It’s not a problem to be in debt. Debt is a very good way to finance something, such as a new machine for your business. It only means that you owe someone money, such as a bank. The debt is repaid over a set time and with interest. For various reasons Barcelona have too much costs compared to their revenue and cannot pay the wages of their players. This is very, very serious and I am not sure it should even be defined as a debt. If you can’t pay your bills you are not in debt, you are bankrupt and your house will be confiscated. If a business was in Barcelonas situation it would be really, really bad. Probably restructure or bankruptcy and legal and financial consequences for the board and directors unless appropriate steps had been taken prior. Buying new players like no other club in Europe probably does not count as appropriate steps.
Even if they are legally allowed to invest in new players while they still cannot pay the wages to the existing players, it must be completely unsustainable for them long term. I think these clubs are so corrupt that they just calculate that someone or something will come in and save them later.
Pathetic club.
Manchester United had a revenue of €712 million prior to the pandemic. With that revenue and control over costs, a debt of €400 million is not an issue on its own. Whatever we think of the Glazers, United is a very well run business.
it is astonishing that you keep saying that barça cannot pay players.
barça can pay its bills. barça has always done that. if barça couldn't, barça would be relegated. revenues are increasing after covid and the wage bill has reduced considerabilly. we are already close to 400M in wage bills (560 of last year included some deferral and 1 time payments). it will take 1 or 2 extra years to be 100% free of toxic contracts.
barça had almost 1000M revenues before pandemic (i think it topped to 990). united debt is 600, not 400. barça debt will be closer to 1bn (if not less) by next year. it was 1.35bn but included some provisions that will not be paid (among other things).
So far as I understand it, our debt is secured against the value of the club and is on preferable terms and easily manageable when set against our revenue. Barca's debt was more than triple ours and due to the ownership structure I don't think they can use assets as collateral as easily as we can and so they wound up with a lot of debt on very poor terms and had their debt rating lowered during COVID which came at just about the worst possible time for them right on the heels of some massive expenditure.
Moving forward they could go for austerity, signing cheap players or free agents and use the academy graduates and they briefly flirted with this at the beginning of last season. They stank up La Liga for 3 months and crashed out of the CL at the group stage and at that point they reversed course quickly deciding that austerity was too risky as if they missed out on future CL revenue it could exacerbate the financial problems and also their fans were close to rioting at the dreadful performances they were seeing. Their new strategy is you have to spend money to make money, the obstacle being they had none to spend and so could only obtain funds by mortgaging future TV rights. The strategy is incredibly high risk, there is a scenario where they win masses of trophies including CLs and revenue explodes as a result sweeping away their problems but there is also a scenario whereby they fail to reach the knockout stages again in 1 or 2 seasons or even miss out on CL altogether and any drop in revenue could be catastrophic to the financial house of cards they have constructed. It is fascinating to watch.
of course barça can use its assets as collateral. barça can even sell them!
barça last loan (short to long term loan) with goldman sachs (last year) was closed at 1.98% (pretty decent rate from my point of view, dont you think?) and it included 90% of laliga tv revenues as collateral. that is why the "levers" were done in 2 stages of negotiations. first 10% (without gs), second 15 (including rights used as collateral with gs, that is why barça paid 100M to GS to pay part of the loan)
barça debt is, worst case, doubling united (united debt is almost 600M euros).
only a small part of the money from the levers has gone to players. the net spending in players is way lower than this forum thinks.
barça has sold 5% of the current revenues, that % will lower in the future. not good, but far from catastrophic.
Thanks for explaining, man. This is incredibly insane way of running the Club. And they've been wanting Messi to be back also. I can't just fathom of why their fans keep bury their heads in sand, and let their Club doing it.
We have Barca posters here just keep justifying their Club doing.
explanations are, best case, incomplete.
barça fans prepared a censure motion the former president (who should be in jail) and we have a new board.
the situation has MASSIVELY improved in the last year.
The Spanish League introduced it's own strict FFP rules last season, which precipitated the Messi move, it is based on turnover vs wage bill or something like it.
Barcelona have a massive wage bill, Utd still have one of the best wage bills against turnover in the prem, our debt no matter how much you hate the Glazer's for it is well managed and easily serviced by our turnover.
"The Levers" are just things that Barca can do to increase their turnover, thereby decreasing the % of their turnover taken by wages under the threshold, this is however short-termism as these are one off infuxes of cash not ongoing revenue streams
spanish ffp has been longer than that. it was covid (radical decrease of revenues) + criminal structure wages bartomeu put in placed combined what put barça near collapse (it is not there anymore).
