World’s biggest club struggling to weather the global financial storm
THE statement from Barcelona on Thursday morning was certainly intended to announce something in relation to the reduction of the biggest wage bill in world football, but for exactly what was planned you just had to take the word of those privy to less formal briefings.
A “proportional reduction of the remuneration provided for in the respective contracts”, was the club’s explanation. Elsewhere the word was 70 per cent salary cuts for the first team, pro rata until the Covid-19 crisis had passed, with no suggestion that these would be deferred to a later date.
Barcelona’s wage bill is extraordinary:
€671m in their last accounts for all their sporting teams including basketball, handball, although it is Lionel Messi and his first team peers who account for all but around €55m of that. Even without global pandemic and economic meltdown Barcelona’s situation was precarious, but the speed with which club president Josep Maria Bartomeu rushed in would suggest that this is a matter of some urgency.
The big stars of the Nou Camp were still keeping their counsel this weekend at the prospect of having to agree a major salary cut, although many of them may be wondering why their counterparts at Real Madrid are yet to face the same announcement.
The key question being: what are Barcelona and their president doing? Real Madrid have kept their powder dry, presumably waiting for developments ahead of the July 1 deadline when their payroll for the preceding six months is due. The season was already becoming a management catastrophe for Bartomeu who somehow made his ham-fisted sacking of Ernesto Valverde worse by alienating Messi. Barcelona then struggled to raise the funds to sign a striker in January amid a major injury crisis this season.
It makes you wonder just how dire the situation had become before the Coronavirus struck.
In their accounts for last season, Barcelona announced a record turnover of €990m, albeit with operating expenses of €973m. They are a club operating right at the very maximum of their earning power, with a profit after tax of just €5m. In January they could not even tie up a loan deal with Valencia for the striker Rodrigo. It does not sound like a club who can weather the kind of financial storm being whipped up.
Ultimately it seems that the savings will have to be made among their star players, although no word yet from the senior members of the dressing room and their captain on how big that will be, or for how long. The rest of the world is watching. If Messi, Luis Suarez and Gerard Pique, among others, are prepared to take a reduction in pay with no prospect of a deferred payment then it will make that decision much easier for, say, English Championship clubs, to sell to their own squads, or indeed others in Spain.
Barcelona Basquet’s Nikola Mirotic, who is thought to be highest earning European-based basketball professional, on a salary estimated between €4m and €5m annually, has said that he has agreed a pay cut. He said he spoke personally with Bartomeu and volunteered to do so. Given that Barcelona’s basketball operation is, unlike football, loss-making, there may have been no other option.
In Spanish football, the announcement from Barcelona meant that others felt confident to do the same. Atletico Madrid cited employment legislation enacted by the Spanish president Pedro Sanchez on March 17. The Spanish government has promised relief in the hundreds of billions but there has been much less detail forthcoming about how it will do so.
Atletico’s wage bill is around €350m, much less than the big two in Spain but considerably more than the next largest, Sevilla (€185m) and Valencia (€177m). Espanyol, who have a wage bill of €86m, are another who have announced a pay cut. How many more Spanish clubs will follow suit this week as the crisis worsens? Yesterday, the country’s death toll rose by 832 to 5,690.
The crisis is exposing those clubs who for too long have lived month to month, and those who have extended themselves the furthest are being obliged to take preventive measures earlier than others. In the English game that has been primarily the Championship, where Leeds United have been among the first to announce wage deferrals. In the leagues below, where match-day income is so crucial, the April payroll next month is looming like treacherous rocks in a storm.
But at Barcelona, named in the Deloitte’s Money League this year as the biggest revenue-generating club in the game, it seems to have come sooner than anyone expected. This is the club who say they are closer than any to an annual €1bn turnover and yet they have a wage bill that holds them hostage to fortune. If this latest crisis does not prompt a rethink of the way they operate then it is hard to think what will.