Rabu, 28 Juli 2010

FC Barcelona in financial trouble

Yesterday I wrote about the Balearic island club RCD Mallorca being banned by UEFA from its competitions for the 2010/11 season. And now could their big Spanish La Liga brothers FC Barcelona be following them soon?

When I wrote my blog entry I didn't know that FC Barcelona was facing this big a financial problem when I named them as an example of a big club who could face the axe due to the new financial regulations being put in place by UEFA for their club competitions. Now it will be interesting to see if UEFA asks for further financial details from Barca before confirming their place in the UEFA Champions League 2010/11 or letting them off with a warning that next year they would scrutinize them more thoroughly.

The new Barcelona president Sandro Rosell and his board of directors had asked Deloitte to carry out a new audit of Barcelona's financial figures and what has come out is simply put a disaster. The old audit showed a profit of 11 Million Euros only in June, while the new audit now suddenly shows a staggering loss of 77,1 Million Euros.

The new Barca audit showed operating income of 408.8 million Euros and costs of 477.9 million Euro compared with previous figures published under former president Joan Laporta of 445.5 million Euros as income and 429 million Euros as costs, the club published on their website (www.fcbarcelona.cat) yesterday.

And that Barcelona has a liquidity problem was known in late-June when the club was forced to seek a 150 Million Euro bank loan to cover for difficulties in their cash flow. One of the key problems was salary payments to their highly paid players.
And what makes the scenario even more scary is the fact that Barca's net debt has risen from 329 Million Euros to now an incredible 442 Million Euros.

Javier Faus, a Barca vice president, said at a press conference, "There is a structural problem. The sporting excellence of the past few years has not been reflected in excellence in economic management."

To the outside world it always seemed Real Madrid where the Spanish club spending loads of money on their Galacticos, while Barcelona was focusing on their youth development programme and buying players here and there to strengthen the squad. But when one now knows these figures and also knows that the club has already spend 40 Million Euros on bringing in Spanish star striker David Villa from FC Valencia and Adriano for 9,5 Million Euros from FC Sevilla for new players, then one also understands why the club had to sell Yaya Toure for 30 Millions Euros to Manchester City and allow Dmytro Chygrynskiy to return to Shakhtar Donetsk for 15 Million Euros to even out the clubs spending in the transfer market. But still the club is trying to lure Cesc Fabregas away from FC Arsenal with a big pay package and a hefty transfer fee for Arsenal. Can Barca actually afford it?

Also Barca shows the problems of Spanish club football. Spain is World and European champions plus their clubs are amongst the best in the world, but this success has been bought by the Spanish with money which they don't have. And if a club like FC Barcelona faces such problems with all the advantages they enjoys along with Real Madrid in that country then think about the smaller Spanish clubs. Spanish clubs have more then 3,5 Billion Euros in debt, the figure is growing by the minute, and new streams of revenue are unlikely to be found and TV rights revenue is at its peak. Sadly difficult times coming for Spanish football...

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