Like a home suffocated by debt, which owes more than it has, the Barcelona Soccer Club has had to resort in the last two years to the sale of assets and rights to plug the waterway that was suffering. It was about avoiding technical bankruptcy, which is what would have happened if it were a company.
Another option, as happens with some families, getting into more debt if they meet the requirements set by the bank, is not very viable since the entity is burdened with a slab of about 1,200 million (had reached more than 1,300 million), despite the fact that, for the purposes of the Professional Football League (LFP), it was 552 million as of June 30.
The challenge of the board chaired by John Laportawho attributed the situation to the “inheritance received” from the previous board chaired by Joseph Maria Bartomeu, is now generating enough resources to grow without getting rid of more assets, increasing competitiveness to increase income by winning competitions, selling t-shirts, merchandising and creating other business avenues; contain spending and reduce debt as much as possible. And this despite the fact that with the sale of parts of the club it has become smaller. Until the works on the Camp Nou In the 26-27 season, the maximum number of spectators at the Lluís Companys stadium in Montjuïc is around 45,000, compared to the 100,000 that the culé colossus will be able to host in three years.
The economic vice president of the entity, Eduard Romeo, admitted a few months ago that “if it were a company, it would either have to do a capital increase, a share of the partners or dissolve.” This was the situation, with a capital gap of 516 million euros, plugged with substantial results (304 million euros in the 2022-2023 season) from the sale of assets.
But, in statements to El Periódico de Catalunya, from the Prensa Ibérica group, Romeu is currently satisfied with having “plugged the drain” that manifested itself in structural losses of around 200 million a year due to ordinary activities (football and other sections). He has already managed to reduce the capital hole to 353 million and will end the current season at -500,000, convinced that in the next season the gap will have been completely closed. He remembers that what they had planned to do in four years they have achieved in half the time.
The levers
Thanks to income from the sale of assets – the so-called levers– More than 800 million euros have been saved economically in the last two seasons, but they are non-recurring resourceswarns the audit of the accounts signed by Grant Thornton. The document signed by the auditor Carlos Capellà highlights that “it must be considered that the club has generated a result of 303 million euros this year, which includes profits from non-recurring operations amounting to approximately 800 million.”
At the same time, it highlights that the board of directors has formulated the accounts under the accounting principle of operating company, that is, with the intention of continuing to survive. The club is based on “mitigating” factors of its complicated economic situation such as the 400 million from the sale of 15% of the sale of TV rights or 250 million additional income per year that they estimate they will obtain from sponsorships or VIP boxes, among others once the Camp Nou is finished. Account supervisors, who tend to be “bird in the hand” advocates, are not entirely convinced. They also draw attention to the sale of 49% of Barça Studios, for which payments are pending.
The thing is that Holes are plugged with extra income that leaves the entity with less equity, that is, they dwarf it and, therefore, make it difficult to generate greater collections. Romeu assures that this will be solved with the commitment to renovate the stadium. He admits that the “most painful” sale was that of 15% of the TV rights, for about 400 million, since it represents less income.
The challenge for the club now is to fill the box enough to avoid losses and, after plugging the leak, be able to continue growing or sailing., to continue with the seafaring terminology. In the budgets for the current 2023-2024 season, the effects of the weight loss cure are already reflected: income of 859 million, 32% less than the 1,259 million of the last campaign (which exceeded the forecast by four million, especially thanks to the sales of assets and the operation of the stadium) and expenses of 832 million, 28.5% less than the 1,165 million last season, (100 million more than expected due to the higher sports wage bill due to the arrival of signings and compensation due to the departure of ‘historics’ like Alba or Piqué) The result for the current season? 8 million euros of profit, 97% less, without more asset sales. One of the variables that is substantially reduced is the sports salary bill, from 676 million to 492 million, a cut of 27%.
Barça space
Last season the profit was 304 million, although it could have risen to 352 million had it not been for 48 million that had to be subtracted for the costs of opening loans and financial interest not accrued by the Barça space which includes the remodeling of the stadium after the agreement with twenty financial entities led by the US entities Goldman Sachs y JP Morgan.
The financing structure agreed through a specific fund has three tranches. The first, of 583 million, of which about 375 will be through bank credit, to be fully repaid in five years. The rest will be through the issuance of debt. The second tranche, of 477 million, will be in issuance terms of seven and nine years; and the third, 390 million, aged 20 and 24. According to the terms of the agreement, the first two tranches have the door open to refinancing, with the hope that over these 10 years the financial cost can be reduced. All of this will be possible especially once the construction risk by the Turkish firm Limak has been overcome.
And how will it be paid? The securitization fund (conversion of debt into bonds) managed by Intermoney has acquired collection rights and the debt and will pay only interest. It will cover 24% of the ‘hospitality’ area; another 24% from sponsorship and title rights, another 15% from museum income and visits; 22% for tickets and restaurants and 15% for events and meetings. It is from the delivery of the stadium, scheduled for 2026 (season 26-27), when the club must generate an additional 247 million per year, up to 347 million (currently it is about 180 million per year), not counting the sponsorship of Spotify, which They do not detail. Of this sum, some 100 million will go to the club’s coffers, to which the excess of 147 million will be added, that is, another 153 million. The rest will go to the fund that pays the debt.
The cancellation of the pending bridge loan with Goldman Sachs, which amounts to 180 million, will be paid with the additional resources obtained by this project, with a fixed interest rate without exchange rate risks, with a flexible structure, and without mortgaging the club facilities.
2023-10-15 09:00:11
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