Barcelona’s money worries: What Xavi’s replacement as manager should know
The role of Barcelona manager is among the most prestigious and coveted in world football.
But Barca’s deep financial problems will severely limit the options of whoever does replace the outgoing Xavi in the summer, and improving their team for the 2024-25 season is going to be hugely challenging.
Since returning for a second spell as club president in March 2021, Joan Laporta has repeatedly used creative solutions — including the famous ‘levers’ of money borrowed from Barcelona’s future earnings — with the stated aim of keeping the squad as competitive as possible.
This has allowed for the additions of expensive stars, such as Robert Lewandowski, and the retention of emerging talents including Ronald Araujo, Gavi and Lamine Yamal, helping the club win the 2022-23 La Liga title.
However, the limits of the board’s short-term fixes are becoming clear, just as the issues within their squad have also been laid bare.
Barcelona began 2024 hoping to strengthen during this transfer window in a bid for success on different fronts over the final months of this season. Instead, January has brought a humbling 4-1 Supercopa de Espana final defeat by Real Madrid, a 4-2 Copa del Rey quarter-final elimination at Athletic Bilbao, and a 5-3 loss at home to Villarreal this past weekend, a result that realistically ended any chances of back-to-back domestic championships.
Further cuts to the wage bill are all but certain in the summer. The sale of key first-team players could be the only possible solution to the constraints imposed by the club’s historic debts of more than €1billion and the financial sustainability regulations of La Liga and European football’s governing body UEFA. Making expensive additions to the squad in the next transfer window looks almost impossible at this point.
Laporta and his closest advisors, including sporting director Deco, have shown creativity in getting around the limitations imposed by the club’s financial issues before.
But this article will detail how high-profile departures from the squad look increasingly probable and why the next Barca manager is likely to have fewer resources to work with than Xavi has enjoyed since he got the job in November 2021.
“Barca are to sue Libero for €40m,” said a slew of headlines on December 31, feeding the idea that the club could force German company Libero Football Finance to pay money Barca claimed it owes them, allowing Xavi’s squad to be reinforced during the winter transfer window.
Last summer, Libero had agreed to take over payments due to Barcelona from Socios.com and Orpheus Media, joining a ‘SPAC’ (special purpose acquisition vehicle) to launch a new Barca Media company on New York’s NASDAQ stock exchange by November.
In October, however, The Athletic reported there was serious doubt that the Barca Media SPAC plan, which leading figures involved had valued at $1billion (£800m at today’s rates), would actually happen.
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The Libero arrangement was initially seen as positive for Barca, with former Chelsea and Manchester United chief executive Peter Kenyon one of several figures with extensive football experience involved in the fund. However, late last month, Libero announced that Kenyon had resigned from its board, which no longer had the quorum of members legally required for it to take decisions.
Meanwhile, further problems emerged at Mountain & Co, the Swiss financiers organising the SPAC for Barca.
Also in December, Glazer Capital, one of the biggest investors in Mountain & Co, lowered its share in the investment vehicle from 13.9 per cent to five per cent. That move was taken by some others involved in the Barca Media floatation as a sign of a lack of confidence that it could happen by the deadline of this April, after which Mountain & Co must dissolve the SPAC.
There have been Spanish media reports that Key Capital, which had helped organise ‘lever’ funding from U.S. financiers Sixth Street for Barca and Real Madrid, were talking to the same company about entering the SPAC. Multiple sources — who, like all those cited in this report, preferred to speak anonymously to protect their positions — have told The Athletic that this is not going to happen.
In recent days, the U.S. Securities & Exchanges Commission (SEC) tightened its rules on SPACs to protect investors, especially from inflated valuations. This was another blow for the Barca Media project, as it makes it more difficult to attract new funding, especially at the ambitious $1billion valuation trumpeted when the plan was announced last summer.
Club sources have confirmed to The Athletic that legal action has been initiated against Libero over the alleged non-payment of the €40million (£34.2m; $43.4m). However, other sources with knowledge of the arrangement doubt whether such a legal action can succeed. Neither Libero nor Mountain & Co wished to comment when contacted about this article.
It is, of course, possible that new funding or partners will be found by that April deadline. However, if the SPAC is dissolved, the €120million initially put up by its investors must be returned, plus interest. Industry sources say this €120m could not have been spent by Barca, on transfers, or anything else.
Barring unexpected developments over the next few months, the Barca Media ‘lever’ that helped fund the club’s transfer dealings last summer will not be of much use in the future.
But that does not mean that all impacts of the board’s ‘levers’ policy are now over.
This season, La Liga slashed Barca’s official permitted salary limit from €648million the previous year to a new figure of €270m. This rule applies to managers’ wages, too.
That came after changes voted in by La Liga clubs in November 2022, limiting the use of ‘lever’ money (essentially, the mortgaging of future earnings) for current expenditure, such as transfers and wages, to five per cent of a club’s annual turnover.
Barcelona’s real squad cost for 2023-24 — the total of salaries and transfer amortisations — is officially budgeted at €492million. As they have exceeded their level, La Liga rules say they must make cuts before signing any more players.
Indeed, when the Barca Media launch ran into problems in August, Laporta and other directors had to cough up €20million in personal guarantees for La Liga to accept the registration of free-agent signing Inigo Martinez and the last-minute loan arrivals of Joao Felix and Joao Cancelo.
Without the arrival of the €40million Barca said they expected from Libero, it has been impossible to add seriously to the squad during this winter window, even though Xavi, Laporta and Deco all wanted that to happen.
They signed Vitor Roque as an ‘emergency’ replacement for long-term injury victim Gavi. However, under La Liga rules, the young Brazilian attacker is only registered until June 30. After that, he is ‘unregistered’, and space within the salary limit must be made to add him permanently to the squad.
Barca agreed to pay up to €61million (the initial fee was €30m) to sign the 18-year-old from Athletico Paranaense, and the wages paid to Roque over the second half of this season get automatically subtracted from the total available to the club for 2024-25, as required by the details of the ‘emergency injury replacement’ regulation.
Yet again, Laporta’s board have used a temporary quick-fix to register a player, without really dealing with the huge underlying problems in their squad cost and club finances.
La Liga maintains that the €40million Barca expected from Libero within their current season budgets must be made up somehow.
La Liga has also already factored €60million from the Barca Studios lever, which was to be paid by next June (€30m each from Socios and Orpheus, under the agreement from 2022), into their salary calculations for this season.
If they don’t pay that money, it would leave a €100million shortfall in Barca’s 2023-24 accounts, with no significant new ‘levers’ that can be pulled to make that amount up due to the above-mentioned tightening of La Liga’s rules in November 2022.
Selling high earners, such as Lewandowski or Frenkie de Jong, by the end of the Spanish tax year (June 30) would be very useful for improving Barcelona’s financial situation. But the first €100million raised will have to go towards balancing their 2023-24 budget. Until that happens, La Liga would not allow a single euro to finance spending on new signings this summer.
Even then, only 50 to 60 per cent of any further money raised or saved via transfers could be spent on new players, given they have exceeded their 2023-24 salary limit.
Securing loanees Joao Felix and Cancelo on permanent deals, as Deco has suggested is a priority, will be very difficult to achieve, given their hefty wages and the sizable transfer fees the parent clubs Atletico Madrid and Manchester City would require.
More immediately worrying for Barca is that, as things stand, Vitor Roque and defender Martinez are set to drop out of their La Liga squad on June 30. Both would then, in theory at least, be free to join another club on a free transfer.
Sources have told The Athletic that Barcelona have given assurances that all will be fine, and that both will be registered to play for them next season.
Whether through levers, personal guarantees or other creative methods, the club have previously always managed to register all the players they wanted, from Lewandowski to Joao Felix to Vitor Roque.
But these continuing deep issues with their finances mean room for manoeuvre in the next transfer window is likely to be even tighter than in the summer of 2022 and 2023.
The problems are not confined to Spain — UEFA’s financial experts have also been keeping a close eye on Barca’s financial dealings.
In July last year, Barca were found guilty by UEFA of “wrongly reporting, in the financial year 2022, profits on disposal of intangible assets (other than player transfers) that are not a relevant income under the regulations”.
This was UEFA’s club financial control body (CFCB) disagreeing with Barcelonaa’s inclusion of €267million raised by selling 10 per cent of future La Liga TV rights to Sixth Street within that financial period. By the CFCB’s reckoning, Barca’s accounts should have shown a significant loss — and a €500,000 punishment was imposed.
Barcelona appealed but, in November, UEFA’s CFCB appeals chamber upheld the decision. Barcelona could appeal again, this time to the Court of Arbitration for Sport, but have not done so yet.
That €500,000 fine now looks like only the start of Barca’s problems when it comes to UEFA’s classification of the ‘levers’ money included in their accounts.
UEFA’s latest financial sustainability and licensing rules will be used by the CFCB for the first time when reviewing all club accounts submitted before the 2024-25 season. These maintain the prohibition on including profits on disposal of intangible assets in clubs’ profit and loss calculations. Calculations are done over a three-year period, and allow for losses of €60million (up from €30m) in that time.
Barca’s most recent accounts, for the 2022-23 season, claim a net profit of €304million, even after the levers of summer 2022 brought a 39 per cent annual increase in their staff costs, raising the wage bill to €639m — the biggest in world football.
That €304million ‘profit’ was made possible by including the second €400m ‘lever’ deal with Sixth Street as income, as well as €200m booked from Socios and Orpheus for shares in Barca Studios (even though Barca have yet to receive most of that money, and there are concerns over whether they will see it, as we explained above).
Last October, club vice-president Eduard Romeu was asked about including the Barca Studios money in the club’s accounts. “It is nothing strange,” he said. “We could call it financial engineering, but it is nothing more than applying the accounting plan.”
But when UEFA’s experts look at Barca’s accounts before next season’s Champions League, if they approach the ‘levers’ income as they have done before, they are likely to again find that Barca have wrongly reported income from non-transfer sources. And instead of a profit, it will look to the CFCB like a far bigger loss than the one from 12 months before.
The CFCB’s procedural rules say that committing a similar offence within three years of a past offence (“recidivism”) counts as an “aggravating circumstance” and merits a more serious punishment. Last month, Germany’s Welt Am Sonntag newspaper reported that Barca’s likely offence was so serious that it could mean exclusion from the 2024-25 Champions League. UEFA has told The Athletic that report was “pure speculation”, pointing out that its assessment of accounts before the 2024-25 season has not yet started.
However, there are precedents of such serious sanctions: Italian side Juventus were excluded from European competition this season and fined €20million (€10m of which was suspended) due to repeated violations of UEFA’s financial regulations.
Barcelona say they are confident they will not face such a punishment, and also that their continuing promotion of a European Super League to replace the UEFA’s three club competitions will not count against them either.
Still, the possibility of not being in the expanded 2024-25 Champions League — either through a UEFA punishment or Xavi’s team not finishing in La Liga’s top four (they are fourth, two points ahead of Athletic Bilbao, who have played one game more) — is something that anybody considering taking the soon-to-be-vacant manager’s job should at least keep in mind.
“Barca’s only financial solution is to sell a part of the club — as Bayern Munich have,” Jaume Roures said on Spanish radio on Sunday. “We have to take the bull by the horns, and finally resolve the club’s financial problems.”
This apparent threat to Barcelona’s cherished socio-owned model was particularly concerning for many of their fans, especially as 1) Roures is a close associate of Laporta, and 2) his Orpheus Media company is involved in the Barca Media lever.
The idea of selling off a chunk of the club to foreign investors is anathema to almost everyone in their native region of Catalonia. But the options for Laporta and the board are increasingly limited. Neither La Liga nor UEFA is willing to accept more ‘levers’ — short-term schemes to raise money to fill holes in the accounts.
Other financial problems continue, too.
Playing at their temporary Montjuic home this season and into the next during extensive work to upgrade the Camp Nou will cost at least €78million in lost earnings, while repayments of €40m per season to Sixth Street for the ‘leveraging’ of their domestic TV rights have already begun.
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Barca’s projected budget for the 2023-24 season showed an €8million profit, but this now looks optimistic. Industry sources continue to insist that the only way for them to break even is to sell first-team players, both for income in this season’s accounts and to cut the wage bill for the next set.
Any manager coming into this situation will have to be realistic about what is possible.
There will be pressure to sell players they would rather keep, and the current squad’s most valuable assets are its most promising younger stars.
Senior figures at the club dismiss the idea its socios model could be in any way endangered, and continue to maintain that the situation is not as bad as it might seem, thanks to long-term plans by Laporta and his board.
Returning to a renovated (but not totally finished, at only two-thirds capacity) Camp Nou by late this year will bring a significant boost in matchday and commercial income, last month’s European Court ‘victory’ for the promoters of the European Super League keeps alive the hope of a new competition that Laporta has claimed would guarantee €300million extra for the club each year, and a potential change of kit supplier could also provide a big financial boost.
“The club is under control in institutional, economic and social aspects,” Laporta said in his message to fans after Xavi’s shock announcement last weekend.
Barca supporters, and their next manager — whoever that person turns out to be — will really want to believe that is true.
(Top photo: Joan Valls/Urbanandsport/NurPhoto via Getty Images)
