Barcelona was in crisis. Can it now spend its way out?

Joan Laporta’s smile was hard to miss. Looking down from a huge digital billboard last month, a grinning image of the president of Spanish soccer giant FC Barcelona covered almost the entire side of the Palms casino resort in Las Vegas.

The billboard scrolled through other pictures – there was one of a handful of Barcelona players and another of coach Xavi Hernández – but it soon came back to Laporta. And that was the sight, the radiant President front and center in the gambling capital of the world, it was perhaps the best symbol of the current financial mess Barcelona has found itself in and the boundless confidence of a man who says he has a plan to fix it.

Barcelona, ​​in true Vegas style, is doubling down.

A team that less than a year ago couldn’t fill their massive payroll; a company with a loss of 487 million euros ($496 million) last year, described by its own chief executive as “technically bankrupt”; Currently struggling with more than $1.3 billion in debt, the club has decided that the best way out of a crisis caused by financial mistakes, lavish salaries and extravagant contracts is to walk away.

He has sold off one club asset after another to raise roughly $700 million to help balance his books. Yet it plans to renovate and modernize its iconic Camp Nou stadium in a $1.5 billion project backed by Goldman Sachs, which will bear a sponsor’s name for the first time in a rush to raise funds. And it has spent more money on new signings than almost any other major club in Europe this summer, with a flashy new acquisition announced seemingly every week to great fanfare.

The voluntary spending has raised eyebrows among Barcelona’s rivals and raised concerns among some of its 150,000 members about the club’s financial viability if Laporta’s big bet doesn’t pay off. But in an interview at The New York Times’ Manhattan headquarters, the president repeatedly insisted he knew exactly what he was doing.

“I’m not a gambler,” Laporta declared. “I take calculated risks.”

However, risk has become playful in Barcelona.

Laporta was elected president of the club for a second time last year after his predecessor and the previous board were ousted, marking the financial and sporting collapse of what was once one of the world’s great sports teams. While many expected Barcelona to slowly rebuild to live within their means during a period of humble austerity, Laporta has decided to steer Barcelona down a different course. He says he has no choice but to try to win every year.

“It’s a requirement,” he said.

More than 700 million dollars have been raised by selling the club’s business pieces. 25 percent of the club’s domestic television rights – a quarter of a century – went to an American investment fund. Music streaming service Spotify has signed a four-year deal to bring its name to the Camp Nou and even more valuable real estate on the front of the team’s shirts. On Monday, Barcelona announced the sale of a quarter of production company Barca Studios to blockchain company Socios. Next, it negotiates part of its licensing business.

Instead of paying off the club’s debt, however, the money has largely been used to acquire new talent: $50 million for Polish forward Robert Lewandowski, $55 million for French defender Jules Koundé, nearly $65 million for Brazilian winger Raphinha. Several other players joined as free agents. More reinforcements may be on the way.

It makes perfect sense for Laporta to sign Lewandowski, who will soon turn 34, and others. It’s part of what he claims is a “virtuous cycle” in which success on the field supports the team’s finances through increased revenue. The strategy repeats the recipe he used during his first term as president, a seven-year spell that began in 2003 and ended with a Barcelona team that was among the best in football history.

“In my time, we set the expectations very high and we were successful,” he said of his previous position. “And then Barça fans around the world, about 400 million fans worldwide, demand a certain success.”

But times and incomes have changed. Inherited in 2003, the club Laporta also fell into financial crisis, losing almost twice as much revenue and mounting debts. But back then the numbers were 10 times smaller and the club had not yet begun the process of becoming the commercial juggernaut it has become.

Those teams also didn’t have to comply with the strict limits on player spending that the Spanish league has since enforced, and it’s those rules that are the most direct obstacle to Laporta’s revival plan. With La Liga insisting it will not relax Barcelona’s rules by a euro, the club have yet to register any new signings this summer. Cautious that the team might not meet the deadline, the league has yet to use any of those players, even reigning World Player of the Year Lewandowski, in its new season branding.

Laporta stressed that the latest asset sale should allow Barcelona to comply with La Liga’s financial rules and register new signings for their battalion. “It was a decision I honestly didn’t want to make,” he said of the sales, even though they will – at least temporarily – put Barcelona’s balance sheet into profit.

This type of maneuver – a mixture of bravado and ignorance – is typical of Laporta, who benefits from a cult of personality that has not been matched by previous presidents in the club’s modern history.

It’s why he can put himself on billboards in Las Vegas and why he can continue to publicly promote the short-lived and widely reviled European Super League. (Barcelona, ​​Real Madrid and Juventus — three of the 12 teams that signed up to the breakaway concept — will continue with the project, which Laporta says is now considered an open competition that will benefit the biggest teams. He recently met with Andrea. Agnelli and Florentino Pérez, his colleagues at Juventus and Real Madrid, Las Vegas to discuss next steps.)

But Laporta’s popularity is also the reason he can escape financial risks that would probably have been unacceptable if proposed by previous presidents, and especially by his unpopular predecessor Josep Maria Bartomeu.

“What would happen if Bartomeu did what the current president is doing?” said Marc Duch, a club member who helped oust the previous board. “We’d all be on fire, pointing at him and trying to fire him.”

Duch said Laporta is given a wider berth and even has fanatical defenders on social media because of his association with the previous golden era. “Laporta has a history of success,” said Duch. “He has a huge fan base: he’s like the Pope, like Kim Jong-un: the supreme leader.”

Laporta’s intensely personal management style has also emerged in other changes at the club. To run for president, Laporta first had to raise a €125 million bond, a bond that was essentially created to protect against mismanagement. According to businessman Victor Fonti, who nominated Laporta for president, club members recently agreed to rule changes that mean he is no longer a personal risk. Therefore, according to Laporta Font, by borrowing money and selling assets, the club is risking its future, not itself.

“If things don’t work out,” Font said, “we hit a wall.”

Also last year, conflict-of-interest rules were quietly changed, bringing a number of Laporta’s friends, former business partners and even family members into leadership roles. For Laporta, these changes were important given the challenge he inherited. “I need people I trust,” he said. But the circle continues to shrink: Laporta’s appointed CEO left within months; instead of replacing him, Laporta took over his duties himself.

At the same time, he has had to rebuild trust with a group of players and convince many to accept pay cuts, in some cases millions of dollars, while the club splashes eight-figure sums on new talent. Laporta described the players who have accepted the pay cuts as “heroes” and insisted that by reducing wage costs and offloading some high-paid players, the new arrivals fit into a carefully crafted salary framework. But getting there hasn’t always been pleasant.

One player who has so far refused to take a pay cut or move to a new club is 25-year-old Dutch midfielder Frenkie de Jong, who was acquired in the summer of 2019 for nearly $100 million. De Jong has been the subject of intense speculation all summer, with Barcelona publicly demanding he accept a pay cut – he had already agreed to a 17 million euro ($17.3 million) deferral – or agree to a move to a new club. (Manchester United are said to have been the keenest bidder.)

But de Jong made it clear he wanted to stay in Spain and while Laporta declared his “love” for the player and said he was not for sale, he added that de Jong must “help the club” by restructuring his wages. The unions and the Spanish league president have both warned Barcelona against putting pressure on de Jong, and in response Laporta has said his club will pay de Jong’s debts. “He has a contract and we’re going to follow the contract,” Laporta said.

Much of Barcelona’s current situation can ironically be traced back to the timing of Laporta’s success in his first term. These teams played an unparalleled brand of football, producing a host of trophies as well as a host of popular superstars earning ever-increasing salaries. No player epitomized this escalation more than Lionel Messi, whose most recent contract with Barcelona was worth around $132 million a year.

However, as Barcelona’s debts grew, it became impossible to sign a new contract with Messi in line with La Liga’s financial rules. With a price, Messi bid a tearful farewell to Barcelona, ​​joining Qatar-owned Paris St.-Germain as a free agent. Laporta, who had promised to keep Messi as a presidential candidate, has since hotly hinted that he would like to bring him back.

“I feel like as president I have a moral obligation to him to give him the best moment of his career or a better moment at the end of his career,” Laporta said, offering no explanation. how it could be done.

Meanwhile, the relationship is broken: Laporta continues to suggest bringing Messi home in constant campaign mode. Messi has previously expressed his disappointment at the way Laporta characterized his departure, and his father has reportedly asked the Barcelona president to stop speaking publicly about his son.

However, the discussion on how to resolve this situation can come later. So are the complex questions of where Barcelona will continue to find ever-increasing revenue streams in the post-pandemic economy, or what it will do if it can’t register all its contracts, or what will happen next year or the year after when the nine-figure bill comes due.

Laporta lives in the present. “Winning,” he said, “is a universal human motivation.”

But now he has run out of time. Laporta politely ends the interview by saying he has to hurry. He has been appointed to Goldman Sachs to discuss a new financing arrangement.

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