Camp Nou: The world’s richest soccer club is facing a financial crisis. Executives blame the pandemic, but many of its biggest problems, including its enormous debt to Lionel Messi, are its own fault. The careful plan hatched by Barcelona fell apart almost as soon as its negotiators entered the room.
On a hot late summer afternoon, Barcelona’s executives had come to one of Monte Carlo’s most exclusive hotels to strike a deal with the German club Borussia Dortmund for one of the most exciting young prospects in Europe: the French forward Ousmane Dembele. Barcelona had decided on its strategy, and its price: Dembele, in Barcelona’s eyes, was worth $96 million, and not a cent more. No matter how hard Dortmund pressed for a higher fee, the men from Barcelona would hold firm. The two executives steeled themselves as they headed to the suite the Germans had booked.
The Germans told their guests that they had no time to exchange small talk, and they were not here to negotiate. If Barcelona wanted Dembele, it would have to pay roughly double the Spaniards’ valuation: $193 million and that would make the 20-year-old Frenchman the second-most expensive soccer player in history.
Barcelona’s president, Josep Maria Bartomeu, was stunned. But he did not walk away. He quickly agreed to pay almost the entire amount, settling at a fee of $127 million upfront, with a further $50 million in easily-achieved performance bonuses. He wanted to play hardball but then felt he did not have a choice.
Only a few weeks earlier, Barcelona had seen one of its own crown jewels, Neymar, plucked by Paris St-Germain. Bartomeu could not risk disappointing a fan base still reeling from that blow by returning home empty-handed. He needed a marquee signing, a trophy, a trinket. He had to pay the price.
Barcelona is the first (and only) team to surpass $1 billion in annual revenue. There is arguably the finest player in history, Lionel Messi. On matchdays, the cavernous, iconic stadium it calls home fills with almost 100,000 card-carrying, dues-paying club members. But Barcelona has been living on the edge for much of its recent history, a consequence of years of impulsive management, rash decisions and imprudent contracts.
For years, soaring revenues helped paper over its worst mistakes, but the coronavirus pandemic has now changed the math. One former board member believes the time will eventually cost the team more than half a billion dollars in revenue. Its salary bill is the highest in Europe. It has already broken debt covenants it agreed to with its creditors, which will almost certainly mean higher interest costs in the future.
The result is that the club that brings in more money than any other in the world soccer now faces a crisis: not only a crushing financial squeeze but a contentious presidential election and potentially even the loss of its crown jewel, Messi. Its hurried pursuit of Dembele, among others, is only one part of how it got here. Even as Bartomeu finalised that deal, in August 2017, Barcelona knew it had been stung.
The club had banked $222 million from the sale of Neymar weeks earlier and now needed a flashy signing to change the conversation. Every seller in Europe, though, knew Barcelona was cash-rich and time-poor. “You have a weaker negotiating position,” said Jordi Moix, Bartomeu’s former vice president for economic affairs. “They’re waiting for you,” he was quoted as saying by The New York Times.
If any club could afford to overpay, though, it was Barcelona. Over the previous decade, it had been transformed into not only the best team in the world — the winner of three Champions League titles in seven years — but also its greatest moneymaking machine. Its revenues were then inching ever closer to the target of one billion euros set by Bartomeu in 2015. It hit the mark — in dollars, at least — in 2019, two years ahead of schedule.
Plans for a sleek entertainment and leisure district around the team’s stadium and the launch of the Barcelona Innovation Hub would keep the river of money flowing. At the same time, though, the club was walking an increasingly delicate financial tightrope. There is another billion-dollar watermark it has passed: its total debt, including the amount owed to banks, tax authorities, rival teams and its own players, has ballooned to more than 1.1 billion euros.
In some ways, Barcelona was a victim of its own success. The more its players won, the greater the figures they could command in salary negotiations. The fact that so much of its squad — the likes of Messi but also Gerard Pique, Sergio Busquets and Jordi Alba — were seen as the spiritual soul of the club, visible proof of the road from the club’s La Masia academy to the first team, gave the players, not the club, leverage.
“Clearly a lack of leadership, the leadership of the board being afraid to say no, is one of the key things that needs to be avoided going forward,” said Victor Font, one of the candidates to become the club’s next president when elections are held in March. “Wages had gone too high.” But when the club could rely on revenues tipping $1 billion every year, paying out almost $700 million in salaries was “a stress, but affordable,” Moix said, adding: “It did not give us much room for savings, but they were the backbone of the team. If we did not make the agreements, they would have gone.”
Its revenues were then inching ever closer to the target of one billion euros set by Bartomeu in 2015. It hit the mark — in dollars, at least — in 2019, two years ahead of schedule. Plans for a sleek entertainment and leisure district around the team’s stadium and the launch of the Barcelona Innovation Hub would keep the river of money flowing. At the same time, though, the club was walking an increasingly delicate financial tightrope. There is another billion-dollar watermark it has passed: its total debt, including the amount owed to banks, tax authorities, rival teams and its own players, has ballooned to more than 1.1 billion euros.