Barcelona have since announced plans for members to vote on the potential sales of Barca Licensing & Merchandising (BLM) and future television rights which could bring in income in the region of €700 million which will enhance Barcelona’s financial status.

Barcelona’s €700m ‘economic levers’ and what it might mean for Lewandowski and De Jong

Barcelona’s €700m ‘economic levers’ and what it might mean for Lewandowski and De Jong

“We have passed from being in a terminal condition and moved into the intensive care unit,” Barcelona president Joan Laporta said last week.

That message was aimed at the blaugrana socios being asked to activate two new “economic levers” which could see the club’s board soon raise €700 million in new funding.

“Activating these levers will move us out of intensive care into a ward where we can receive more treatments, and soon leave the hospital,” Laporta predicted.

In Thursday’s extraordinary general assembly at the Camp Nou, Laporta went for a more positive and uplifting metaphor — describing Barcelona as a Formula 1 car that had been in for repairs, and those levers would be like fuel to get the vehicle racing again at top speed.

“We want a Barca that can compete head to head with those state-owned clubs, or those clubs owned by billionaires,” Laporta said in his address. “We want to compete with the strength of our brand and the strength of our members. We don’t want to be held back by those who put obstacles in our way.”

The votes were called to give Laporta and his directors permission to sell 49.9 per cent of the club’s Barca Licensing and Merchandising (BLM) arm, and up to 25 per cent of its La Liga TV revenues over the coming years to one or more partners. Both were passed by big majorities — 88 per cent for BLM and 84 per cent for the TV revenues.

There is still a big leap between this authorisation to take out more mortgages on the club’s future and Barcelona really being able to move on from their huge debts and start to compete again to win the biggest trophies and sign the game’s most expensive players.

These are medium-term goals, but shorter-term deadlines are looming — including June 30 for the close of the club’s financial year, July 31 for La Liga’s salary limit calculations, and the closing of the summer transfer window on September 1.

The decisions made as each of these dates passes will be crucial for the exact make-up of coach Xavi’s first-team squad for the 2022-23 campaign.

Most importantly, perhaps, the reaction to Thursday’s vote will affect big transfer calls, including whether Frenkie de Jong is sold to Manchester United, and if Robert Lewandowski can be signed from Bayern Munich.

 

Everyone in football knows that Barcelona’s current board inherited an awful financial situation from their predecessors, led by Josep Maria Bartomeu.

Laporta and his executives have made some progress over the last 15 months, including restructuring much of the club’s €1 billion-plus debts, and moving out high earners including long-time talisman Lionel Messi. But Barcelona are still living beyond their means. As things stand, they are set for a further loss of at least €150 million when the current financial year ends on June 30.

That was not supposed to happen, after Laporta and his executives pushed record losses of €481 million into the 2020-21 accounts. That was to clear the way for a better future — and the budget announced last summer predicted a net profit of €5million for the last financial year.

 

Those reckonings were wrong.

 

The team made the quarter-finals of the less-lucrative Europa League not the Champions League, after only finishing third in their group in UEFA’s blue-riband club competition. Such underperformance led to an unexpected investment in new players in January, including €60 million Ferran Torres, to ensure they qualified for next season’s Champions League and secured the payout that comes with that.

 

Commercial and match-day income at the Camp Nou have remained well below pre-pandemic levels, amid a hectic turnover of executives in many departments at the club.

 

The proposals to “activate levers” at Thursday’s EGM was part of another attempt to turn this situation around and show a sizeable profit in this next set of accounts.

 

The club’s voting socios were not given many firm details of the amount to be raised, or from whom, or what they would giving up in the future. But they agreed to let the board sell stakes in club “assets” which could potentially raise €600 million-€700 million before the 2021-22 books are signed off.

 

The first lever involved Barca Licensing and Merchandising (BLM), a separate company owned by the club which was formed in 2018, when Bartomeu’s board took back control of the club’s merchandising and retail rights from Nike.

 

The club’s vice-president for finance Eduard Romeu says Barcelona have already spoken to “eight or nine” potential partners who could take a minority stake in BLM, potentially help run its activities, and share in its profits. The Athletic understands these companies include American online retailer Fanatics and European group Investindustrial.

 

Romeu says that the club has rejected €275 million for 49.9 per cent of BLM but industry sources doubt whether they will get a better offer. Legal issues with Nike dating back to Bartomeu’s time as president are another complicating factor. Everything at Barcelona tends to get complicated.

 

The other lever voted through on Thursday was to cede a maximum of 25 per cent of the club’s TV revenue from La Liga games for an unspecified number of future seasons.

 

Romeu has claimed that this could raise as much as €540 million, but the expectation is now for around €250 million at most. This may or may not come from investment fund CVC, who have partnered with most other Spanish clubs in a similar arrangement organised through La Liga.

 

Barcelona sources told The Athletic the club has been speaking to CVC about a “parallel offer” which would release the same amount of money, but on much better conditions. La Liga sources said Barcelona are still welcome to come into “LaLiga Boost” but that the terms for all participating clubs must be the same.

 

The tricky part is that everyone has been here before.

 

Last October, blaugrana socios gave the board permission to sell a stake in Barca Studios, which was also set up under Bartomeu, and produces audiovisual content for the club’s own channels or to sell to other broadcasters.

 

Barcelona’s 2021-22 budget included €50 million from that source, and club officials spoke of the possibility of generating €200 million or more. Romeu said this week that offers for a share in this company had been received but rejected as too small. Sources say that Barca Studios’ most senior executives departing due to differences of opinion with Laporta’s board have made it much more difficult to attract the right partner at the right price.

 

Nevertheless, the hope remains that, over the next fortnight, the club can quickly finalise various complicated deals with different partners to raise at least €500 million. That would turn the current heavy losses in their 2021-22 accounts into a big profit, and make Barcelona’s short and medium-term financial situation look healthier.

 

Longer-term, the situation is not so clear — given their new “partners” would take a significant chunk of their revenue each year far into the future.

 

Most immediately, there would be less need to raise significant money from transfers over the next 13 days.

 

It is all very last minute, and quite chaotic, but in the simplest terms, Thursday’s vote means it is less likely that De Jong goes and more likely that Lewandowski comes. But nothing is certain — and the exact reverse is among the many possibilities of how the summer might play out.

 

Close Barcelona watchers will also know that Laporta and his directors have so far shown creativity in finding money to sign players, then often had problems registering the new arrivals due to La Liga’s salary limits.

 

This is because, besides the club’s historic debts, the squad’s ongoing salary bill remains way out of control. Barcelona’s total wage bill in 2020-21 (with Messi, Antoine Griezmann et cetera) was €617 million. Their budget for wages last season was €470 million, but in the end, the total came out as €90 million more than that — €560 million.

 

 

(Photo: Xavier Bonilla/NurPhoto via Getty Images)

Romeu said last week that, ideally, the figure for next season should be €400 million — similar to that of 2021-22 La Liga and Champions League winners Real Madrid. La Liga’s next calculations, based on figures Barcelona say they will submit by the end of July, may mandate even bigger cuts.

 

The easiest way to lower your wage bill, and what happens at most clubs, is to sell a player, or multiple players. And Barcelona currently have a full XI of first-team squad members who Xavi is not counting on for next season. The problem is that Samuel Umtiti, Martin Braithwaite, Miralem Pjanic, Neto Maura, Clement Lenglet and company do not have much of a market, and are generally happy with their current lives, and hefty wages, in Catalonia.

 

Barcelona have made some progress this month, selling youth-team forward Ferran Jutgla to Belgium’s Club Bruges for €5 million. They could raise similar sums for squad players Oscar Mingueza and Riqui Puig, but this would not add significantly to the coffers, or make much difference to the wage bill.

 

A complicating factor is that, under La Liga’s rules, clubs who have broken their salary limits in previous seasons must devote the majority of any money raised to paying off existing liabilities.

 

La Liga president Javier Tebas reminded everyone this week of his organisation’s rule of one-to-three for teams in this situation — “If Barca sell players for €100 million, they can spend €33 million on new players,” Tebas said.

 

A more straightforward method to free up space on the wage bill is to get existing players to take pay cuts, or at least defer a part of their salaries into the future.

 

This happened last August when Gerard Pique’s “generosity” allowed new signings Memphis Depay and Eric Garcia to be registered. Further “gestures” from Sergio Busquets and Jordi Alba allowed for Sergio Aguero to make his La Liga debut. Then in January, Umtiti’s surprise contract extension meant Ferran Torres and Pierre-Emerick Aubameyang could start to play.

 

 

(Photo: Alex Caparros/Getty Images)

Newcomers such as Torres and Aubameyang have also agreed to heavily-weighted contracts — whereby they cost the club less now but will earn significantly more in the future. These manoeuvres helped Xavi get a better team on the pitch as Barcelona finished as runners-up to secure that Champions League income, but arguably are also just piling up more issues for the future.

 

La Liga have reacted to sporting director Mateu Alemany’s ingenuity during the January window by giving the club an unprecedented “limit” of minus-€144 million. That shows the scale of the challenge facing Alemany and other executives in freeing up more space this summer.

 

Despite this, Barcelona have already agreed to sign Chelsea defender Andreas Christensen and AC Milan midfielder Franck Kessie as free agents when their contracts expire at the end of this month, and the 19-year-old playmaker Pablo Torre from Racing Santander. As things stand, however, none of that trio can be registered. Nor can the club renew Ousmane Dembele’s contract, even if the French attacker agrees to a new deal. That is before even considering more expensive transfer targets such as Lewandowski, Leeds United winger Raphinha or Sevilla centre-back Jules Kounde.

 

Recent weeks have seen further pressure being applied to Barcelona’s biggest earners to take further cuts. Romeu has openly said that the contracts of the “captains” (Busquets, Pique and Alba) are “inflated, out of proportion”. The board would love these 30-somethings to move on. But Xavi sees them as important for the team, and the three Catalans are very comfortable at the Camp Nou.

 

Last week brought local media claims that Xavi had told Pique he was not counting on him as a key player for next season. The Athletic understands that neither the coach or the player, who have the same agent, was the source of these interestingly-timed stories. Instead they form part of a populist move by the hierarchy to make it look like they are being strong in protecting the club’s interests. Some believe that the players have been taking advantage of the club for many years and such messaging is backed up by Laporta’s strong stance over a new contract for 17-year-old midfielder Gavi.

 

Laporta reiterated last night (Thursday) that a deal was close to being finalised for Gavi. Yet a few weeks ago he gave a pointed interview to L’Esportiu, a Catalan daily sports newspaper, in which he put pressure on the player and his agent to agree to Barcelona’s latest proposal.

 

“His agent has had the renewal offer on the table for a long time,” Laporta said at the time. “We don’t have any news they have accepted it. The news that we do have is that they are comparing and at some time will say something. We have said our position and for now, it’s not been accepted.

 

Laporta said “within the salary levels, it’s more than acceptable. (But) we will not go out of these levels, because I don’t want Barca to continue in the line that those before us were on that has taken Barca to ruin”.

 

 

Laporta said last night that Gavi’s new deal is close to being finalised (Photo: Pedro Salado/Quality Sport Images/Getty Images)

It may be the case that Pique, Busquets and Alba eventually cede to this pressure, and space is freed up on the salary scale that would allow for, say, Christensen and Kessie to be registered. But to actually pay any fee for someone such as Raphinha, or take on a new top star of Lewandowski’s status, at least one current big earner would have to be sacrificed.

 

This brings us to De Jong, who is next on the scale behind the aforementioned “captains”, and a player the board believe could raise enough money to allow significant additions to the squad if he moves on.

 

Some of those close to members of the first team believe that Barcelona directors are attempting to create an environment in which the Netherlands midfielder would accept an exit, through a drip-drip of stories in the local media. However, another source who knows De Jong well says he thinks the pressure will not work.

 

The vote passing may ease that pressure in the medium term, but those June 30 and July 31 deadlines are still relevant.

 

If no money is raised from the levers (BLM, Barca Studios or future TV rights) before the end of this month, the only way to avoid big losses in the 2021-22 accounts will be the transfer market — Selling players is another of the levers that Barcelona could turn to.

 

The club’s myriad financial issues mean that time is not their friend.

 

Atletico Madrid waited until the last minutes of last summer’s window to get the terms they wanted to take Griezmann back. Other clubs eyeing Barcelona players will know their hand in negotiations should get stronger and stronger as the weeks progress, and that anything might happen.

 

A year ago, Laporta kept saying that Messi would stay — until he suddenly said that was going to be impossible.

 

Many around the Camp Nou — in the dressing room, boardroom and stands — are exhausted by all the talk about financial problems, enormous debts, wage cuts and salary limits. There is also a lot less said currently about trusting the La Masia model, and more about how Barcelona need to be able to spend heavily on ready-made stars.

 

“I don’t need the details, just do it. Let’s get out of this hole and start signing big players again,” a senior socio told The Athletic last week, when asked to sum up the general mood among the fanbase.

 

It was also striking that, of the 4,478 “compromisario” socios chosen to represent the club’s more than 150,000-strong membership in Thursday’s vote, which took place virtually, just 646 and 586 respectively actually took part in the two votes.

 

Many of those present in the Camp Nou’s Auditori 1899 did want to share their views, including former club presidents Joan Gaspart and Enric Reyna, and Messi’s former agent Josep Maria Minguella. All three said they were upset the club had got into this state but none seriously criticised Laporta’s policies.

 

The two new economic levers that are now available for the board do not necessarily mean Barcelona can definitely go and sign Lewandowski, or Raphinha. Just as if the socios had voted ‘no’, it would not have meant De Jong or somebody else definitely had to be sold by June 30.

 

The sense is still of improvisation, of reacting to events rather than having a clear long-term strategy.

 

What is clear is that there is still lots to do.

 

Barcelona remain in “intensive care” and there is no single magic cure. Xavi clearly wants to make big changes to the squad in this transfer window, but building a really competitive squad for 2022-23 remains a huge challenge for Laporta, Romeu, Alemany and all their colleagues.

 

The only thing that is certain is that Barcelona are in for another very long summer.

 

Thursday’s overwhelming backing for Laporta’s plans is a step in the direction they want to take, but the destination remains very uncertain.