European knockout another blow imminent but Barca’s financial problems worsen

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By the time Barcelona kick off against Bayern Munich on Wednesday at Camp Nou, they could already be knocked out of the Champions League.

Xavi Hernandez’s side have won just one win in their first four Group C matches, with a 3-3 draw at home to Inter Milan earlier in October likely sealing their fate.

If the Italian side beat already eliminated Viktoria Plzen earlier on Wednesday at the San Siro, Barcelona would be out.

For a club that has spent lavishly this summer on players like Robert Lewandowski, Jules Kounde and Raphinha, on a sporting level, elimination is embarrassing.

Financially, it puts more pressure on the club’s accounts which stood at 1.3 billion euros ($1.28 billion) in debt this summer, thanks to overspending and the Covid-19 pandemic. before President Joan Laporta and the board pulled their infamous “palancas” — — financial leverage.

They have sold 25% of their La Liga TV rights for the next 25 years to US investment firm Sixth Street Partners in two deals, for an estimated combined total of €665m.

Barcelona also sold two 24.5% stakes in Barca Studios to Socios.com and Orpheus Media, to help fund their summer spending spree and manage their wage bill, adding another €200m.

The club had been aiming to reach the quarter-finals of the Champions League, so a second straight group stage elimination will cost them around 20 million euros in prize money, not including revenue from ticket sales or TV rights.

On the other hand, they will earn revenue from a possible Europa League run, although significantly less than in the Champions League. They will also save money by not having to pay bonuses to players linked to Champions League progress.

“If they get out of the Champions League, they will lose revenue but also stop paying bonuses, so saving money. (Their situation) won’t change much this season,” the chairman of the club said on Friday. La Liga, Javier Tebas.

– Deeper issues –

La Liga’s own Financial Fair Play spending rules prevent clubs from spending too much on transfer fees and wages, depending on their level of debt and income. Previously, Barcelona could only spend a quarter of the money they earned as a result.

Tapping their financial leverage this summer has helped them bend the rule and revamp the squad, but next summer’s troubles await unless they can reduce their exaggerated payroll.

“The palancas have worked this year, they said it themselves, but for next season they can’t start again, they have to cut their wages,” added Tebas.

“They can’t continue with 500 million euros in salary to pay, they have to reduce it to 400 or a little more, like Real Madrid and other big European clubs. Otherwise, next year they will be back on the 1:4 expense ratio.”

Sergio Busquets’ contract expires this summer but some of the other highest-paid players in the squad, including Gerard Pique and Jordi Alba, have more time to fulfill their contracts.

Elimination from the Champions League will certainly not help Barcelona’s financial situation, but a more worrying issue is that the exorbitant wages paid by Josep Maria Bartomeu’s former regime still weigh on the club.

After failing to reach agreements with some players on a pay cut this summer, Laporta and club treasurer Ferran Olive offered a guarantee of around €11m of their own money, to secure the registration of Kounde.

Whether they’re knocked out or there’s an unlikely ‘miracle’ in the Champions League, unless Barcelona can cut their wage bill in the coming months, next summer they’ll have to be significantly more frugal.

rbs/jc

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