Barcelona: The Covid impact revealed
Posted on October 7, 2020
BARCELONA have announced their preliminary figures for the 2019-20 season and it’s no great surprise – they made a post-tax loss of € 97 million. This only adds to a somewhat troubled period for the club in which they almost lost the talismanic Lionel Messi and washed some of their dirty linen in public.
The internal politics continue to rumble on, but for the time being, Messi is a Barca man.
As for club president Josep Maria Bartomeu, a motion of no confidence against him seems inevitable, triggering a referendum on whether he should leave the club or remain.
Barca saw their overall revenues drop by € 203 million (18%) to € 855 million. The club had budgeted for just under € 1.1 billion. All main revenues streams declined significantly: matchday was down 24% to € 162 million; media dropped 17% to € 249 million; and commercial was 9% lower at € 297 million. The club accrued € 148 million from player transfers.
The loss is high but Barca explain this as a direct result of the pandemic. Without it, they commented, the club would have made a € 2 million profit. The club cut costs by 2% and reduced some salaries. The total wage bill was still € 636 million which equates to a salary to income ratio of 74%.
Barca’s net debt, at € 488 million, is very high and has increased by € 271 million since 2018-19. Bank debt has risen by over € 200 million. Given an investment of € 109 million was made in Espai Barca, the adjusted net debt amounts to € 379 million. Furthermore, the club has an available cash balance of € 164 million and although net equity has decreased, they had a positive balance of € 35 million as at June 30 2020.
Barca’s ambitious Espai Barca project, which includes the renovation of the Camp Nou, will cost € 815 million and is being financed by US investment bank Goldman Sachs. The deal with Goldman is being billed as unique and runs for 30 years and includes a sale of part of the rights to collect the additional revenue generated by Espai Barca. The club returns the investment over 30 years in tranches of € 50 million per year.
Barca have budgeted for 2020-21 and taken into consideration continued pressure from the pandemic. They are looking at income of around € 791 million, but even then it depends on when the Camp Nou will open to the public. These forecasts also envisage higher levels of tv rights and a gradual recovery of tourism.
Barca’s record in the transfer market has been patchy in recent years, but despite investing around € 1.7 billion over the past decade in new players, their net expenditure is € 738 million.
Barca’s figures for 2019-20 highlight how even big clubs can become vulnerable in a crisis. With high expenses and levels of debt, should the pandemic worsen or be prolonged, the 2020-21 season may see another sizeable loss for one of the world’s biggest and most glamorous clubs. How they could do with 70,000 Catalans pouring through the gates once more.