BEVERLY HILLS, January 26, (THEWILL) – In October 2020, when THEWILL reported losses suffered by Catalan giants Barcelona due to the coronavirus pandemic, the full extent of the financial crisis the club was mired in was not completely available. La Blaugrana had announced a loss of €97 million for the 2019/2020 economic year, which was a massive €203 million decrease in revenue for the La Liga club.
More details have emerged now that have caused increasing alarm for the club’s financial health and a report of the financial figures from the club’s annual financial report has given more context to the numbers with the grim reality that the club is on the verge of bankruptcy as things stand.
The financial report revealed Barcelona’s indebtedness to be as high as €1,173m, €730m of which is due in the short term. They owe banks €266m and have to pay up by June 30. Goldman Sachs, the leading global investment banking, securities and investment management firm, alone is owed €90m.
As THEWILL reported in November last year, Barcelona was seeking to cut its wage bill to avoid running into a financial crisis due to losses suffered as a result of the coronavirus pandemic. It was highlighted in this annual financial report that the wage bill still occupies 74 percent of the club’s total income, which exceeds the 70 percent league limit.
In the season preceding the pandemic outbreak, their revenue for the last normal full season of football (2018/2019), was €990m. As indicated above, projected revenue for 2019/2020 took a €97 million hit, falling to €855m, a 14 percentage loss. Yet, expenses did not witness the same drop. A mere two 2 percent drop in expenses meant spending reduced from €973m to €955m only.
The management at Camp Nou has effected some cost-saving mechanisms to bring the club from the brink of insolvency and has negotiated a reduction of the wage bill with players and staff. These measures have not changed the immediate situation but for the current fiscal year, the club expects to have expenses of €796m and income of €828m.
The Catalan side also owes other clubs €126m from transfer deals conducted in recent years. The most shocking of these is the €29m owed to Liverpool for the 2017 transfer of Brazilian playmaker Philippe Coutinho. Other transfer debts have €16m owed Ajax for Frenkie de Jong and about €10m owed Bordeaux for Malcolm. These are due to be offset by the 30th of June.
Further due payments are linked to deals that released players to other clubs like €21m for Arthur to Gremio, and €11 million for Arturo Vidal to Serie A. Barca also is not done paying for the Antoine Griezmann’s deal with Atletico Madrid.
While negotiations are ongoing to defer some payments so as to enable the Spanish club avoid payment issues to creditors, some deals have been agreed to keep payments off their due dates to Barca’s relief.
Camp Nou had hoped that fans would have been allowed to return to the stands by now. They were expected to make about €56m from that revenue source from a capacity of 25% in February and 50% from May onwards. As that did not materialise, it denied them the massive income of revenue.
A new president will be in place soon and will have his hands full trying to sort through these debts while keeping the team victorious and the club afloat. How Barcelona handle these and keep on top of their transfer repayments without the axe of insolvency coming down on the club, will clearly be a class in financial crisis management.