Financial woes at Barcelona

The authoritative Swiss Ramble reviews Barcelona's latest accounts and it's a sorry tale.

The pre-tax loss widened from €133m to a shocking €555m (€481m after tax). Revenue dropped €138m (19%) from €729m to €591m and profit on player sales fell €64m to just €4m, partly offset by operating expenses down €66m, though net interest payable rose €22m.

President Joan Laporta blamed this on the previous management, who “delivered the worst accounts in Barca history”. This resulted in €161m player impairment and €110m other impairment and provisions (law suits, tax cases) following the Due Diligence report.

Before the 2020 loss, Barca had reported profits 8 years in a row, amounting to around a quarter of a billion pre-tax over this period. However, they have now posted massive €689m losses in last 2 years. Club has budgeted a return to profitability (€4m) in 2021/22.

The €555m pre-tax loss is by far the highest in Spain, though worth noting that next largest losses were made by clubs that have also published 2020/21 accounts, Sevilla €39m and Athletic Bilbao €25m. In stark contrast, Real Madrid have announced a small profit.

Barcelona had the highest revenue in the world in 2019/20 with their €715m topping the Deloitte Money League, but this only highlights the fact that revenue is not the whole story. As the old saying has it, “Revenue is vanity, profit is sanity and cash is king.”

Clearly, COVID has had a huge impact on finances in 2020/21 with many leading clubs across Europe reporting horrific losses, e.g. Inter €246m, Juventus €210m and Manchester United €105m. That said, Barca’s €481m post-tax loss is the worst ever, almost twice as much as next highest.

In contrast to previous years, the club did not benefit from player trading, as profit from player sales slumped from €68m to just €4m, as €34m gains were largely offset by €30m losses. Like many other clubs, they have become increasingly reliant on player sales, though profits have fallen 3 years in a row from €208m peak in 2018 (mainly Neymar to PSG).

[This reliance on player sales is a trend across Europe, but they are volatile and it is a risky strategy to depend on them. Arguably Chelsea have pursued a sophisticated and successful selling strategy, WG].

Barca earned €85m from the Champions League after reaching the last 16, €15m less than prior season €100m (quarter-final). Less than Real Madrid’s €111m, but ahead of Atletico Madrid €76m and Sevilla €68m. Worth noting the influence on Champions League money of the UEFA coefficient payment (based on performances in Europe over 10 years), where the club had the 3rd highest ranking in 2020/21, giving them €33m. This change in distribution rewards good record of Spanish clubs.

They have earned a hefty €421m from European competition in the last five years, only surpassed in Spain by Real Madrid €446m. Atletico Madrid’s success has brought them €361m, then a big gap to Sevilla €201m, Valencia €118m and Villarreal €80m.

Football wages fell €11m (2%) to €432m, down from €501m two years ago, partly due to players agreeing payment deferrals. That said, still nearly €100m more than €340m wage bill in 2017. €432m wage bill is still €54m higher than Real Madrid €378m, though gap has narrowed in last two years, and over €200m more than Atleti €227m. Will further reduce in 2022 following departure of players on high wages and agreed pay cuts (Pique, Busquets and Alba).

One comment was ‘My understanding is they have a lot of debt, but also high revenues. If they can service that debt by posting small profits yearly they can do this indefinitely (as long as interest rates do not rise).’ [Which they may well do].

Fulham requires big funding from owner

After lengthy delays, Fulham’s shiny, new Riverside Stand has finally opened, creating “a unique Thameside destination with first class facilities for supporters and partners on match days, as well as for the wider community year-round”. This ambitious project has increased Craven Cottage’s capacity by around 4,000 to 29,600, while it has also taken advantage of the club’s fantastic location and wealthy catchment area by including two Michelin star restaurants, a rooftop swimming pool, corporate hospitality and event space, all benefiting from views of the Thames. Chief executive Alistair Mackintosh observed, “Fulham is the sort of club that can have a business class or first class and have fans that turn left on a plane.” Indeed, there is also an exclusive members club – with a football season ticket as an optional extra. It’s fair to say that “the times they are a-changing”, as this is a long way from the traditional pie and a pint. However, in a world where clubs face the tw...

It's no deal say Spurs insiders over Taiwanese takeover

Senior figures at Tottenham Hotspur insisted on Friday that they had not been informed of any deal to sell Daniel Levy’s stake in the club. A business group, Eight Sports Capital — which is said to include a billionaire Taiwanese financier — claimed that it had an agreement in place to buy a 24.99 per cent stake in ENIC, the club’s majority owners, from Levy, who owns 29.88 per cent. The Times has been told Ng Wing Fai and Brooklyn Earick form part of the group, having both been linked previously to potential takeovers of the Premier League club. The Taiwanese businessman, Richard Tsai, is also said to be part of the consortium. He is reportedly worth £7 billion. Last year Earick, the former DJ and tech entrepreneur, was part of an attempted £4.5 billion takeover, which was “unequivocally rejected” by Spurs. An ENIC spokesperson said: “We can confirm that neither ENIC nor THFC are aware of any sale by Daniel Levy’s Family Trust of its minority stake in ENIC, THFC’...

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...

The Political Economy of Football V2

Search This Blog