Barca are back… or are they masters of spin?

JUST A couple of months ago, Barcelona were supposedly staring into the abyss, broke, unable to keep their talismanic player and in a deep, deep crisis. Their story was a lesson to every over-ambitious and reckless football club and also, some assumed, an indication of the troubles to come for the industry. The perils of debt and overspending, that was the moral of the tale.

Barca have been in better places and they have certainly lost ground on their rivals at home and abroad. But what’s this we have here, some kindly bankers saving the club? It’s not a Spanish institution that has come to their rescue but Goldman Sachs, the US investment bank who, according to their then CEO in 2009, were very good at doing “God’s work”. Barca probably need celestial help at the moment, so why not hire Goldman to sort out the mess that has built-up at the club? One might suggest the Wall Street firm have provided a big vote of confidence for the Blaugrana.

Joan Laporta, who won the political battle to become president last year, claimed that “Barca are back” after acquiring Manchester City’s Ferran Torres for around € 50 million. With the club’s debts supposedly well over € 1 billion, people are naturally asking how they can suddenly afford such a signing. Laporta, who called Barca “a benchmark club” also insisted a new squad is under construction at the Camp Nou and boasted he will sign Europe’s hottest property, Erling Haaland from Dortmund in the summer. There has been talk of bids for Chelsea central defender Andreas Christensen and Juventus striker Álvaro Morata.

Barca were never going to become football’s Lehman moment precisely because they are Barca. Nobody was going to close them down and even if it did get to the 11th hour, Spain and Catalonia would never allow the demise of one of its biggest sporting entities and ambassadors. The public relations would be a disaster, the blow to Spanish morale would be ill-timed and the politics would also be very tricky to handle. Barca’s situation was undoubtedly caught up in politics, but it did highlight how badly they had been run for a long time.

Goldman Sachs have agreed a € 595 million loan that will run for 35 years but for the first five years, Barca will only have to deal with the interest. In that period, Goldman will work on the vital task of restructuring the club’s finances. The loan, of which € 100 million was available immediately, will allow Barca to stay afloat and also provide some much-needed breathing space. 

Laporta, when he unveiled Torres, said Barca were recovering their status and warned the rest of the football world that “we are back as big players in the market”. Such a statement would appear a little premature and also tasteless given the publicity surrounding the club’s financial crisis in 2021. Borrowing money is not an achievement, but merely underlines the parlous state of their finances. A little humility would have served them better.

However, if a bank is going to lend to any football club, it would ideally be to one that can generate € 1 billion a year when the climate is right. With such a high cost base, the problem was that when conditions turned bad it exposed Barca’s fragile business model.

On top of being able to meet their running costs, the club also has its ambitious Espai Barca project in the pipeline. Barca’s members voted overwhelmingly to continue this scheme, which includes the Camp Nou and a new sports centre. The stadium, when completed, will cost around € 900 million, but Laporta believes additional revenue generation from the project will total € 200 million per year.

Barca suddenly seem to be in a better frame of mind than they were just a few weeks ago. Although they crashed out of the UEFA Champions League at the group stage, which must have been a seismic shock on so many levels, they now have “one of their own” in Xavi as coach, their seventh full-time appointment since Pep Guardiola departed in 2012. Only Luis Enrique has seemed anything like a comfortable hiring during that time. Xavi could be Barca’s Zidane, but he doesn’t have the squad the Frenchman inherited at Real Madrid. Xavi has been in charge for nine games and his win rate is 44%, but he will enjoy the luxury of patience from the Barcelona top brass. 

Cynics believe Barca desperately needed some good news and Laporta is doing his best to stir things up in the media. He may well have cash that is burning a hole in his pocket, but competition will be fierce for Europe’s big names. How far can they go when they still have so many issues to solve?

Barcelona’s inflection point arrives in Munich

EUROPEAN football should learn from the trials of Barcelona after reality firmly arrived at the gates of the Camp Nou. Barca were dumped out of the UEFA Champions League at the group stage for the first time since 2000, completing a dreadful year for one of the continent’s biggest and most successful clubs.

For Barca’s hordes, the morning after being soundly beaten in Munich by Bayern must feel like the collapse of an empire. It certainly provides affirmation of the club’s decline over the past few years, both on and off the pitch. Who would have anticipated, back in 2015 when they last won the Champions League that they would face crippling debts, lose their talismanic player because they couldn’t afford him and then tumble out of the competition before the knockout stage? Barca are in serious trouble and if they doubted it before they travelled to Germany, they surely realise the scale of their problems now.

The Spanish media called it Barca’s resignation from the football elite and accused the club of being trapped in time, pointing to a decline that started in Lisbon in 2019-20 when they were thoroughly humiliated by Bayern Munich by eight goals to two. 

When Barca won the 2015 Champions League, it seemed the continuation of the club’s dominance of European football that started with Pep Guardiola’s era. However, it was Real Madrid, not Barca, who were in the ascendancy, winning the competition in 2016, 2017 and 2018. Meanwhile, Barca struggled to get past the quarter-final in all three seasons, losing to Atlético Madrid, Juventus and Roma, the latter a complete collapse after winning the first leg. Then came 2018-19’s dramatic capitulation against Liverpool in the semi-final, losing 3-0 after winning the first leg 3-1. The Barca of Pep would not have thrown away a tie like that.

In 2019-20, Barca got to the last eight again and were dismantled by Bayern. They went out a round earlier last season, ousted by Paris Saint-Germain, whose victory underlined a shift in European football – the pretenders had finally overtaken the masters.

Losing Messi may have been a necessity from a financial standpoint, but his departure may have ripped the heart out of Barca, a premature end to his career with the club at a time when crisis was approaching. They might have a batch of outstanding players in the wings, but youngsters take time to flourish and it may need a period in the wilderness to allow Barca to regroup and re-emerge with a different model. Says Xavi, the unfortunate coach who has to drag the club through this season: “We have to get Barca back to where they belong, which is not in the Europa League…a new era starts today.”

Big clubs fall from grace, although in the modern game, it’s a lot harder for giants to be toppled. Barca’s situation, made worse by their horrendous loss of € 555 million in 2020-21, is poor by their own standards, but they won’t suffer relegation and there’s no way Spain, Catalonia and the city of Barcelona will allow a collapse of one of its greatest sporting ambassadors. Real Madrid failed to make the European Cup in 1970-71 and were, instead, in the European Cup-Winners Cup, reaching the final against Chelsea. They almost seemed embarrassed to be competing in anything other than the premier competition. Likewise, Manchester United, in 2014, found themselves excluded from Europe for the first time in years and Liverpool went from 1985 to 2000 without Champions League football. Others, such as AC Milan and Inter have also slipped from view at various times. Prolonged success is never guaranteed.

From 2004 to 2021, Barca finished in the top three in Spain, but in 2021-22, this seems unlikely to happen. Their best chance of qualifying for next season’s Champions League may well be by winning the Europa League. Absence from the competition’s latter stages will cost them dear – over the previous five years, their revenues from Europe amounted to € 421 million – and failure to even qualify for 2022-23 will hit Barca’s turnover significantly. Given the club had the highest wage bill in Spain in 2021, they need Champions League football to remain competitive. The wage bill of € 432 million – representing a wage-to-income ratio of 73% – was also the biggest in Europe. With Messi and Antoine Griezmann now gone, this should surely drop to more sustainable levels.

Ironically, Barca, along with Real Madrid and Athletic Bilbao, are leading the bid to thwart “Project Boost”, the plan for private equity firm CVC to inject € 2 billion into the La Liga coffers which will mortgage the league’s TV rights for 50 years. The three clubs offer an alternative, “Project Sustainable”, which will operate via a Special Purpose Vehicle (SPV) that will raise € 2 billion at a cost of 2.5 to 3% per annum over 25 years. The scheme will, apparently, be cheaper for the clubs than the CVC proposal and would not involve a stake in the league being transferred. Major banks such as JP Morgan, Bank of America and HSBC have been working with the three clubs, who have already written to the other members of La Liga, urging them to back Project Sustainable.

What next for Barca? Aside from the Europa League, which could hand them a very tough draw, they are 16 points behind league leaders Real Madrid but six behind fourth place. Xavi, who epitomises the overused claim, “he’s one of our own”, was hired for the long term with the mission of building a new team. With the club’s debts standing at around € 1.4 billion, some skilful financial engineering will be required to create a blend of home grown talent and proven ability from outside. It may be painful at the moment for the Culés, but the major surgery will be a prerequisite for future success. And there will be another golden era for Barcelona, it is just the timing that will be uncertain for some time.