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.

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s

Gold standard ground boosts Tottenham's income

The gold standard in European football grounds is the Tottenham Hotspur stadium in north London, a £1bn construction project completed in 2019. Its impact on the club’s finances has become increasingly clear as the effects of the pandemic have faded. Previously, the average fan would spend less than £2 inside the ground on a typical match day, but now that figure is about £16, thanks to new facilities including the longest bar in Europe and an on-site microbrewery. Capacity has gone up from 36,000 at the club’s previous home of White Hart Lane to 62,000. The new stadium — built on land adjacent to White Hart Lane — has opened the door to a broad range of other events that have helped to push commercial income up from €117mn in 2018 to €215mn in 2022. Last year, Tottenham hosted US singer Beyoncé for five nights on her global Renaissance tour, two NFL matches, as well as rugby games and heavyweight boxing bouts. Money brought in from football has gone up too. Match day income is

Spurs to sell minority stake

Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to depl

The Political Economy of Football V2

Search This Blog