Barcelona spent its way into crisis. Can it now spend its way out?
By Tariq Panja
Joan Laporta’s smile was hard to miss. Staring down from a vast digital billboard last month, the grinning image of the president of the Spanish soccer giant FC Barcelona covered almost an entire side of the Palms Casino Resort in Las Vegas.
The billboard scrolled through other images — there was one of a handful of Barcelona’s players, and another of its coach, Xavi Hernández — but soon enough it was back to Laporta. And it was that sight, a beaming president front and center in the gambling capital of the world, that was perhaps the best symbolism of the financial mess in which Barcelona currently finds itself, and of the boundless confidence of the man who says he has a plan to fix it.
Barcelona, in true Vegas style, is doubling down.
A team that less than a year ago was unable to meet its huge payroll; a business that, with losses of 487 million euros ($496 million) last year, was described by its own CEO as “technically bankrupt”; a club that is currently saddled with debt of more than $1.3 billion, has decided the best way out of a crisis caused by financial mistakes, rich salaries and extravagant contracts is to spend its way out.
It has sold off one club asset after another to raise roughly $700 million to help balance its books. Yet it is plowing ahead with a $1.5 billion project, with financing arranged by Goldman Sachs, to renovate and modernize its iconic stadium, Camp Nou, which because of the rush to raise funds will for the first time carry the name of a sponsor. And it has paid out more money on new signings this summer than almost any other major team in Europe, with a new flashy acquisition announced to great fanfare on a seemingly weekly basis.
The freewheeling spending has raised eyebrows among Barcelona’s rivals and concerns among some of its 150,000 members about the club’s financial viability if Laporta’s big bet doesn’t pay off. But the president, in an interview at the Manhattan headquarters of The New York Times, offered repeated reassurances that he knows exactly what he is doing.
“I’m not a gambler,” Laporta declared. “I take calculated risks.”
Risk, however, has become a fixture at Barcelona.
Laporta was elected club president for a second time last year after his predecessor and the previous board were ousted for what amounted to the simultaneous financial and sporting collapse of one of the world’s great sports teams. While many expected Barcelona to rebuild slowly, to live within its means in a period of humbling austerity, Laporta has decided instead to steer Barcelona on a completely different course. He says he has no choice but to try to win every year.
“It is a requirement,” he said.
More than $700 million has been raised by selling pieces of the club’s business. Twenty-five percent of the club’s domestic television rights — for a quarter century — went to a U.S. investment fund. Spotify, the music streaming service, signed a four-year deal to put its name on the Camp Nou and the even more valuable real estate on the front of the team’s jerseys. On Monday, Barcelona announced the sale of a quarter of its production business, Barca Studios, to a blockchain company, Socios. It is in talks to sell part of its licensing business next.
Instead of paying off club debt, however, the money has largely gone toward accumulating new talent: $50 million for Polish striker Robert Lewandowski, $55 million for French defender Jules Koundé, almost $65 million for Brazilian wing Raphinha. Several other players joined as free agents. More reinforcements may be on the way.
To Laporta, signing Lewandowski, who will soon be 34, and the others makes perfect sense. It is part of what he contends will be a “virtuous cycle” in which success on the field will shore up the team’s finances through an increase in revenue. The strategy is a repeat of the recipe he used during his first tenure as president, a seven-year period that started in 2003 and ended with a Barcelona team celebrated as one of the best in soccer history.
“In my time we put the expectations very high and we were successful,” he said of his previous tenure. “And then the Barça fans around the world, around 400 million fans worldwide, they require a level of success.”
But times, and revenues, have changed. The club that Laporta inherited in 2003 was mired in a financial crisis, too, with losses of almost double its revenue and mounting debts. But the figures were 10 times smaller back then, and the club had not yet begun the process of transforming itself into the commercial juggernaut it has become.
Those teams also were not required to meet exacting constraints on player spending that have since been enforced by the Spanish league, and it is those rules that pose the most immediate obstacle to Laporta’s revival plan. Because La Liga has insisted it will not ease the rules by a single euro for Barcelona, the club has not yet been able to register any of this summer’s new signings. Wary that the team might not make the deadline, the league has not yet used any of those players, even Lewandowski, the reigning world player of the year, in any of its branding for the new season.
The most recent asset sales should clear the way for Barcelona to meet La Liga’s financial rules and register its battalion of new signings, Laporta insisted.
“That’s been a decision that in honesty I didn’t want to do,” he said of the sales, even as they will — at least temporarily — push Barcelona’s balance sheet into profit.
That type of maneuver — a mix of boldness and brinkmanship — is typical of Laporta, who benefits from a cult of personality unmatched by previous presidents during the club’s modern history.
It is why he can put himself on Las Vegas billboards, and why he can continue to advocate publicly for the short-lived and widely reviled European Super League. (Barcelona, Real Madrid and Juventus — three of the 12 teams that signed up for the breakaway concept — are forging ahead with the project, which Laporta said is now being envisioned as an open competition that will benefit the biggest teams. He met recently with Andrea Agnelli and Florentino Pérez, his counterparts at Juventus and Real Madrid, in Las Vegas to discuss the next steps.)
Laporta’s popularity is also why he can get away with financial risks that most likely would have been unacceptable had they been proposed by previous presidents, and particularly his unpopular predecessor, Josep Maria Bartomeu.
“What would happen if Bartomeu did the same as the current president is doing?” said Marc Duch, a club member who helped oust the previous board. “We would all be on fire, pointing at him and trying to fire him.”
Laporta is granted a wider berth, and even backed by fanatical defenders on social media, Duch said, because of his links to the earlier golden era.
“There is a success story behind Laporta,” Duch said. “He has a huge fan base: He’s like the pope, like Kim Jong Un: the supreme leader.”