After a period of considerable turmoil, it seems FC Barcelona is back on its feet. On-field? Of course, they are back and running fast with a superlative start to their 24/25 season under new boss Hansi Flick
Off-field? The situation seems to be quite optimistic although a long way to go before it can be called as financially stable. In October 2024, FC Barcelona announced their annual accounts for the 2023-24 season. Multiple factors like increase in sponsorship revenues, record merchandise revenues and most importantly, reduction in wage bills, all point towards an optimistic path
In this blog, we will discuss about FC Barcelona’s journey across the storm and finally on the right road to recovery
The Turmoil
A possible explanation of why the crisis happened in the first place can be summarised by a chain of events and its consequences.
In 2017, Barcelona, flush with the record transfer money offer for Neymar Jr. (€222mn, remember?), took some expensive transfer purchase decisions, like Ousmane Dembele, Phillip Coutinho which did not quite work out on-field at the same time added to the ballooning wages. Almost at the same time, management took the disastrous decision of relaxing wages and salaries hiked leading to a highly inflated wage bill. As per the report from Front Office Sports, the total wage bill rose from €340mn in 2017 to €487mn in 2018
While dealing with inflated wages, the onset of pandemic led to a worsening situation. Matches were suspended and even when they restarted, it was behind closed doors which led to a decrease in matchday income so much so that in 2020, Barca’s total revenue fell by 14% to €729mn. The wages to revenue ratio was in the comfortable range of around 50% which rose to greater than 70% around this time. As a result, from 2018-2020, the club had a total net loss of more than €430 mn.
With this followed a change of management and restructuring started
Economic Levers
The new FC Barcelona management led by president Joan Laporta decided on a radical approach to raise funds as LaLiga tightened the financial screws and created a stronger compliance structure. President Joan Laporta’s solution, called ‘economic levers’, a term coined by him, essentially deals with selling their TV and licensing rights for multiple years in the future for immediate cash in hand
As per Mundo Deportivo, La Liga has presented its Economic-Financial Report for the 2022/23 season, revealing Barcelona’s corporate operations, or “levers,” totaling €808mn. This short term option, possibly the only solution at that moment to balance on-field performance as well as business, somehow managed to loosen the grip but it’s effects could be seen in future. The chart below highlights the ‘levers’ used
2023/24 Revenues: Recovery Shoots
The fact that Barcelona’s total revenue of €763mn in 23/24 is just €43mn less than that of 22/23 despite almost €100mn decrease in matchday income since the men’s first team has been temporary relocated to the Olympic Stadium, is very commendable. This was possible mainly for two reasons:
- €141mn reduction in wages related to football
- Profit on player sales to the tune of €79mn
On the positive note, Barcelona posted a healthy sponsorship revenue of more than €210mn and record turnover of €110mn for Barça Licensing and Merchandising. Continuing the strong note, the club has renewed their long-running kit supplier partnership with Nike in a deal that is reportedly the richest of its kind in soccer, jumping from the current €105mn annual value to a reported €127mn with a €158mn signing bonus.
Overall, FC Barcelona saw a sharp swing from a recorded profit after tax of €352mn in 22/23 to a €91mn loss in 23/24, almost €450mn
In Conclusion
According to the 2024/25 forecast would see a further increase in sponsorship revenue and merchandise sales, while the wage bill was to remain “stable” at €500mn. It projected a €5mn profit for the current season while relying on a player transfer profits remaining strong.
For FC Barcelona all this points to recovery though the effects of ‘economic levers’ will keep pinching them
