The economic crisis due to covid-19 leaves a hole of 97 million in Barça

The president of FC Barcelona Josep Maria Bartomeu, in the stands of the Camp Nou in the match against Sevilla.Alberto Estévez / EFE

The failure of Barcelona in the sporting results of last season (it closed the campaign without any title) continued in the financial year, which ended last June.

It took four months of the impact of the coronavirus to turn some accounts red eight years later, with 97 million euros of losses dragged by a general drop in income, impossible to reduce despite the cut in player salaries and other expenses.

The new context has also left uncertainty about when it will be possible to return to the path of profits and a certainty: a debt perched at 820 million euros after shooting 48% in a single year.

The effects of the pandemic resulted in a revenue contraction of 203 million compared to the initial forecasts, which left far from the claims of the board chaired by Josep Maria Bartomeu to exceed 1,000 million euros (1,059) in revenue.

"The obsession with increasing turnover was not an objective in itself, but to generate income to remain competitive," said Jordi Moix, the club's economic vice president.

The closure of the stadium and the impact on television and commercial rights was added a reduction in income from transfers and assignments (one of the club's bets in recent years to balance the accounts) in a market devalued by the crisis.

Efforts to reduce spending cuts did not come as fast as income fell, which meant that only one out of every three euros that was left could be saved.

"This crisis directly affects two key elements in football: attendance at stadiums and trips for international competitions, so the impact is greater than that of other crises," Moix stressed.

With the intention of assuming the pending payments, and the evolution that the club was showing previously, Barça has raised the total debt to 820 million, basically the bank, which goes from 271 million to 480. The board of directors calculates that the net balance (what he owes less what he is owed) stands at 488 million and far exceeds the limit set by the statutes, according to which Ebitda (gross operating profit) cannot be exceeded twice.

In this case, multiply it by 3.64.

"Barça is a boat in a very important storm and now it's time to row, adjust the boat to bring it to a good port and that the crisis affects as little as possible in the short term," explained the economic vice president.

The directive will wield a force majeure cause such as COVID so as not to have to assume the statutory mandate of financial planning to turn the situation around.

The initial hypothesis is that the downward trend in revenue continues and stands at 791 million euros.

This scenario, however, points to a difficult fulfillment due to the forecasts with which he has painted the picture: opening the stadium in December with a capacity of 25% to reach full capacity in February, and a progressive recovery of tourism in Spain that revitalize the activity of its stores.

Moix has not been able, in any case, to point to a return to the club's profits.

Despite the financial problems, the club intends to continue with Espai Barça, an urban and sports infrastructure operation with which it aims to achieve an extraordinary 150 million euros each year with, basically, the remodeling of the Camp Nou and the construction of a new Palau Blaugrana with a capacity for 15,000 spectators, as well as office and hotel spaces.

The project, however, will not cost the 600 million euros that the club initially estimated.

The total disbursement has risen to 725 million euros, a figure that jumps to 815 million euros due to the financial cost that its final execution will have.

“The project will continue without costing the partner money.

It will not put sports management at risk and the club's assets will not be mortgaged, ”Moix said.

Barça plans to sign the financing plan with the investment bank Goldman Sachs, which will have the collaboration of other financial entities to pay for the project.

The US entity will secure a 30-year contract (five years of works plus another 25) with an interest rate that will range between 3% and 4% per year.

The club will pay Espai Barça through a transfer of the collection rights of the 150 million that it plans to enter thanks to the new facilities (new boxes and sponsorships and the income derived from the commercial activity and the club's museum) and the Income from the sale of the rights to give the Camp Nou a commercial name.

This operation will be delayed until the new stadium is completed, predictably in 2025 if the new directive that comes out of the elections next March assumes in its entirety the project developed by the current directive.