Barca's financial woes worsen

Barca’s financial woes have been much discussed in recent years as they gradually and inexorably accumulated deeper and deeper debts during Josep Maria Bartomeu’s ill-fated spell as president.

But now, current chief Joan Laporta and his board suddenly find themselves faced with the consequences of all the years of avoiding facing up to the responsibility for their own actions.

As things stand, La Liga will not allow them to register the four players they have signed this summer — unless they first make savings of over €200 million elsewhere.

The Spanish league’s strict economic controls (or financial fair play rules) also mean that, unless they make drastic cuts elsewhere, Barca will not be able re-register Lionel Messi, no matter how big a pay-cut he might accept.

La Liga set up an economic control department in 2013, staffed by analysts who review the finances of each Primera and Segunda club and establish its strict squad cost limit for each season.

This squad cost limit is the total amount that clubs can spend on their first-team players, first-team coach, assistant coach and head physio, as well as their reserve teams, academy and any non-registered squad players. Clubs may choose how the money is split between transfers or wages, provided the overall limit is not exceeded.

The squad cost limit is based on financial data which the clubs must submit to La Liga in the months before each summer transfer window opens. Factors which are considered include expected revenues for the coming season, but also profits and losses from previous years, overhead costs, non-player contracts, current savings, any existing debt repayments, investments and sources of external financing.

The overall effect is quite like UEFA’s Financial Fair Play rules, in that it aims to ensure that clubs live within their means. La Liga’s rules also do not allow super-rich owners to pump in money, which can lead to unsustainable situations should those super-rich owners withdraw their support at any moment.

A big difference is that UEFA’s FFP looks back at spending in past seasons, while La Liga’s rules are applied in advance, with cost limits set before any unsustainable spending takes place.

Given Barca have admitted to liabilities of around €1.3 billion, before the current board got permission to borrow a further €525 million at last month’s AGM, it is clear that their room for manoeuvre this summer was going to be seriously restricted.

The starkness of Barca’s situation can be seen from how dramatically their permitted squad limit cost has fallen. Back in 2019-20, they had the largest salary cap in La Liga at €671m. Last year it was €347m. The total for the new season has not yet been confirmed, but Catalan radio reported on Monday night that it will be in the region of €160m.

That means that the club would only be able to spend about 25 per cent of the total they had available just two seasons ago on salaries and transfer fees during 2021-22.

So Barca’s board have to fill the gaping holes in their finances by either selling players who can bring in significant money and/or allowing multiple players to leave so they no longer have to pay their wages.

It is true that recent weeks have seen Barca organise deals to sell squad players and youngsters. This has brought in a total of €26.5 million, and will also have taken a couple more million off the annual wage bill. So it is a start, but maybe about 10 per cent of the adjustment which is really required.

Whoever stays or leaves, Messi will likely also have to take a huge pay cut — maybe even something like 80 or 90 per cent — to stay at Barca. The club are looking at ways of making this up to him — such as deferring payment into the future, or guaranteeing him a well-paid ambassador role after his playing career is over. There are however serious tax implications for all these potential solutions, and Messi and his family have learned from experience not to cut corners with the Spanish tax man.

There are no easy solutions — the financial mess left by Bartomeu and his fellow directors really is that historically bad.