Barcelona’s Financial Conundrum

Over the last few months, football fans and the world alike have welcomed a breath of fresh air in the form of Euro 2020 and the Copa América. Whether it be Italy’s beautiful redemption story or Leo Messi finally lifting an international trophy with Argentina, there was magic in watching football in its purest form. While their players were off on vacation or participating in the grandest international tournaments, clubs had begun preparing for the upcoming season. 

The transfer market has been in full swing, and Europe’s premier clubs worked desperately to get their finances in check. One club, however, was in utter turmoil: Football Club Barcelona. Arguably one of the biggest clubs in the world, the Catalan’s precarious financial situation was threatening to crumble the club. If you have followed Barcelona over the past year, you would’ve seen this coming; The club has had a mammoth €1.2 billion debt and a bloated wage bill.

Consequences were bound to arise, and now they have. Barça is struggling to meet La Liga’s financial rules, has no funds to operate in the transfer market, and perhaps cannot register its new free signings. To make matters worse, Lionel Messi has officially left the club and will not be back.

The question arises, how did Barcelona get here, what factors have made the financial situation so terrible, that the greatest player to ever grace the game was forced to leave the club.

Impacts of the Neymar Transfer

To understand the calamitous situation at Barça, we must travel back in time to August 2017. Many dubbed it the transfer that changed football forever: Neymar Jr’s transfer from FC Barcelona to Paris Saint-Germain. The Parisians met Neymar’s €222 million release clause and, in doing so, shook the very pillars of the transfer market.

You see, the repercussions of this eye-watering transfer were grave. Josep Maria Bartomeu, FC Barcelona’s president at the time, was in a perilous situation; He had allowed one of the club’s most precious assets to leave. Terrified of the fans’ and socios’ reactions, Bartomeu went on a mission to fix his mistake. 

The issue was, however, that the entire market knew Barça were now flush with money. Every player they cast their eye on would now come with an inflated asking price. Suffering from this curse, the Catalans would end up shelling out enormous sums of money for Ousmane Dembélé (€105 million, plus a reported €40 million add-ons), and Philippe Coutinho (€120 million, plus a reported €40 million in add-ons).

Barcelona signed both Coutinho and Dembélé for mammoth fees after Neymar Jr. left.
Image credits: Getty Images

Reckless Financial Management

The Spanish Giants have historically been a club that shows great trust in their youth system, La Masia, and has rarely relied on squandering inordinate funds in the transfer market. The reckless spending, however, continued. Barça have spent over €750 million, including Antoinne Griezmann’s highly controversial move, on transfers after Neymar Jr’s switch to Paris. The success rate has been woefully low; Something which has certainly beleaguered the club. 

At the core of Barcelona’s troubles is financial mismanagement. Along with splurging on transfers, the Catalans have offered ridiculous wages to all their players. To put it into perspective, Samuel Umtiti, a player who has struggled for performance since the 2018 World Cup, earns more than Manchester City pair Ruben Dias and Aymeric Laporte combined. Another similar case is Antoinne Griezmann; the Frenchman pockets an eye-watering €880k a week!

Barça’s staggering wage bill has been a cause for concern for a few seasons now. The club have failed to rectify the issue so far; however, the bill—quite literally—comes due. Barça’s wage cap for the 2021-22 season will force the club to adopt drastic measures or face severe consequences. 

The Wage Cap Problem

To understand the problem, we must first understand La Liga’s economic controls. In 2013, the Spanish League set up an economic controls department with the sole aim of keeping the league’s finances in check. This department, which employs countless analysts and accountants, calculates a squad cost at the start of each season for all the clubs in La Liga and the Segunda Division.

Essentially, they limit how much a club can spend on their first team and the surrounding elements, such as the head coach, staff, and reserve players. This amount, which clubs can spend on transfers and wages, is calculated based on many factors, including expenses, profit and losses of the previous years, expected revenue, and more. The difference between these controls and UEFA’s FFP, which some may deem incompetent, is that FFP punishes teams after the damage is done. In contrast, La Liga imposes regulations before the spending. 

In Barcelona’s case, La Liga has already decided the punishment. Two seasons ago, their wage cap was €671 million; now, it’s reportedly at a meagre €160 million. Their mind-boggling debt, coupled with the coronavirus pandemic, has drastically reduced their squad cost. The consequences are dire; if the Catalan club do not slash their wage bill by €200 million, they will not be allowed to register their new signings.

Barcelona’s wage cap is shrinking season upon season.
Image credits: The Athletic

The Imbalanced Squad

With such a catastrophic situation upon them, it’s all hands on deck for Joan Laporta and his team. As it stands, Barcelona have offloaded a few players, but they have all been fringe players or B-team players. To meet La Liga’s wage cap, the Catalans will have to sever ties with some of the big earners of the squad. 

However, this is easier said than done. It has been reported that Samuel Umtiti, for instance, would be glad to stay at Barca and see out his contract. Another mammoth earner, the forgotten Miralem Pjanic, has an evident lack of buyers and seemingly no way out of the club. Among the squad’s experienced players, the club has agreed on a wage cut with only Gerard Pique. Sergio Busquets and Sergi Roberto are yet to agree to the proposed cuts, whereas Jordi Alba seems reluctant to take one. 

The Spanish media also claimed that Barcelona would look to offload one or more of its star attackers. With Ansu Fati, Ousmane Dembele, Antoinne Griezemann, Martin Braithwaite, Alex Collado and new additions Sergio Aguero and Memphis Depay, the club have eight first-team attackers for three positions. With such a high imbalance, the Catalans are reportedly ready to sell a few attackers. 

Barcelona’s squad is overloaded with attacking options. Image credits: Marca

Two names initially mentioned were Coutinho and Dembele. Unfortunately, both have severe injury issues, which has made it increasingly difficult to find buyers. The Spanish media also floated around rumours of a high profile Griezmann – Saul swap deal. That deal, however, seems to have too many obstacles. 

What Now?

So you see, essentially, La Liga’s regulations and horrendous financial management from the previous board have prevented Barcelona from keeping Lionel Messi. The repercussions of this in itself are huge, with a myriad of issues, both on-field and off-field, arising for the Catalans. Devastatingly, even after shedding Messi’s wages, Barcelona’s wage bill still isn’t within La Liga’s norms. Reportedly, it is 95% of the revenue, whereas it’s supposed to be below 70%.

With just under a week remaining for the season to start, Laporta faces a strenuous task to put a competitive squad together. New signings have officially been ruled out and the void left behind Messi will be impossible to fill. There will be a greater responsibility on the entire squad and the collective must be stronger if Barça hope to compete for trophies. One thing is certain, the upcoming season promises to be an intriguing one with countless unknowns and great apprehensions.

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