Real Madrid and Barcelona's debt

manutddjw · Jan 26, 2021

How do the Spanish clubs get to this point of ridiculous spending? For every player that goes there or is even linked with them, they all dream of Madrid or Barcelona so why are they paying them such huge salaries? Had we matched or exceeded Madrid’s offer for Ronaldo we still wouldn’t have been able to keep him such is their appeal to a lot of players.

With respect to Messi’s salary you have to ask why. Very few clubs could afford the transfer nor would they ever approach 1 million in salary for the player. Prime Messi wasn’t going to PSG and give his best years to the French league.

Kyonn · Jan 26, 2021

Adnan said:
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That last part about wages is the most concerning. When a business gets to the point of missing payroll things are in serious trouble.

Kaos · Jan 26, 2021

Not being able to pay player wages bemuses me, they're FC Barcelona not Leyton Orient ffs, how badly have they managed their finances :houllier:

GifLord · Jan 26, 2021

Kyonn said:
That last part about wages is the most concerning. When a business gets to the point of missing payroll things are in serious trouble.

Inter have similar issues

RedDevilzFox · Jan 26, 2021

Does anyone know the most current and detailed finances of Man United? Wonder what kind of, if any, deep doo doo are we in given we are not oil funded and have owners that actively take money out of the club.

In short, what's been the impact of COVID etc been? Our debt was already large (although not to the level of Barca). Has it gotten worse, if so, how worse?

Kyonn · Jan 26, 2021

RedDevilzFox said:
Does anyone know the most current and detailed finances of Man United? Wonder what kind of, if any, deep doo doo are we in given we are not oil funded and have owners that actively take money out of the club.

In short, what's been the impact of COVID etc been? Our debt was already large (although not to the level of Barca). Has it gotten worse, if so, how worse?

United is a publicly traded company and thus, by law, must release their financial statements.

https://ir.manutd.com/financial-information/annual-reports/2020.aspx

RedDevilzFox · Jan 26, 2021

Kyonn said:
United is a publicly traded company and thus, by law, must release their financial statements.

https://ir.manutd.com/financial-information/annual-reports/2020.aspx

That assumes everyone knows how to read a financial statement. Can you do a TL DR?

Kyonn · Jan 26, 2021

RedDevilzFox said:
That assumes everyone knows how to read a financial statement. Can you do a TL DR?

Financial statement analysis is one of the most boring and difficult things in finance and far from my strong area (but I do work in corp accounting/finance). GAAP provides companies a fair bit of leeway on how/when to book certain revenues and expenses so things aren't always what they seem.

Balance sheets tend to be the easiest to understand and just taking a quick glance the one thing that really stands out is the large drop in cash. From just over £300M on 30/6/19 to just over £50M on 30/6/20.

flappyjay · Jan 26, 2021

manutddjw said:
How do the Spanish clubs get to this point of ridiculous spending? For every player that goes there or is even linked with them, they all dream of Madrid or Barcelona so why are they paying them such huge salaries? Had we matched or exceeded Madrid’s offer for Ronaldo we still wouldn’t have been able to keep him such is their appeal to a lot of players.

With respect to Messi’s salary you have to ask why. Very few clubs could afford the transfer nor would they ever approach 1 million in salary for the player. Prime Messi wasn’t going to PSG and give his best years to the French league.

Had a chat about this with my brother the other day, players talk about their dream to play for the Spanish big 2 and then proceed to get Chinese league wages. Makes me wonder if Griezmann is really a United fan but was swayed by the 800k a week we were never going to pay him. He would have been lucky to get half of that from us.

Mb194dc · Jan 26, 2021

GlastonSpur said:
Bailed out? Spurs have one of the best credit ratings going. Many banks are very happy to lend money to us, seeing as we are one of the most valuable clubs in world football and generally - the Covid-era aside - make big profits.

Yes bailed out:

https://www.ft.com/content/d0157351-9745-4640-8db3-cfc56a043eab

My guess is Spurs will have to borrow even more as this drags on and on due to the stadium which can't be used. I am wondering what happens if Spurs default? Bank of England and others take over the club? Daniel Leverage indeed.

Tomics · Jan 26, 2021

I think Messi and other players should agree to a significant pay cut if they truly love the club especially if they are on the verge of bankruptcy.

Personally, that is what I will do if I am a player to a club who gave me so much. I will even go as far as playing for free for a short term if it means it will help the club in anyway

RoyH1 · Jan 26, 2021

stubie said:
Aren’t Barcelona having the Nou Camp redeveloped as well?

It's still in the planning stages and by the look of it, will remain that. way for a long time

yumtum · Jan 26, 2021

The fact that these two existing is basically throttling the other La Liga clubs by hogging all the money from TV deals etc and are still managing to be in the financial peril they're in should be met with scorn.

No wonder they're desperate for the Super League - seem to remember them proposing that the only clubs that couldn't get relegated were them :lol:

amazingly arrogant clubs.

Acrobat7 · Jan 26, 2021

https://www2.deloitte.com/uk/en/pag...articles/deloitte-football-money-league.html#

Pep's Suit · Jan 26, 2021

If only FFP was created to deal with debts instead of protecting elite clubs from new competition.

GatoLoco · Jan 26, 2021

Omg Bartomeu. I knew he was bad, but I would have never imagined he was going to be that bad.

Alemar · Jan 26, 2021

Dumbstar said:
Barca still owe Liverpool 70m euros?!!

Feck me, I finally understand the meaning of "the gift that keeps on giving".

Yea, that was news. You sold them players like 10 years ago, and they still owe you 70m, madness

Alemar · Jan 26, 2021

Bwuk said:
We should offer them what they owe Ajax for De Jong.

He’s exactly what our midfield needs at #6.

I would offer them some 40m for Ansu Fati as well to give a helping hand

Jeppers7 · Jan 26, 2021

Pep's Suit said:
If only FFP was created to deal with debts instead of protecting elite clubs from new competition.

Yes would be super wouldn’t it, everyone waiting around to see if it would be them taken over next. Forget what clubs have done in the past and how they built up their clubs, how well they’ve been managed. Nah let’s piss money up the wall like City did for 30 years, be an absolute embarrassment to the city of Manchester.....then profit from that because that makes our selling price really cheap, thus making us an ideal opportunity for an investor especially given the spotlight we can get due to our neighbours being one of the biggest clubs in the world.....Sounds really idealistic

cyberman · Jan 26, 2021

Dumbstar said:
Barca still owe Liverpool 70m euros?!!

Feck me, I finally understand the meaning of "the gift that keeps on giving".

Nope. You are fully paid. They owe the bank that paid you the fee now

Sean_RedDevil · Jan 26, 2021

This is very interesting too.

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ATXRedDevil · Jan 26, 2021

RedDevilzFox said:
That assumes everyone knows how to read a financial statement. Can you do a TL DR?

Kyonn said:
Financial statement analysis is one of the most boring and difficult things in finance and far from my strong area (but I do work in corp accounting/finance). GAAP provides companies a fair bit of leeway on how/when to book certain revenues and expenses so things aren't always what they seem.

Balance sheets tend to be the easiest to understand and just taking a quick glance the one thing that really stands out is the large drop in cash. From just over £300M on 30/6/19 to just over £50M on 30/6/20.

TL DR is that we’re fine. Balance sheet speaks as of its date - 6/30. The postponement of the premier league and other competitions almost certainly meant revenue that is typically received in a calendar year by 6/30 was not received until after the close of our fiscal year. This makes comparability to prior years, where cash from tv and competition earnings would have hit the balance sheet by 6/30, difficult.

The 9/30 balance sheet shows cash and cash equivalents at about £59m, so about unchanged from 6/30, but we also paid transfer fees between 6/30 and 9/30.If we continue to lose match day revenue past this season, I wouldn’t expect a ton of transfers, but we’re far from in trouble.

DannyCAFC · Jan 26, 2021

Unsurprising - they were already in debt years ago at their peak and since then it's spiralled, Messi's wages have snowballed which has completely destroyed their wage structure, and they've spent massive amounts of money on individual players since then.

Griezmann, Coutinho, Dembele and De Jong have cost around £430m in transfer fees and probably upwards of £1.2m p/w in wages alone.

Lastwolf · Jan 26, 2021

Kaos said:
Not being able to pay player wages bemuses me, they're FC Barcelona not Leyton Orient ffs, how badly have they managed their finances

Leyton Orient wage bill is 1.8million per year, or 150k a month, if things where going bad you could leverage some assets or loan money to the club to cover them for the rough patch. It's not great but that's manageable I reckon for a moderately rich owner to cover cash flow issues.

Barca's wage bill is is much much higher, 340million, so thats 30mil in cash they need each month. They don't have a bankroll owner like Chelsea or City and they are by all accounts already leveraged out the ass, so covering that gap can be harder.

Kaos · Jan 26, 2021

Lastwolf said:
Leyton Orient wage bill is 1.8million per year, or 150k a month, if things where going bad you could leverage some assets or loan money to the club to cover them for the rough patch. It's not great but that's manageable I reckon for a moderately rich owner to cover cash flow issues.

Barca's wage bill is is much much higher, 340million, so thats 30mil in cash they need each month. They don't have a bankroll owner like Chelsea and they are by all accounts already leveraged out the ass, so covering that gap can be harder.

Stop it, I wasn't expecting a sensible, thorough explanation as to why, I just wanted to shit on Barca!

cafecillos · Jan 26, 2021

These are today's front pages of the two biggest Barça-centered newspapers:

No, you're not missing anything due to the translation, there's literally no mention of the economic situation

spaceboyRSA · Jan 26, 2021

Kaos said:
Stop it, I wasn't expecting a sensible, thorough explanation as to why, I just wanted to shit on Barca!

Nothing wrong with shitting on Barca. Im looking forward to those guys from Operation Repo knocking on the Nou Camp doors wanting to repossess players. "It ain't no joke, you gonna pay that note!"

One can dream.

DannyCAFC · Jan 26, 2021

meneillosRC said:
These are today's front pages of the two biggest Barça-centered newspapers:

No, you're not missing anything due to the translation, there's literally no mention of the economic situation

Barca board after reading Balague's tweets:

dinostar77 · Jan 26, 2021

Epic financial mismanagement from Barcelona board. Will take years post Messi to resolve. As they are the symbol of catalonia im sure the catalonia banks will help them.

I think they were ok until that semial summer when PSG took neymar away from them. It seems to have caused a schism in the club and they pissed money up the wall on 100m+ transfer fees for players they didnt need.

They need to let Messi leave. Trust their academy players. Stick to free transfers and players in the last years of their contracts and try to get the debt down. Maybe accept that for a few years CL qualification will have to be the target.

Dumbstar · Jan 26, 2021

cyberman said:
Nope. You are fully paid. They owe the bank that paid you the fee now

It's very confusing for the likes of us finance haters. The tweet below your post shows money owed to clubs rather than money owed to banks for certain players.

It's probably somewhere in between legally speaking. I'll have to read through LFC forums to find out more. Reading through Hicks and Gillette stuff 10 years ago was bad enough.

GlastonSpur · Jan 26, 2021

Mb194dc said:
Yes bailed out:

https://www.ft.com/content/d0157351-9745-4640-8db3-cfc56a043eab

My guess is Spurs will have to borrow even more as this drags on and on due to the stadium which can't be used. I am wondering what happens if Spurs default? Bank of England and others take over the club? Daniel Leverage indeed.

I've news for you: every club in the Prem has a stadium that can't be used due to Covid-19. And so every club in the Prem is taking a financial hit. Manchester United, for example, reported a $91m loss in the period to June 30, 2020.

The article you cite actually points the excellent credit rating of Spurs, a rating that has enabled a Covid-related loan from the Bank of England at lower interest rates than those available to almost all other Prem clubs.

ICHM · Jan 26, 2021

Fire sale in the summer.

red4ever 79 · Jan 26, 2021

Tomics said:
I think Messi and other players should agree to a significant pay cut if they truly love the club especially if they are on the verge of bankruptcy.

Personally, that is what I will do if I am a player to a club who gave me so much. I will even go as far as playing for free for a short term if it means it will help the club in anyway

Why? They have a contract that the club presented to them. Club should honour that.

Ali Dia · Jan 26, 2021

flappyjay said:
Had a chat about this with my brother the other day, players talk about their dream to play for the Spanish big 2 and then proceed to get Chinese league wages. Makes me wonder if Griezmann is really a United fan but was swayed by the 800k a week we were never going to pay him. He would have been lucky to get half of that from us.

why on Earth did they pay him 800k a week when they were the only interested club he where could still move up. Stupid stupid move on their part. It’s like having Sanchez x 2. Messi while being the GOAT is being way overpaid for a guy on the way down and the power they gave him. Coutinho.... Dembele...each one just making the mess bigger. That’s exactly where we were heading before Ole came, buying names and thinking big wages and fees will equal success. A smaller less risky version of the same approach which guarantees nothing and can leave the club in a hugely expensive mess

HTG · Jan 26, 2021

The funny thing is how many of those horrible transfers aren’t even there anymore. Coutinho being the worst one. Overpaying for him to get there, loaning him out to the club that would humiliate them in the cl and still owing Liverpool money for him. That’s just incredible. :lol:

golden_blunder · Jan 26, 2021

Certainly putting their ‘fan owned’ model to the test at the moment

RedDevilzFox · Jan 26, 2021

golden_blunder said:
Certainly putting their ‘fan owned’ model to the test at the moment

No model is perfect if you squander your money willy nilly which Barcelona certainly have. Buying players that either didn't fit or were simply overpriced and then paying even more over the top salaries.

Having said all that, I feel the media is sensationalizing it a little bit, I am sure they will figure it out. Getting Messi salary off the books would be a good start.

cafecillos · Jan 26, 2021

golden_blunder said:
Certainly putting their ‘fan owned’ model to the test at the moment

Particularly when the board has such a tight grip on the traditional media most of the "socis" get their information (propaganda) from. It's certainly not the panacea some seem to think it is.

Anyway, looking on the bright side, it's almost impossible to run the club more incompetently, so there's that I guess (if the club still exists after this, that is). They took one of the best teams in club football history and leave a cesspit instead. With the approval of the "socis", by the way.

cafecillos · Jan 26, 2021

RedDevilzFox said:
Getting Messi salary off the books would be a good start.

Instead of looking at the wages of the best and most succesful player to ever play for the club, we/the "socis" should be talking about almost everything else, starting by the 400M+ (+ roughly 60M on yearly wages) spent on Coutinho, Dembelé and Griezmann, two of which where absolutely unnecessary and ridiculous signings even at the time. Yes, Messi's wages are too high for his current output, but they're not even in the top 20 of most urgent/embarrassing stuff surrounding the club at the moment.

FrankDrebin · Jan 26, 2021

Funny thing is, Barca have very few players on their books that clubs would be willing to throw good cash at. Their top earners are the more experienced ones who, outside of Messi, Alba, Busquets and Pique, have been largely underwhelming and overpaid. Griezmann, Coutinho , Pjanic, Dembele , Umtiti etc. The only good fees they'll receive will be clubs interested in De Jong, Dest and Fati.

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