With another transfer window closed, many still wonder how exactly does Barcelona keep signing star players even though the club reportedly has over €1 billion ($1.08 billion) in debt.

Betting on the future

The club has done this by getting loans using future revenue streams as collateral. Specifically, Barcelona has leveraged future ticket sales, media rights deals, and assets such as its production company Barça Studios to secure financing.

For example, Barcelona sold 25% of its LaLiga TV rights for the next 25 years to Sixth Street for €267 million ($317 million). This provided immediate funds for transfers like Robert Lewandowski by essentially mortgaging future broadcast earnings. Additionally, the club sold 24.5% stakes in Barça Studios, which produces media content, to raise around €200 million ($207 million) in cash now.

Barcelona is betting these media assets will appreciate in value, allowing them to repay loans down the road. This creative financing strategy gives Barcelona an influx of money right now to spend big on transfers and salaries. But the loans must eventually be paid back over a period of many years by generating revenues from sources such as ticket sales, broadcast rights, and Barça Studios growth. Essentially Barcelona has exchanged long-term financial flexibility for short-term spending power.

Barcelona buying new players? How we got here

Barcelona got in this tough financial situation mostly because they have spent more money than they’ve brought in the last few years. COVID-19 also hurt their finances. The debt grew from €217 million in 2014 to over €1 billion by 2021. Revenue also dropped from over €840 million in 2019 to €631 million in 2021 as the pandemic hit.

To navigate Financial Fair Play regulations limiting spending to 70% of revenue, Barcelona has turned to novel financing arrangements. The club initially reduced its wage bill by renegotiating contracts of veterans like Gerard Pique and Jordi Alba. More crucially, Barcelona convinced new signings to accept lower wages than they earned at previous clubs. For example, Lewandowski reportedly earns under €10 million ($10.8 million) at Barcelona versus €20 million ($21.7 million) at Bayern Munich. Other new arrivals like Raphinha also took pay cuts.

No room for errors in the short term

This high-risk financing strategy has given Barcelona payroll flexibility now, but greatly reduced its long-term spending power. The bets Barcelona placed on its media assets rising in value may not pay off down the road when debts come due. While creative financing has allowed player purchases despite financial fair play rules, years of austerity likely await. Debt repayments will restrict Barcelona’s budget just when these star signings exit their prime. The club essentially must achieve immediate on-field success and revenue growth to justify mortgaging its future. Past transfer missteps suggest Barcelona could be saddled with debts without sufficient income if signings flop or finances stagnate. With little room for error, Barcelona is gambling that short-term gains justify long-term pain. The coming years will reveal whether selling the future to improve today represents a masterstroke or a reckless mistake.

Bad business or future blueprint for other clubs?

While Barcelona’s financial maneuvers are clearly risky, they represent an innovative model for how other football clubs could leverage future assets to raise capital for present needs. If Barcelona’s gamble pays off and star signings catalyze increased revenues that allow debt repayment, this creative financing could be a blueprint for clubs seeking flexibility despite financial constraints. The potential success of mortgaging future earnings to fund current transfers may inspire other teams to follow suit. So Barcelona’s high-stakes approach could shape football finance for years to come by providing a template, if successful, for clubs to sign top talents by essentially borrowing against tomorrow.

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