Barcelona's Financial Paradox
When people hear that name, they think of the Champions League and legends like Messi, Xavi, and Iniesta, but recently it has been associated with its poor financial situation. One of the most successful and prestigious clubs went from buying the best players to not being able to afford any, or so we think.
After Joan Laporta rejoined the club during the 20/21 season, he inherited a €1.35 billion debt alongside €730 million payable within a year, according to Dev Das on Medium. Former president Bartomeu went trigger-happy on transfers trying to fill Neymar's shoes after his departure for €222 million in the summer of 2017. Barcelona were desperate to find a replacement for their Brazilian star, signing players for outrageous amounts just because they believed they had a financial cushion from Neymar's exit. Barcelona risked huge amounts of capital on players who soon proved not worth their price tag, like Dembélé, Coutinho, and Griezmann, to name a few, and it would seem like an inescapable debt.
Furthermore, Messi's absurd contract — a €555 million contract — didn't help their case. COVID was the nail in the coffin; with games played behind closed doors, Barcelona was unable to generate revenue from ticket sales and game-related purchases. Messi was eventually forced to leave the club of his life at the end of the 2020/21 season due to this financial mess.
How was Laporta going to fix this? One word: lever. When Laporta returned to Barcelona, he had two options, according to Goal: either reduce wages and sell mass amounts of players, which would hurt the club competitively and cause outrage, or focus on maximizing revenue; Laporta chose the latter.
Laporta focused on selling future assets to start winning again, a short-term solution he believed would lead to long-term recovery. Laporta sold 25% of the club's La Liga television rights for the next 25 years to an investment company called Sixth Street. Laporta's model seemed to be working; in the summer of 2022, Barcelona signed Robert Lewandowski, Jules Koundé, and Raphinha and won the league that season for the first time in 4 years.
However, it wasn't, and still isn't, smooth sailing from then on; Barcelona is in a crisis every summer because they can't register new signings. Take the summer of 2024 for example. Dani Olmo was signed shortly after the Euros, but the club ran into a registration problem during the season because of La Liga's financial fair play; a club's squad cost limit determines whether it can sign a player, kind of like a credit score. Ironically, despite Barcelona's revenue maximization through their levers, they still can't register players. This shows that Laporta's decision helped the club's immediate cash flow, but it didn't solve all their problems.
One thing that has always helped Barcelona, and is continuing to do so, is La Masía. Barcelona's youth system consistently produces world-class talent. Take players like Lamine Yamal and Pau Cubarsí, who have recently graduated from the academy and earned crucial roles in the first team while Barcelona doesn't pay a dime for them; additionally, Barcelona makes a huge profit by selling La Masía players such as Dru Fernández.
Although Barcelona isn't totally out of the woods yet, it seems they are nearing the end of the tunnel, with 3 La Ligas in the last 4 seasons. Barcelona is stable enough that they don't have to pull any levers, but their agreement with Sixth Street could come back to haunt them. Not this window, but with Rodri choosing Barcelona over their arch-nemesis Real Madrid, Laporta's decision to sell part of their rights could be the difference between a player choosing the Merengues over the Blaugrana.
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