The 2003 film “Pirates of the Caribbean: The Curse of the Black Pearl” is based on a group of pirates who, after discovering and seizing a treasure chest of 882 gold pieces that were buried by the Spanish conquistador Hernán Cortés, become cursed. The pirates turn into immortals who take the appearance of skeletons whilst in the moonlight — and only returning the final gold medallion will break the spell. When looking at FC Barcelona’s financial situation a mere four years after receiving a world-record transfer fee, it seems that Barcelona’s fortunes have been cursed by a glamorous treasure chest.
Barcelona’s Transfer Deals
Four months after Barcelona’s historic 6-1 comeback in the UEFA Champions League Round of 16, PSG took revenge by seizing the engineer of the remontada, triggering Neymar’s €222 million buyout clause and following it up with a blockbuster €180 million deal for Kylian Mbappé. It would seem like science fiction to think that, four years removed from the world-record sale of Neymar, Barcelona would not have enough money to register their new signings or renew the contract of the greatest player in the club’s history.
The Catalans have completed deals to sign Memphis Depay, Sergio Agüero and Eric García on free transfers, whilst also triggering their €9 million buyback option to sign Emerson Royal from Real Betis, but they have been unable to register any of their new signings in their 2021/22 squad due to La Liga’s salary cap rules. Unless Barcelona can make savings of over €200 million, they will not even be able to renew the contract of Lionel Messi, currently a free agent for the first time in his professional career, although the Argentine is reportedly eager to reject other interested clubs and sign a two-year contract.
La Liga’s Financial Controls
Since 2013, La Liga has administered a system of economic control to monitor the finances of all 42 clubs in Spain’s top two divisions and establish a squad cost limit for each season. This enforces how much money each club can spend on players in their first team as well as the youth teams, in addition to the coaching staff and head physio. Each club can decide how to divide the spending between transfer fees and wages, but they must not exceed the limit.
The squad cost limit is based on financial data that each club must submit prior to the summer transfer window, including expected revenue from the upcoming season, profits and losses from previous years, overhead costs, non-player contracts, current savings, any existing debt repayments, investments and sources of external financing. It’s why, two years after having to deal with a salary limit of €671 million, Barcelona are now hemmed in with a limit of €348 million. While the club finished the previous season exceeding the limit, Javier Tebas, the president of Liga Nacional de Fútbol Profesional (LFP), has made it clear that they will not enjoy the same privilege next season.
As such, it means that Barcelona are more desperate than ever before to slash their wage bill and create revenue via player sales. Jean-Clair Todibo has been sold to Nice for an initial fee of €8.5 million, whilst Konrad de la Fuente has also packed his bags to the Région Sud, joining Marseille for a fee of €3 million. Junior Firpo has joined Leeds United for a fee of €15 million plus add-ons, Francisco Trincão has joined Wolves on loan with an option to buy for £25 million, whilst Carles Aleñá has joined Getafe for €5 million, with Barcelona retaining a resale clause of 50%. Ilaix Moriba has been demoted to the Barcelona B team after rejecting Barcelona’s contract renewal offer, and with his deal set to expire in 2022, he could be sold for a hefty profit this summer. Two years after joining from Palmeiras for €7 million + €3 million in add-ons, Matheus Fernandes has been released from his contract, and he intends to sue Barcelona for unjust dismissal.
Offloading Expensive Veterans
Last summer, in the wake of their crushing 8-2 defeat to Bayern Munich in the UEFA Champions League, Barcelona offloaded veterans Ivan Rakitić, Arturo Vidal and Luis Suárez for minimal fees, with the latter’s 21 goals leading Atlético Madrid to their first league title in seven years. However, even after dispatching their veteran players last year and selling several young prospects, there is still so much deadwood for the club to offload before they can think about registering their new signings.
One of those ‘dead wood’ players is Philippe Coutinho. After quickly responding to the Neymar move with a deal for Borussia Dortmund’s Ousmane Dembélé, paying €105 million plus €40 million in bonuses, Barcelona attempted to get a deal over the line to sign Coutinho in the final days of the summer transfer window. Their initial bid of £72 million as well as two improved bids were both swiftly rejected by Liverpool, prompting Coutinho to submit a transfer request via email. Coutinho’s efforts would not be in vain, however, as Barcelona eventually signed him for an initial £105 million fee rising to £142 million with potential add-ons.
Whilst Liverpool used the money to bring in Alisson and Virgil van Dijk, both crucial in the club’s Premier League and Champions League triumphs, Coutinho proved to be a colossal failure in his first 1.5 seasons at the club before joining Bayern Munich in loan, where he would win the treble and score the final two goals in their 8-2 triumph over his parent club in the Champions League. He did manage to rack up one goal and two assists in his first three games under Ronald Koeman, but a meniscus rupture ruled him out for the majority of the 2020/21 season.
With two years left on his contract, Barcelona are eager to get rid of the Brazilian this summer in order to avoid paying a further €20 million to Liverpool should Coutinho reach 100 appearances for them; he has currently played 90 matches so far. He has been short of offers due in large part to his wage — a reported €24,489,920 per year only surpassed by Antoine Griezmann and current free agent Lionel Messi in the Barcelona squad.
The same problem goes for Samuel Umtiti. After joining from Lyon for €25 million in the summer of 2016, the Cameroon-born defender quickly emerged as one of the best young centre backs in Europe, displacing Javier Mascherano from the centre of defence and earning a bumper new contract at the end of the 2017/18 season. He followed up his domestic double-winning campaign by leading France to the World Cup trophy in Russia, playing through pain after picking up a knee injury and opting for conservative treatment over surgery in order to participate in the tournament.
This decision proved to be a death warrant for his Barcelona career, with Umtiti missing the bulk of the 2018/19 season due to injury. Even after returning from injury, the 27-year-old looks to be a shadow of himself, consistently proving to be a liability in defence under Koeman and dropping further and further down the pecking order behind Gerard Piqué, Ronald Araújo, Clément Lenglet and Óscar Mingueza. Barcelona have even offered to release Umtiti from his contract in an attempt to not pay his bloated salary for the next two years, a move that would see him forgo a total of €35 million — whilst also receiving some sort of compensation package. Umtiti, for his part, has refused their attempts but is reportedly open to leaving on loan.
Apart from Umtiti, Barcelona have also offered to release Miralem Pjanić in order to get off the hook for the final three years of his contract. The 31-year-old joined from Juventus last summer, with Barcelona paying €60 million for the Bosnian international and Juventus paying €72 million for Arthur Melo in a blockbuster swap deal that seemed to have the sole purpose of balancing the books for both clubs. “That exchange is one of the biggest aberrations I’ve seen in the history of football. It’s absurd,” said André Cury, Barcelona’s former head of South American operations. “You exchange 23-year-old Arthur, who has a net salary of €2 million, for a 31-year-old player, who must have €6 million in salary.”
If Barcelona do manage to loan out Coutinho, Umtiti, and Pjanić, they would free up around €64 million in gross salary costs, but it would still prove insufficient in getting Barcelona under the salary cap. One of the main reasons for that is player amortization.
Player amortization spreads the cost of a player’s transfer fee over the length of his contract. In the case of Pjanić, who joined last summer on a four-year contract for a fee of €60 million, €15 million of that fee has already been amortized, whilst a remaining €45 million has yet to be amortized. It would mean that, if Barcelona were to let Pjanić leave for free this year, they would take a loss of €45 million in the books. These losses and amortization costs are taken into consideration for Barcelona’s squad cost limits, with the total amortization costs for the upcoming season accounting for €144 million on the club’s books.
Laporta Has A Massive Job On His Hands
Joan Laporta, who assumed the Barcelona presidency on March 7 for his second spell in charge, has been left with a hefty bill to pay thanks to the disastrous management of his predecessor Josep Maria Bartomeu. Barcelona have a total debt of €1.173 billion, the majority of which is considered ‘short-term debt.’ While it is true that the pandemic has worsened that figure, €323 million of that amount is based on outstanding transfer fees, another €350 million is due to pending amortization fees, and €266 million in bank loans are due as well, some of which must be paid by this summer. The club’s wages to income ratio stands at 110%, in excess of the limit established by La Liga’s salary cap rules, and as such, only 25% of their incoming revenue can be spent on registering players and paying salaries transfer fees. The remaining 75% of the profit must be spent on paying off outstanding debts.
Laporta may have thought he was pulling off a masterstroke by signing various high-profile players on free transfers (Kays Ruiz-Atil is also expected to join from Paris Saint-Germain on a free), but he likely underestimated Barcelona’s deep-rooted financial problems. No transfer is genuinely ‘free,’ and even if Lionel Messi does accept a substantial pay cut, and even after securing a €500 million loan from Goldman Sachs to ease the burden of the pandemic, Barcelona will need to get creative in finding new sources of revenue from player sales in order to register Emerson, Memphis, García and Agüero, whose gross salaries for next season will combine for €29 million.
“The club’s in a worse state than I expected — and I knew I was coming into a difficult situation,” stated Laporta in a recent interview. “We’ve encountered a squad with old-fashioned contracts and we will have to work out what to do. The existing contracts can be changed or restructured. After that, there are more drastic measures that we hope we don’t have to adopt. But nothing’s ruled out if it’s for the good of the club. Between salaries and amortisations, it’s about €650m , which is more than the club’s revenue. These salaries are out-of-step with the current market.”
Barcelona Focused On The Youth
Apart from registering their new signings and agreeing a contract renewal with Messi, Barcelona’s biggest priorities will lie in keeping hold of the likes of Pedri, Frenkie de Jong, and Ansu Fati, but their financial predicament may force them to cash in on some of their other promising young stars such as Moriba, who, at 18, has become a first-team regular under Ronald Koeman, upstaging the likes of Pjanić and earning comparisons to Paul Pogba. Barcelona may be hoping that Javier Tebas makes another exception to allow them to renew Messi’s contract and register their new signings, but Tebas, so far, has shown no signs of blinking:
“We cannot make a rule for Messi or for Haaland. The rules are what they are. The managers know it perfectly well and it will not change. The efforts made by Barcelona to reduce its salary bill are on the right track but there will not be a special rule. The rules have to be complied with, we are not going to change them. We are not going to make an ad-hoc rule for Messi.”
Messi’s renewal is a necessity for the club, as his mere presence generates more for the club in commercial revenue than he earns. Recent reports have even stated that various presidents of La Liga clubs are willing to chip in to help pay for it, as they consider Messi’s continuation in Spain a vital asset for La Liga. There is zero doubt that Messi will have to accept an enormous pay cut from his previous wage in order to remain in Catalunya, with Barcelona likely having to spread payments down the line in future lines and/or give him a comfortable post-playing career job as a club ambassador.
The catastrophic management of Josep Maria Bartomeu has left Barcelona strapped of cash and unable to complete the basic fundamentals of registering their new signings or renewing Lionel Messi’s contract, and the onus is now on Joan Laporta to continue to find ways to free up space in the wage bill and create extra revenue. Unlike in the Pirates of the Caribbean, there is no missing gold medallion that can lift the curse and bring things back to normal — only a series of smart financial decisions and a concerted effort to rescue Barcelona from the abyss.