MADRID, Feb 17: Barcelona is back in the second tier of European football after nearly two decades contending among the elite in the Champions League, a blow to its prestige and a further hit to its dire financial situation.
It debuts in the Europa League against Napoli on Thursday, 18 years after it last appeared in the lower-tier UEFA Cup. The Catalan club’s quick demise has been directly related to its recent financial struggles.
But how did Barcelona’s financial struggles began? And what has the club been doing to try to recover and regain its status as a top contender in Europe?
What happened?
Most of the blame for Barcelona’s financial struggles has been linked to former president Josep Bartomeu, who resigned in 2020 – denying wrongdoing – amid accusations of irregularities in his administration and a fallout with Messi.
The COVID-19 pandemic also affected the club, but the increasingly high salaries of the first-team squad created most of the problems. The spending on players surpassed the club’s total income when new president Joan Laporta arrived last year.
Debts
The club’s debt reached a whopping 1.3 billion euros, including almost 390 million euros related to player salaries and over 670 million euros owed to banks. Some 40 million euros were linked to membership losses, while the impact of the pandemic was 91 million euros.
Players’ salaries
Players’ salaries rose 61% from 2016-17 until 2020-21 – from 471 million euros to 793 million euros – and Laporta said they would have reached 835 million euros – well over 100% of the club’s revenues – if action wasn’t taken.
Salary cap
The high salaries made it difficult for Barcelona to put its squad together as Spain has strict fair-play regulations that are mostly linked to clubs’ financial health.
Barcelona’s cap for 2021-22 was slashed to 97 million euros.
What was done
Laporta said he had to reduce salaries by about 200 million euros, increasing the focus on promoting youth players to the first team. Also, key were reducing salaries of some of its highest-paid players.
The Future
Laporta put in place a five-year restructuring project of the club’s finances. It included the refinancing of the club’s debt with Goldman Sachs in a loan of more than 500 million euros “to give the club breathing space and not to take anything from the members’ pockets.”
The general assembly last year also approved a financing package of up to 1.5 billion euros to revamp the Camp Nou Stadium and other club facilities, a project that had already been initiated but that was changed under Laporta. (AP)
