Spanish league powerhouse F.C. Barcelona sent its most expensive player to Paris Saint-Germain, but the club’s financial troubles are lingering behind- even requiring a loan from Goldman Sachs to make payroll.
The Catalan team released its latest financial report on Monday, and president Joan Laporta explained in a two-hour press conference that while the club is still facing difficulties, his administration was able to figure out the main problems and hopes to get rid of club’s massive debt in the “next year or two.”
Barca is trying to recover not only from a battered balance sheet, which in January showed negative working capital of over $711 million, but also a leadership crisis that resulted in Laporta assuming the club presidency in March.
“We asked for an [additional] 80 million euros ($94.2 million) loan from Goldman Sachs when we took over in the spring because we realized we could not pay the payroll,” Laporta said, part of a $701 million total loan package from the U.S. financier.
He won the elections that took place March 7, after former president Josep Maria Bartomeu and his top deputy Jaume Masferrer were arrested as part of an investigation of misuse of funds and corruption, known as Barçagate.
According to Laporta, the club managed to lower its deficit to $488 million, with $771 million in revenues and $1.41 billion in expenses. While this balance sheet still “complicates” the club’s relations with the creditors, Barca managed to raise “550 million euros ($647.7 million) at a very good interest rate of 1.1%,” Laporta added.
Barcelona’s financial situation worsened because of COVID-19, with pandemic-related losses of $107 million.
One of the club’s major issues is the expensive players acquired during Bartomeu’s reign. Even after selling Neymar Jr in 2017 and saying goodbye to Lionel Messi, who signed with PSG last week, Barca’s player salaries total $726.6 million, which is “25% to 30% more than their competitors,” Laporta said.
“We have found the erroneous policy around players’ contracts,” Laporta said. “It was an inverted pyramid; veterans had long contracts and young people had short ones. This made it difficult to renegotiate contracts.”
The new administration says it managed to reduce player contract costs by $80.1 million. “In reality it is not a reduction because we have found it in the form of contract termination bonuses,” he said. Laporta also mentioned that they found out the previous administration was paying “third parties” huge sums of money to find “interesting young players” in South America.
The club’s renowned stadium, Camp Nou, also needed work, Laporta said. He cited a 2019 report that pointed it out that if repairs were not made, it entailed “a risk for spectators.” The club completed a $2 million project during the summer break, he said, and Barca hosted its first game on Sunday, a 4-2 victory over Real Sociedad, without putting “fans at risk.”
According to Laporta, the club needs to cut another “200 million euros” ($235.5 million) from its soccer budget, but it is in a better place. With the Goldman Sachs loan, he said, “I think we can manage now.”