Barcelona: Back from the brink … levers

DavelinaJolie

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What's this letter of freedom bullshit the Barca fan keeps posting? You can't replace a multi million euro contract with a "letter of freedom"
It's another euphemism to put a positive slant on "terminating a player's contract".

How can the players possibly refuse terminating their contract doesn't have the same ring to it, does it?
 

prateik

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On the whole I agree with you, but a pay day loan isn’t as bad as selling off assets. Having said that though, if confirmed to be the true deal, the shit they’re trying to pull off reminds me of worldcom.
Sixth Street pays €517m for 25% of the TV rights for the next 25 years.
  • Barcelona pays €150m to acquire that percentage back from year 26 onwards.
  • Total: €667m
So Barca put in €150m right now into the company ? Then took it back and claimed it as revenue?

Also, Does it mean Barca have to pay Sixth Street €150m after 25 years to get their rights back?
 

yumtum

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It's another euphemism to put a positive slant on "terminating a player's contract".

How can the players possibly refuse terminating their contract doesn't have the same ring to it, does it?
Which reminds me, what happened to that player who got his contract terminated by Barca last year? Anyone remember his name?
 

Ragnar123

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They're fecked

2 days ago. Another example of todays journalism. We'll just have to wait and see. I'm pretty sure there is a plan b if no player leaves. Even if it means to sell another asset they don't want to (BLM). That would be the 5th and last lever. I hope Tebas is proud in crippling his own league because of an unforseeable pandemic and no, I'm not talking about only Barca, but 2/3 of the complete league.
 

King Kendrick

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So Barca put in €150m right now into the company ? Then took it back and claimed it as revenue?

Also, Does it mean Barca have to pay Sixth Street €150m after 25 years to get their rights back?
They set up a new company with 6th, which all TV revenues will flow through. 6th gets its cut, then after 25 years Barca pays 150m to get the 517m in lost revenue "back." They're now claiming 667m gained when adding those numbers up, which is stupid because they're essentially paying 150m to get the 517.

EDIT: after reading below, it looks like they paid 150m now, and 150m later. So 300m total.
 
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non profit football

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FC Barcelona, as reported by Pedro Morata on El Partidazo de Cope, has put money out of its own pocket to inflate the sale price of the first two levers: the sale of 25% of the TV rights to Sixth Street. Specifically at 150 million euros.

Barça claims, officially, to have sold the first two levers for 667 million, when in reality, according to the information, Sixth Street would have paid only 517 million. The other 150 kilos would have been put up by the Catalan club, with the aim of inflating the figures.

...

Sixth Street appears in Barca's life. Sixth Street is brought in by Key Capital, whose founders are Borja Prado and Anash Laghari. Barca and Sixth Street set up a subsidiary company called Locksley Invest S.L.. Both hold 50 %. Barça then sells its television rights for life to this company. Sixth Street buys only the rights for a period of 25 years and for an amount of 517 million. Barça puts another 150 million of its own money to buy its own rights from the 26th year (in 2048) onwards.


Then Barcelona, once this 'trick' is done, receives from Locksley Invest S.L. 667 million for that 25% sold. But of this 667 million, Barça itself has put up 150 million. The operation is accepted by the new company in charge of the Barça audit, Grant Thornton, obliging the subsidiary company to hold the rights for life.

The explanation for this ruse is that the club tried to get LaLiga to accept an income of 667 million for fair-play purposes, but LaLiga said no. The reason for this was that Barça were actually getting an income of 667 million. Because in reality Barça only received 517 million 'clean'. As the interpretation was not favourable, they have been forced to hastily sell the other two levers for 200 million more.

https://www.marca.com/futbol/barcelona/2022/08/05/62ed86fe22601d6c6d8b4589.html
 

King Kendrick

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2 days ago. Another example of todays journalism. We'll just have to wait and see. I'm pretty sure there is a plan b if no player leaves. Even if it means to sell another asset they don't want to (BLM). That would be the 5th and last lever. I hope Tebas is proud in crippling his own league because of an unforseeable pandemic and no, I'm not talking about only Barca, but 2/3 of the complete league.
Regardless of FFP, wouldnt you need to pull some levers anyways? If I'm not mistaken you had a shit ton of money in short term debt that had to be paid off either last or this year?
 

King Kendrick

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FC Barcelona, as reported by Pedro Morata on El Partidazo de Cope, has put money out of its own pocket to inflate the sale price of the first two levers: the sale of 25% of the TV rights to Sixth Street. Specifically at 150 million euros.

Barça claims, officially, to have sold the first two levers for 667 million, when in reality, according to the information, Sixth Street would have paid only 517 million. The other 150 kilos would have been put up by the Catalan club, with the aim of inflating the figures.

...

Sixth Street appears in Barca's life. Sixth Street is brought in by Key Capital, whose founders are Borja Prado and Anash Laghari. Barca and Sixth Street set up a subsidiary company called Locksley Invest S.L.. Both hold 50 %. Barça then sells its television rights for life to this company. Sixth Street buys only the rights for a period of 25 years and for an amount of 517 million. Barça puts another 150 million of its own money to buy its own rights from the 26th year (in 2048) onwards.


Then Barcelona, once this 'trick' is done, receives from Locksley Invest S.L. 667 million for that 25% sold. But of this 667 million, Barça itself has put up 150 million. The operation is accepted by the new company in charge of the Barça audit, Grant Thornton, obliging the subsidiary company to hold the rights for life.

The explanation for this ruse is that the club tried to get LaLiga to accept an income of 667 million for fair-play purposes, but LaLiga said no. The reason for this was that Barça were actually getting an income of 667 million. Because in reality Barça only received 517 million 'clean'. As the interpretation was not favourable, they have been forced to hastily sell the other two levers for 200 million more.

https://www.marca.com/futbol/barcelona/2022/08/05/62ed86fe22601d6c6d8b4589.html
This makes it seem like theres more to this deal than they let on. Itll come to light that 6th has to be a coowner in perpetuity in this new company.
 

King Kendrick

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I could be doing 2+2=5, but logically its the only thing that makes sense. A payday loan where you can get you your entire money back? Why set up a new company to just put the revenue in? of course, you can make the case of inflation rates, opportunity cost, etc. but why not just put the lump sum in escrow? Its either that, or theres a bunch of shady side dealing going on.
 

Mb194dc

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Ye with little faith.

Laporta is one of the most creative accounting or otherwise CEO in world football.
They will always find a way.
Until their revenue collapses again due to the dire economic environment?

My guess is they're going to face further severe financial problems in the next few years.

A lot of clubs will, Laporta has simply copied Bartomeu and the results will probably be similar.
 

Ragnar123

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Regardless of FFP, wouldnt you need to pull some levers anyways? If I'm not mistaken you had a shit ton of money in short term debt that had to be paid off either last or this year?
That short term debt was refinanced with the last big credit Goldman&Sachs gave them. €600m for 1.98%. Those levers are only for the ffp rules. Barca has now a ton of cash, with the upcoming 4th lever around €500m, but Tebas's ffp doesn't care. Only the Masa Salarial (wages+amortization) counts here.
 

OmarUnited4ever

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2 days ago. Another example of todays journalism. We'll just have to wait and see. I'm pretty sure there is a plan b if no player leaves. Even if it means to sell another asset they don't want to (BLM). That would be the 5th and last lever. I hope Tebas is proud in crippling his own league because of an unforseeable pandemic and no, I'm not talking about only Barca, but 2/3 of the complete league.
I think what Tebas/ La Liga is doing with enforcing Economic Controls is necessary to keep the league financially stable and prevent clubs from spending excessively on transfer fees and wages.
 

JPRouve

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I think what Tebas/ La Liga is doing with enforcing Economic Controls is necessary to keep the league financially stable and prevent clubs from spending excessively on transfer fees and wages.
And it's reasonable. There are many ways to stay within the rules and improve, if you are financially prudent.
 

Iker Quesadillas

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What's this letter of freedom bullshit the Barca fan keeps posting? You can't replace a multi million euro contract with a "letter of freedom" - Barca and a player has entered into a legally binding contract, in said contract there will be loyalty fees relating to transfers etc so simply saying "let's call it quits eh?" Won't cut it.
It's a fairly common expression in Spain. It just means that the club is not seeking to receive a transfer fee.
 

King Kendrick

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That short term debt was refinanced with the last big credit Goldman&Sachs gave them. €600m for 1.98%. Those levers are only for the ffp rules. Barca has now a ton of cash, with the upcoming 4th lever around €500m, but Tebas's ffp doesn't care. Only the Masa Salarial (wages+amortization) counts here.
Thanks for that clarification. You must be heavily cash flow negative then? Because besides for Frenkie (I'm assuming Griezz is off the books now) I dont see who would destabilize amortization that much (new signings + Ferran aside)
 

sglowrider

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I could be doing 2+2=5, but logically its the only thing that makes sense. A payday loan where you can get you your entire money back? Why set up a new company to just put the revenue in? of course, you can make the case of inflation rates, opportunity cost, etc. but why not just put the lump sum in escrow? Its either that, or theres a bunch of shady side dealing going on.
Setting up a new company is the fishy part. I bet if you dig deeper, some of the Barca officials have their sticky fingers as directors of some shell companies that are part of that ecosystem.

From almost terminal to ICU using morphine to make everyone feel/look good.
 

groovyalbert

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2 days ago. Another example of todays journalism. We'll just have to wait and see. I'm pretty sure there is a plan b if no player leaves. Even if it means to sell another asset they don't want to (BLM). That would be the 5th and last lever. I hope Tebas is proud in crippling his own league because of an unforseeable pandemic and no, I'm not talking about only Barca, but 2/3 of the complete league.
:lol:

Why spend a penny of the money raised from levers on any player when you knew full well how much you needed to clear to actually register players? Every penny raised from those should have gone towards debt management.

Also - be prepared to pay players what you owe them.
 

sglowrider

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This makes it seem like theres more to this deal than they let on. Itll come to light that 6th has to be a coowner in perpetuity in this new company.
If you think about it, it's a takeover of the club without the fans even knowing.

It's only a fan-owned club in name -- when you have these companies being owed all that money over a 25yrs period. Whoever controls the money has the power.

Bartomeu fecks things up --- and Laporta thinks 'where there are problems, there are opportunities.' And here we are. So in a time when they get into deeper financial straits, they will need to create more levers for these shadowy companies. In time the only thing the socias or fans own will be like Chelsea, the 'pitch'.
 

yumtum

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It's a fairly common expression in Spain. It just means that the club is not seeking to receive a transfer fee.
Granting a free transfer sounds different to unilaterally cancelling a contract (Barca have form with this), if players are owed money, then they will have to be paid, loyalty bonuses too.
 

Ragnar123

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Thanks for that clarification. You must be heavily cash flow negative then? Because besides for Frenkie (I'm assuming Griezz is off the books now) I dont see who would destabilize amortization that much (new signings + Ferran aside)
Yeah, the captains and Frenkie are a big part of the Masa Salarial. Braithwaite and Neto are also on big wages + amortization. That's why Barca met with Busquets and Pique recently to ask them to lower or deffer again. And they want to get rid of the latter two of course.
Before those levers, barca had a negative equity capital as the pandemic hit barca way harder than the other teams because of Bartomeu's spending and tourism stop, which was a big part of the revenue. Under the spanish ffp rules, that means barca (and 13 other LaLiga clubs now) was on the 1:4 rule. For every new 1€ they wanted to invest, they had to free up 4€ in Masa Salarial first. That means in wage and amortization. To sign Auba, Torres and Troure last season, Barca did exactly that. But it would cripple the competitiveness in the long run, so barca needed to get rid of the 1:4 ratio.
The first 2 levers (selling 25% TV rights to 6th Street) gave barca a positive equity. That means the 1:4 rule eased to an 1:1 ratio. With the new signings and no departures, barca's Masa Salarial is around €650m. Barca tried some tricks to enhance the €500m cash flow of the TV rights to €650m, but LaLiga didn't accept it. Now the only options available to reach those €650m are reducing the current wage&amortization in selling players or selling the remaining assets (next 25% of Studios and some % of BLM). But BLM is a difficult choice, because Laporta's board think it's worth way more than the current offer for it. Barca's Studios on the other hand doesn't generate much, because Barca has no experience in digital merchandise and selling half of it to a competent investor could very well be profitable in the end.
 
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Iker Quesadillas

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Granting a free transfer sounds different to unilaterally cancelling a contract (Barca have form with this), if players are owed money, then they will have to be paid, loyalty bonuses too.
I'm reading a bit on the subject now and it's more complicated than what I had assumed.

It sounds like the letter of freedom is related to the existence of release clauses in Spain. Those can determine how much a player has to pay to get out of a contract. The letter of freedom frees the player from those obligations. It seems like it does not actually free the club from paying the player's salary, though. They have to do that until the player signs for a new club. I'm not 100% sure of that part, but it's written in a few places.

But I guess it's the same thing, it's just a specific name for a common practice.
 

cyberman

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2 days ago. Another example of todays journalism. We'll just have to wait and see. I'm pretty sure there is a plan b if no player leaves. Even if it means to sell another asset they don't want to (BLM). That would be the 5th and last lever. I hope Tebas is proud in crippling his own league because of an unforseeable pandemic and no, I'm not talking about only Barca, but 2/3 of the complete league.
I’ve read that total La Liga debt is 56 percent more than before the pandemic. Don’t be blaming your league president for trying to reign that in since it’s clear your clubs don’t give a feck
 

yumtum

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I'm reading a bit on the subject now and it's more complicated than what I had assumed.

It sounds like the letter of freedom is related to the existence of release clauses in Spain. Those can determine how much a player has to pay to get out of a contract. The letter of freedom frees the player from those obligations. It seems like it does not actually free the club from paying the player's salary, though. They have to do that until the player signs for a new club. I'm not 100% sure of that part, but it's written in a few places.
I don't hold it against any player not trusting Barca to honour this bit, if I were Braithwaite I'd stay put until the money is paid.
 

Iker Quesadillas

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Braithwaite and Neto are also on big wages + amortization.
Braithwaite is not on big wages for a club of Barcelona's standing. According to this source, he's in the third tier of Barcelona wages. Fourth tier is basically young players or canteranos. His transfer fee was only 18m, too.

The club just wants to get rid of him.
 

King Kendrick

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Yeah, the captains and Frenkie are a big part of the Masa Salarial. Braithwaite and Neto are also on big wages + amortization. That's why Barca met with Busquets and Pique recently to ask them to lower or deffer again. And they want to get rid of the latter two of course.
Before those levers, barca had a negative equity capital as the pandemic hit barca way harder than the other teams because of Bartomeu's spending and tourism stop, which was a big part of the revenue. Under the spanish ffp rules, that means barca (and 13 other LaLiga clubs now) was on the 1:4 rule. For every new 1€ they wanted to invest, they had to free up 4€ in Masa Salarial first. That means in wage and amortization. To sign Auba, Torres and Troure last season, Barca did exactly that. But it would cripple the competitiveness in the long run, so barca needed to get rid of the 1:4 ratio.
The first 2 levers (selling 25% TV rights to 6th Street) gave barca a positive equity. That means the 1:4 rule eased to an 1:1 ratio. With the new signings and no departures, barca's Masa Salarial is around €650m. Barca tried some tricks to enhance the €500m cash flow of the TV rights to €650m, but LaLiga didn't accept it. Now the only options available to reach those €650m are reducing the current wage&amortization in selling players or selling the remaining assets (next 25% of Studios and some % of BLM). But BLM is a difficult choice, because Laporta's board think it's worth way more than the current offer for it. Barca's Studios on the other hand doesn't generate much, because Barca has no experience in digital merchandise and selling half of it to a competent investor could very well be profitable in the end.
That's where my question comes back in, as its transfer fee that is amortized over the length of the contract, with renewals allowing it to be spread further around (hence the Arthur swap deal allowing for creative accounting). Technically right now your books would show a profit of about $40m for Frenkie (no clue how variables are tabulated) if my math is right, even though obviously the sale amount is a little less.

I appreciate the full breakdown, and I understand WHY they did it, I just don't think its a financially prudent thing to do, and why many people in this thread are fascinated to watch. While it may be a drop in the bucket in the yearly budget, eventually the money gone will add up. I understand the need for competitiveness, but I think it would have been much more prudent to dial back your expected revenues from reaching certain stages of competitions, reconsolidate your position, and grow again in a healthier way. If yearly cash flows are so dependent on the overall stadium functionality, now would be as good a time as ever to reassess how to move forward. I understand fan expectations, but surely cutting off your arm to save your life would be better than (worst case) continuing forward having to become a quadriplegic.
 

Niemans

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Setting up a new company is the fishy part. I bet if you dig deeper, some of the Barca officials have their sticky fingers as directors of some shell companies that are part of that ecosystem.

From almost terminal to ICU using morphine to make everyone feel/look good.
If Barcelona sells the rights directly to Sixthstreet, €500M-25 years, that is accounted for as an income of €20M annually. And it does not serve Barcelona for the FFP.
Creating a third company accounts for €500M this year.

This has been explained by an economist named Marc Ciria.

I don't hold it against any player not trusting Barca to honour this bit, if I were Braithwaite I'd stay put until the money is paid.
The same thing has been done by Barcelona with Riqui Puig 2 days ago.
 

giorno

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Carta de libertad = club is renouncing a transfer fee for the player. It's not any more than that

Back on topic: it's the hope that kills me :(
 

yumtum

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The same thing has been done by Barcelona with Riqui Puig 2 days ago.
Quick Google search and it seems this was a regular transfer? Small fee for a player with 10 months left on his contract with a €10m buyback clause and a 50% sell on clause - hardly unilaterally ripping up a contract a la Matheus Fernandes.
 

bond19821982

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I refuse to believe that Lewa or his lawyers didn't think about this, given that this happened last year too. There is probably a getout clause if they are unable to register.
 

Summit

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What a weird way to run a football club and treat their current players..asking players to take a pay cut while signing the most players out of any club. Horrible club.
 

Ragnar123

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Braithwaite is not on big wages for a club of Barcelona's standing. According to this source, he's in the third tier of Barcelona wages. Fourth tier is basically young players or canteranos. His transfer fee was only 18m, too.

The club just wants to get rid of him.
That source confused gross with net. Griezmann earned €20m net. As did Dembele (€11m) with his first contract. Braithwaite is also on €5m net. Add the amortization of €18m/4 years of contract and you get the yearly cost of nearly €15m (10m gross + 4.5m yearly amortization) of Masa Salarial for a player, who doesn't have the skills for a club like Barca and who won't see a minute on the pitch anymore.
That's an example of Bartomeus heritage Laporta wants to get rid of. He costs the club €15m yearly just to go to training.
 

Iker Quesadillas

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That source confused gross with net. Griezmann earned €20m net. As did Dembele (€11m) with his first contract. Braithwaite is also on €5m net. Add the amortization of €18m/4 years of contract and you get the yearly cost of nearly €15m (10m gross + 4.5m yearly amortization) of Masa Salarial for a player, who doesn't have the skills for a club like Barca and who won't see a minute on the pitch anymore.
It's still not big wages.

Braithwaite would be useful enough in a normal context, but Barcelona just keep signing strikers. 2 in 2022. Of course he's not going to see a minute on the pitch, that's a situation the club created.
 

elmo

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That's where my question comes back in, as its transfer fee that is amortized over the length of the contract, with renewals allowing it to be spread further around (hence the Arthur swap deal allowing for creative accounting). Technically right now your books would show a profit of about $40m for Frenkie (no clue how variables are tabulated) if my math is right, even though obviously the sale amount is a little less.

I appreciate the full breakdown, and I understand WHY they did it, I just don't think its a financially prudent thing to do, and why many people in this thread are fascinated to watch. While it may be a drop in the bucket in the yearly budget, eventually the money gone will add up. I understand the need for competitiveness, but I think it would have been much more prudent to dial back your expected revenues from reaching certain stages of competitions, reconsolidate your position, and grow again in a healthier way. If yearly cash flows are so dependent on the overall stadium functionality, now would be as good a time as ever to reassess how to move forward. I understand fan expectations, but surely cutting off your arm to save your life would be better than (worst case) continuing forward having to become a quadriplegic.
Laporta doesn’t care. He’ll be voted out by the time it all starts to hit back and he’ll be claimed as a genius if they continued winning.
 

GinobiliTheGOAT

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Laporta doesn’t care. He’ll be voted out by the time it all starts to hit back and he’ll be claimed as a genius if they continued winning.
And rightfully so, the turnaround after a literal criminal with Barto has been great. We were 13th in la liga with Koeman less than a year ago