Thread by @SwissRamble

#FCBarcelona 2021/22 accounts cover a season when they finished 2nd in La Liga and were eliminated at the group stage of the Champions League before reaching Europa League quarter-finals. Head coach Ronald Koeman was replaced by Xavi in November. Some thoughts follow.

#FCBarcelona swung from €555m pre-tax loss to €124m profit (€98m after tax), including €266m gain from TV rights sale. Revenue rose €48m (8%) to €639m and profit on player sales increased €24m to €28m, while operating expenses and interest payable were down €44m & €17m.

#FCBarcelona improvement in the bottom line was also driven by much lower once-off costs, as they had booked €271m in prior year following the Due Diligence report, including €161m player impairment and €110m provisions (law suits, tax cases). 2022 included net €6m reversal.

#FCBarcelona included €267m gain from sale of 10% of La Liga TV rights to Sixth Street, their first economic lever. The  €400m gain from sale of another 15% will be booked in 2022/23 accounts. These sales deliver €667m in total, but club will pay €41m per annum for 25 years.

That means #FCBarcelona will pay more than €1bln over the life of this agreement, but financial vice-president Eduard Romeu said the deal was better than La Liga’s CVC agreement (8.2% over 50 years), as that had no buyback option and prevented the club joining a future ESL.

In addition, #FCBarcelona also sold 49% of Barca Studios (excluding Barca TV & Productions) to Socios.com and Orpheus Media for €200m. Including €400m TV rights sale, 2022/23 accounts will therefore be boosted by €600m once-off profit, giving total gain of €867m.

#FCBarcelona have not ruled out further levers, including the sale of 49% of Barca Licensing & Merchandising, looking for at least €300m. However, president Joan Laporta said, “We cannot be activating levers forever.” Romeu added, “One lever could also be the sale of a player.”

#FCBarcelona would have reported €142m pre-tax loss without €266m TV rights gain, compared to Real Madrid €296m loss if €316m gain from stadium revenue sale to Sixth Street is excluded. Adjusting for once-off provisions would give similar losses: Barca €151m, Madrid €127m.

The return of fans meant increases in #FCBarcelona competitions, up €53m to €61m, and season tickets, up €33m to €49m. However, broadcasting fell €31m (11%) to €250m, partly due to deferred income in prior year, while marketing slightly decreased by €3m to €267m.

As a technical aside, #FCBarcelona definition of €1,017m revenue (the club’s “highest ever”) is different from the international figure of €639m operating revenue, as it includes €266m TV rights sale, €43m gain on player sales and €68m from impairment & provision reversals.

#FCBarcelona managed to lower wages by €33m (7%) from €490m to €457m (football €402m, other sports €55m) and player amortisation by €42m (27%) from €155m to €113m. However, depreciation rose €6m (30%) to €26m, while other expenses also increased €24m (15%) to €189m.

Thanks to activating levers, #FCBarcelona €124m pre-tax profit is the highest in Spain, ahead of Real Madrid €20m. The losses reported by other clubs are a bit misleading, as their most recent figures are from 2020/21, which was severely impacted by the COVID pandemic.

This was in stark contrast to 2020/21, when #FCBarcelona posted football’s highest ever loss after tax of €481m. In fairness, UEFA said that accumulated losses of European clubs in 2020 and 2021 were €6 bln, but Barca’s €689m pre-tax deficit was comfortably the worst.

Clearly, COVID has had a huge impact on finances with #FCBarcelona estimating a revenue loss of €447m in 2020 and 2021, as games were played behind closed doors, exacerbated by the closure of retail stores and the club museum. However, total losses also reflect poor management.

#FCBarcelona profit on player sales rose €4m to €28m, but much less than Real Madrid €62m. The €43m gain reduced by €15m loss from contract terminations. Mainly Emerson Royal to #THFC, Ilaix Moriba to RB Leipzig & Junior Firpo to #LUFC. Messi left for PSG on a free transfer.

Before the large losses in 2020 and 2021, #FCBarcelona had reported profits 8 years in a row, amounting to a quarter of a billion. Club has budgeted a €366m pre-tax profit in 2022/23 (€274m after tax), thanks to the inclusion of €600m from activating more economic levers.

One reason for #FCBarcelona financial issues is a steep decrease in profits from player sales, which have fallen from €208m peak in 2018 (mainly Neymar to PSG) to €28m in 2022. Indeed, their €72m profit in the 2 COVID years was only around a third of Real Madrid €207m.

#FCBarcelona operating loss, excluding player sales & exceptional items, improved from €238m to €146m, though has fallen from €22m profit in 2017. To be fair, most clubs post operating losses, but Barca’s result was one of the worst in Spain, only beaten by Real Madrid €186m.

#FCBarcelona revenue is down €213m (25%) from 2019 pre-COVID €852m peak to €639m, though budgeted to rise to €780m in 2023. Using club’s definition (including player sales & economic levers), next year should be record €1,255m (Barca Studios €200m sale in Financial Income).

Despite the increase, #Barcelona €639m revenue is still €83m less than Real Madrid €722m, though much higher than other domestic rivals. In 2019 the roles were reversed with Barca €84m ahead, which means that there has been a €167m revenue swing in just 3 years.

#FCBarcelona dropped 3 places from 1st to 4th in the 2020/21 Deloitte Money League, their worst position since 2014. Their €582m revenue was a fair bit behind #MCFC €645m, Real Madrid €641m and Bayern Munich €611m, but ahead of #MUFC €558m, PSG €556m and #LFC €550m.

#FCBarcelona marketing & advertising revenue fell slightly to €267m, nearly £100m less than 2019 €363m peak, and below Real Madrid €290m. Fifth highest in Europe in 2021. However, budgeted to recover to €369m in 2023 (Spotify deal, US summer tour, higher sponsorships).

#FCBarcelona have signed a new sponsorship deal with Spotify, but worth noting that this covers shirt, stadium naming rights & training kit. Based on the reported €70m, this is actually lower than the previous deals with Rakuten and Beko (though more than 2021/22 extensions).

In 2021/22 #FCBarcelona extended two sponsorships by a year for lower money: Rakuten shirt sponsorship from €55m to €30m and Beko sleeve/training deal from €19m to €10m. Current deals: Spotify €70m (4 years to 2026) and Nike €105m kit supplier (runs to 2028).

#FCBarcelona broadcasting income fell €31m (11%) to €250m, due to 2 factors: (a) Champions League exit at group stage; (b) prior year included revenue deferred from 2019/20 for games played after accounting close. Far behind Real Madrid €311m. 5th highest in Europe in 2021.

After years of individual deals in Spain, La Liga have introduced a collective deal, based on 50% equal share, 25% performance over last 5 years and 25% popularity (1/3 for average match day income, 2/3 for number of TV viewers). Gross income reduced by liabilities (7%).

Even after the changes, the big two still receive by far the highest TV income from La Liga’s TV deal. No figures yet for 2022, but in 2021 #FCBarcelona and Real Madrid got €166m and €163m, followed by Atletico Madrid €130m, then a big gap to Sevilla €84m and Valencia €73m.

The new 5-year €2.1 bln La Liga TV deal from 2022/23 is slightly up: domestic (Movistar and DAZN) €1.2 bln, overseas €0.9 bln. Although still far behind the Premier League €3.9 bln, it is much higher than other leagues: Bundesliga €1.4 bln, Serie A €1.1 bln & Ligue 1 €735m

Based on my model, #FCBarcelona earned €72m from Europe in 2022: Champions League group stage €64m plus Europa League quarter-finals €8m. This was much lower than Real Madrid’s €133m for winning the CL, and less than prior year’s €85m when Barca reached CL last 16.

It is worth noting the influence on Champions League distribution of the UEFA coefficient payment (based on performances in Europe over 10 years), where #FCBarcelona had the 3rd highest ranking in 2022, giving them €34m. This will fall as recent results have worsened.

#FCBarcelona have earned €432m from Europe in last 5 years, only surpassed in Spain by Real Madrid €497m. If they again fail to get through Champions League group stage, they will lose €20m (budgeted to reach QF) plus lower gate receipts, offset by EL money & smaller bonuses.

#FCBarcelona competitions revenue rose €53m to €61m, while season tickets were up €33m to €49m, due to return of fans to stadium with games played behind closed doors in 20/21. However, capacity was still “severely affected” by COVID restrictions at various stages in 21/22.

As a result, #FCBarcelona attendance was only 55,000 in 2021/22. Highest in La Liga, but much lower than pre-pandemic 77,000. Club’s match day income will be hit by having to play at the smaller Olympic stadium during the Camp Nou redevelopment.

#FCBarcelona Espai project, including Camp Nou redevelopment, increasing capacity from 99,000 to 110,000, will cost €1.5 bln, though should be “self-funded” by the projected additional €200m revenue per annum: naming rights, sponsorships, VIP boxes, tickets, catering & events.

#FCBarcelona football wages fell €30m (7%) from €432m to €402m, down from €501m 3 years ago, due to departures (notably Leo Messi), lower bonuses and players agreeing payment cuts and deferrals. Total wages, including other sports, decreased from €490m to €457m.

#FCBarcelona €402m wages overtaken by Real Madrid €478m for first time since 2017, but still €136m above Atleti €266m. However, 2023 budgeted to increase to €534m, because of new signings and deferred payments coming due. Second highest in Europe in 2021, only behind PSG.

#FCBarcelona squad spending limit increased from minus €144m to €656m for 2022/23, slightly below Real Madrid €683m. La Liga president Javier Tebas noted this was thanks to money generated by the economic levers, which was why they “registered players at the last minute”.

#FCBarcelona wages to turnover ratio improved from 73% to 63% (based on football wages only), though this was as low as 52% in 2017. This was one of the better performances in La Liga, around the same as Real Madrid 66%.

#FCBarcelona player amortisation, the annual cost of writing-off transfer fees, fell €42m (27%) from €155m to €113m, significantly lower than Real Madrid’s €164m, partly due to huge player impairment (write-downs) in the previous season.

#FCBarcelona financial issues are partly due to lavish spending on new players: their €1.2bln gross transfer spend in 5 years to 2021 was 2nd highest in Europe. However, they slowed down in 2021 & 2022, when they averaged just €86m a year, compared to €320m in previous 3 years

The use of levers allowed #FCBarcelona to spend €153m this summer to bring in Lewandowski, Raphinha and Koundé. This contributed to them having the highest gross spend in La Liga in last 3 years, though they were just outpaced by Atletico Madrid in net terms.

#FCBarcelona gross financial debt increased from €533m to €841m, though the good news is that this has been restructured with a 10-year €595m loan at 1.98% replacing old short-term debt. Since these accounts club has reduced debt by €125m using some of the levers cash.

#FCBarcelona restructured debt means that interest paid was reduced from €41m to €30m, though this has shot up from just €1m in 2018. The amount paid in 2021 was the highest in Europe, ahead of Atletico Madrid €30m, #MUFC €23m, #THFC €21m and Inter €20m.

#FCBarcelona reduced transfer debt by €38m to €193m, so this is down from €323m in 2020. Now lower than Atletico Madrid €196m, though Barca’s €231m payables were second highest in Europe in 2021. Mainly owed to #MCFC, Juventus and Ajax with over €100m due this year.

#FCBarcelona total debt (including wages, tax authorities debt and trade creditors) increased from €1.2bln to €1.5bln, just €60m more than Real Madrid (including €886m stadium debt). Worth noting that tax debt rose €100m to €148m. Only surpassed by #CFC and #THFC last year.

After adjusting for non-cash items, #FCBarcelona generated €173m cash in last 4 years, boosted by €491m player sales, then spent €763m on player purchases, €244m capex & €103m interest. However, cash increased by €338m due to €581m external loans and €246m sale of rights.

#FCBarcelona cash balance increased from €60m to €378m, though still lower than Real Madrid €773m. However, these high amounts are a bit misleading, as much is ring-fenced for stadium development, while balance always high before July semi-annual wage payment.

Of course, #FCBarcelona do not benefit from owner funding (loans and share capital), unlike many other leading clubs, whose business model is reliant on benevolent shareholders, e.g. in the last 10 years Inter and Milan received over €900m, with #CFC and #MCFC just under €800m.

#FCBarcelona were not included in the list of clubs given FFP penalty payments, though UEFA did note that were only able to technically fulfil the break-even requirement thanks to the application of COVID-19 emergency measures (and presumably the economic levers).

Laporta said #FCBarcelona still believed that the European Super League was “the solution that football needs”, which is unsurprising, given they would have received a €330m welcome bonus. The 3 clubs most keen on ESL (Barca, Real Madrid & Juve) lost €1.7bln in last 3 years.

While #FCBarcelona fancy financial footwork has enabled them to improve their finances in the short-term and sign new players, this strategy does come at a price, essentially hoping that it will drive success on the pitch and generate more money in the future.