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Scratching under the surface of Barcelona

On the surface of things, Barcelona are virtually the perfect club. Their style of football is a joy to watch, their fan-ownership set-up is envied by many an English football fan as is their highly successful youth system, whilst they seemingly have the finances to spend big whenever they desired. However, when we begin to scratch under the surface, the polished veneer begins to show flaws – somebody described Barcelona as the footballing equivalent of Coldplay: a bit self-righteous, adored by the masses and just a little too free with their opinions.

Real Madrid came under a huge amount of criticism for their public courting of Cristiano Ronaldo last season. Indeed, they riled Sir Alex Ferguson so much he stated that he would ‘not sell that lot a virus’. However, there is seemingly little difference between their behaviour regarding that deal and the Barcelona tactics to unsettle Arsenal’s Cesc Fabregas. People seem to justify it by the fact that he is a former Barcelona youth player, so they have an almost accepted right to take him back. If reports are to be believed, Barcelona have not even been in contact with Arsenal yet.

But ignoring the fact of whether Barcelona are acting in an appropriate manner – can they afford to buy him? Spanish football is not in a good situation at the moment – indeed, it has recently overtaken the Premiership as the most indebted league on the planet with debts of over £3bn. One of the major problems is that TV rights are negotiated individually, rather than collectively as in the majority of other leagues. Only this week, Real Mallorca narrowly missed out on the Champions League, but were forced to enter voluntary administration with debts of nearly €85m. Valencia’s financial problems are well documented.

However, Barcelona is an interesting case. In their recent financial report, their debt was reported at €30m – a loan taken out in February from Spanish bank La Caixa. That sounds relatively respectable for a club of their size and stature. However, new Presidential candidate, Sandro Roselli this week claimed that Barcelona’s debt was in fact a staggering €489m. There are also various other reports of amounts between the two – a club spokesman has referred to net debt of €202m, whilst the English media has quoted figures of €350m.

Which figure we believe depends entirely on how exactly we define debt. At its most narrow definition, the figure of €30m would be correct, since that is the only money that they owe the banks. However, if we take the broadest possible definition of debt, we would take total liabilities, including all financial obligations, debts, claims and potential losses. In this situation, the debt matches Roselli’s claims of €489m.

If we scratch the surface a little more, we find more details that tarnish Barcelona’s squeaky clean exterior. In recent months, the club has had to pay over €36m to the Spanish tax authorities over irregularities that occurred in the last ‘90s. This is in addition to the €25m that they have already paid regarding similar irregularities in earlier years. They have paid a reported €16m against claims brought by a Spanish TV company, Sogecable. Barcelona were found guilty of having breached their contract with the company. Sogecable had paid a fixed sum to the club and claimed that it was entitled to get all of the club’s international income between the seasons 2003/04 and 2007/08. However, the club withheld income from advertising and image rights, claiming it was not part of the deal. However, given that they did not appeal against the decision, it appears like an admission of guilt on their part. They also owe almost €50m to various clubs on transfer purchases that have not been paid yet. This includes almost €16m to Arsenal – €12 for Thierry Henry and €4m for Aleksandr Hleb.

The TV rights deal is a big issue in Spanish football at the moment. Barcelona’s current TV yearly income is an enormous £134.9m. Compared to even the English giants, this is impressive – Arsenal’s TV income is a measly £73.2m in comparison. They earn more than double the amount that 3rd placed Valencia receive and over 15 times more than 7 of the current La Liga teams. Clearly, this will only serve to ensure that Real Madrid and Barcelona are permanent fixtures at the top of the table. Indeed, a large number of the teams have threatened strike action if there is not a move to collective bargaining – a move that would reduce the top two divisions to eight teams each.

Barcelona continue to ignore calls for this to happen. A Barcelona director said that rather than spending time on this issue, they should spend the time ‘focussing on getting their finances in order’. However, how are they meant to do this without the revenue from TV deals? It is almost inevitable that the move will happen in the near future. Although Real Madrid and Barcelona have almost 80% of the TV audience, the interest will die off if they have no other teams to play.

The move to have UNICEF as their shirt sponsor won the club a lot of positive publicity, and rightly so. However, to assume that they do not rake in a huge amount of money from sponsorship deals would be foolish. The club has a list of 26 other sponsors, including Nike who pays a guaranteed minimum amount of €30m per year. They also retain player image rights, allowing them to make millions of euros on advertising deals.

This allows them to pay high wages – they have 8 of the top 38 highest paid players in the world, and 4 of the top 12. The Spanish ‘Beckham Law’ gives them a huge advantage over English clubs when it comes to paying wages. This law allows foreigners in the top tax bracket to pay only 23% tax for their first 5 years, in comparison to the 50% rate in England.

Whilst this all seems a very negative review, I must admit that there are a huge number of things related to Barcelona that are hugely admirable. The youth system is second to none – Xavi, Andres Iniesta, Victor Valdes, Gerard Pique, Carlos Puyol, and indeed, Fabregas himself – have come through in recent years. The election system, where the chief executive is directly accountable to the club’s fans in another. However, we need to be careful not to be blinded by what we are allowed to see. There is a lot lurking just under the surface to suggest that Barcelona does not match the squeaky clean image that it projects.

Their highly public pursuit of Cesc Fabregas has been going on for years, and we shall have to wait and see whether it will end this summer. Currently there is a huge gap between the relative valuations of the two clubs, and there will have to be a lot of tough negotiations if the deal is to happen. However, the first blow has been struck by the Catalans. Their public pursuit has reportedly led to Fabregas requesting a move away from the club.

However, in the words of Arsene Wenger: “I can't see anyone who has a competitive edge going to Spain. They have two good teams, but the third team is 21 points behind and this week the players threatened to go on strike because they are not paid. It's a league that is in complete disarray. If you are competitive you stay in England, that's where the competition is and that's where the best players want to be.”


  1. Lured here by your posting on the BBC. Interesting article.

    Given that money always talks, what is your opinion on Platini's/Uefa's recent pontifications?

  2. I must admit, I'm not entirely convinced by the new UEFA regulations. Whilst undoubtedly something needs to be done to try and control finances in football, I simply do not think that the new break-even regulation is going to have a positive impact. Whilst it may well limit spending, I believe it will have other negative effects as well. In particular, I think it will disproportionately benefit the current top clubs, simply because they make more money, and hence will be able to spend more money.

    I also think that the limit on rich owners putting money into the club is a little risky. They want to stop the ridiculous sums of money that are being spent at the moment, but they risk stopping the investment altogether - rich owners are unlikely to want to own clubs if they cannot put their own money into them, and gain success that way.


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