, due to the pandemic, they both just about managed to break-even, so Barca's €97m loss is a real outlier. Worth noting Barca’s figures include €43m losses from other sports, eg. basketball €28m.

Clearly, COVID has had a major adverse impact on finances in 2019/20 with many leading clubs across Europe reporting horrific losses, e.g. Roma €204m, Milan €195m, Everton €158m, Inter €100m, Juventus €90m and Tottenham €72m. Barca were keen to emphasise that without COVID they would have posted a €2m profit, instead of a €128m loss.

Most clubs that have so far published 2019/20 accounts have announced significant revenue reductions, but Barca's €123m decrease has only been surpassed by Manchester United €133m, though their 14% drop is not as high as others in percentage terms.

The club benefited from €73m profit on player sales, including Arthur to Juventus, Malcolm to Zenit, Perez to Roma, Cucurella to Getafe and Ruiz to Braga. That’s pretty good, but less than prior season’s €101m and below Atleti €136m and Real Madrid €101m.

Like many other clubs, Barca have become increasingly reliant on player sales with average annual profits from this activity nearly quadrupling in last 3 years to €127m, including Neymar’s lucrative sale to PSG in 2018. However, 2020/21 budget only assumes net €28m.

Before last season’s €128m loss, Barca had reported profits eight years in a row, aggregating around a quarter of a billion pre-tax in this period. The operating loss more than doubled from €83m to €173m in 2019/20 (€9m profit just 3 years ago). In fairness, most football clubs post operating losses, but Barca’s was one of the highest of Money League clubs in 2018/19.

Without the pandemic, Barca said they would have achieved their objective of reaching €1 bln revenue (including player sales) in 2019/20, i.e. growing €69m from €990m to €1,059m. The €203m loss comprised stadium €67m, TV €35m, commercial €72m and transfers €29m.

The club have estimated a further €64m reduction in revenue in 2020/21 from €855m to €791m, partly mitigated by including TV money for 2019/20 competitions completed in July and August. That would mean a total revenue loss of nearly half a billion (€470m) over two years.

The €123m revenue decrease in 2019/20 to €729m is much higher than Real Madrid’s €42m fall to €715m and Atleti’s €10m drop to €358m. That said, the Catalans’ revenue is still €14m higher than Madrid and twice as much as Atleti.

Of course, Barcelona and Real Madrid's revenue continues to put them in a league of their own in Spain. Their combined €1.4 bln revenue is more than all the other La Liga clubs combined (excluding Atletico Madrid).

After years of individual deals in Spain, La Liga have introduced a collective deal, based on 50% equal share, 25% performance over last 5 years and 25% popularity (1/3 for average match day income, 2/3 for number of TV viewers).

Even after the changes, Barca €153m and Real Madrid €145m still receive by far the highest TV income from La Liga’s TV deal, followed by Atletico Madrid €116m, then a big gap to Valencia €76m and Sevilla €73m. Lowest payment went to Mallorca €41m.

Worth noting the influence on Champions League money of the UEFA coefficient payment (based on performances in Europe over 10 years), where Barca had the 2nd highest ranking in 2019/20, giving them €34m. This change in distribution rewards good record of Spanish clubs.

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The Political Economy of Football V2

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