This article analyses FC Barcelona finances in respect of the 2020/21 season.
Season Review
FC Barcelona endured a tumultuous season both on and off the pitch, finishing third in La Liga and being knocked out of the UEFA Champions League in the Round of 16. The season did not end trophyless, with a Copa del Rey glory secured.
Off the pitch, the club’s finances were severely damaged by COVID-19 and the results of playing squad investments in recent years. This resulted in Barcelona recording a loss before tax of over half a billion (€555m).
FC Barcelona Finances – Revenue
Revenue fell €132.8m (-19%) from €708.3m to €575.4m, largely due to the loss of matchday revenue.
Matchday
Matchday revenue had the biggest drop, falling from €136.1m to €23.7m (-83%). This was due to much of the season being played behind closed doors because of COVID-19. The return of fans in 2021/22 should result in much of this revenue being recovered, however the club’s fall into the UEFA Europa League (UEL), may result in lower gate receipts from these European home games.
Broadcast
Broadcast revenue (related to TV broadcast and TV rights) rose from €248.5m to €281.4m (13%), due to revenue deferrals because of the 2019/20 season being completed during the 2020/21 financial year (July and August), both in La Liga and the UCL.
Due to this deferral, broadcast revenue was likely to decline without strong performance in Europe and domestically. Therefore, the club’s failure to qualify for the knockout phases of the UCL for the first time since in over 20 years will result in a significant revenue decline, especially given the club’s exit at the UEL Quarter-finals stage.
Commercial
Commercial revenue fell from €323.7m to €270.4m (-16%), mainly due to the COVID-19 pandemic. This caused the club’s shops to be closed for most of the season, reducing merchandise sales. Commercial revenue may be damaged by the club’s disappointing UCL campaign, however the return of fans to the Nou Camp and the reopening of the club shop should see commercial revenue increase in 2021/22.
The Catalans new Spotify kicks off in 2022/23 and is reported on improved terms of c.€70m p.a. vs. €55m p.a. in its current Rakuten deal. Please note, the Spotify deal also includes rights to the women’s team and Nou Camp, which Rakuten did not.
FC Barcelona Finances – Revenue summary
The COVID-19 pandemic and the resulting health restrictions have taken a toll on FC Barcelona’s financial health. The easing of COVID-19 restrictions and resumption of ‘normality’ will see revenue recover, however the team’s UCL failures will dampen this.
FC Barcelona Finances – Operating costs
Operating costs rose €56m (8%) to €785.4m. This was largely driven by the recognition of various expenses for accounting purposes following a financial review at the club.
Wages
FC Barcelona’s wage bill rose slightly from €487.1m to €489.6m (1%). The marginal increase was subdued because of the club’s performances leading to lower bonuses.
The minor wage increase and steep revenue decline resulted in a rise in the wages to revenue ratio (from 69% to 85%).
This should decline in 2021/22 due to the shock departure of Lionel Messi and the recovery of matchday revenue.
Other costs
Other operating costs rose from €224.3m to €275.9m (23%). This was due to various expenditure relating to tax, legal, provisions and other costs being recognised for accounting purposes. The board of directors commissioned a financial review which resulted in this increase.
FC Barcelona Finances – Operating costs summary
FC Barcelona knew they required to decrease its cost base and had planned to reduce the sporting payroll by 24%. However, the much-publicised issues in doing so meant this was not possible and led to the departure of Messi but not other high-earners. The club continues to look at ways to manage its wage bill but faces pressures to remain competitive which makes this a tough challenge. With Coutinho on a successful loan spell and some high earners coming to the end of their contract, Barca will be hoping to better manage its wage bill herein.
FC Barcelona Finances – Transfers
As far as net transfers go, FC Barcelona had a net transfer income of €34.3m, highlighting its inability to invest following disappointing but expensive signings in recent seasons (2019/20 saw a €148.1m net spend). The most notable 2020/2021 signings were Sergiño Dest (€21m), F. Trincão (€31m); and M. Pjanic (€60m). Major outgoing included of the 2020/2021 Arthur (€76m); I. Rakitic (€3.5m); L. Suárez (€7m); N. Semedo (€32m) and C. Pérez (€13m).
Amortisation
Amortisation of player rights increased by €141.2m (81%), from €174.0m to €315.2m. This was driven by the investments made over the past two seasons and contributed significantly to the huge loss incurred in 2021. The reduced spending in 2021/22 will likely see this fall.
Profit on player sales
FC Barcelona’s profit on player sales fell by €64.3m (-94%), from €68m to €3.7m. The sale of Emerson Royal and Firpo will likely see this number increase significantly and help reduce losses.
Transfer debtors / creditors
In 2021, FC Barcelona owed transfer fees amounting to €231.2m, while being owed only €37.6m, a net position of €193.6m. This has undoubtedly contributed to the club’s uncomfortable financial situation.
FC Barcelona Finances – Transfers summary
FC Barcelona’s financial issues are well documented, with its recent transfer record being a major factor. The return of Xavi and greater reliance on youth has led to results on the pitch and will be key to its financial recovery off it. Further sales will however be helpful in easing its financial issues, although the club has opted out of receiving cash from the CVC investment.
FC Barcelona Finances – Profitability
2021 saw FC Barcelona record a loss of over half a billion, driven by COVID-19 and exacerbated by its previous player trading.
Operating profit / loss before player trading
Before player trading, FC Barcelona recorded an operating loss of €193.6m. This represents a huge loss compared to a €1m profit in 2020. The return of matchday revenue should reduce this loss (dependant on its wage bill control). However, the club’s poor European campaign (and absence of revenue deferrals) will offset some of this recovery.
Operating profit / loss after player trading
After player trading, FC Barcelona recorded a whopping operating loss of €505.0m. This compared to a €100m loss in 2020, an increase of €400m (-381%). This was largely driven by the increase in player amortisation due to past signings, and lower player sales. An increase in player sales, reduced spending and the revenue recovery mentioned above should improve the situation
Profit / loss before tax
Before tax, FC Barcelona loss went from €133.2m to €555.4m (-317%). Net finance costs nearly doubled from €28.2m to €50.4m (78%).
FC Barcelona Finances – Profitability summary
FC Barcelona has not been profitable in recent years following significant investment and the outbreak of COVID-19. It will be challenging in the short term to return to profitability given performances on the pitch and its large cost base, however it can already be seen that the situation is improving. The club has however increased its debt levels considerably which will result in finance costs rising.
FC Barcelona Finances – Assets / Liabilities
When it comes to net assets, FC Barcelona went from €30.8m in net assets, in 2020, to €450.7m in net liabilities, in 2021, driven by the losses incurred.
Cash flow
FC Barcelona’s cash reserves fell from €162.2m to €60.4m. This was mainly driven by cash outflows from operations (€132.1m), player transfers (€3m) and capital expenditure (€15.2m). Cash inflows related to financing operations (€50.5m) were not sufficient to absorb these cash outflows. Barca’s cash position is likely to have improved, with it reported the CVC investment in La Liga will result in the club receiving €270m.
Debt
FC Barcelona’s debt rose from €317.6m to €472.2m. This was driven by the reduction in cash, but also increased bank borrowings (rising by over €100m) following its JP Morgan loan.
FC Barcelona Finances – Final Remarks
It has been a challenging period for FC Barcelona in the past two seasons. The pandemic compounded an already difficult period, with the club seemingly working hard to recover on and off the pitch. The improved performances under Xavi and focus on cost control, combined with CVC’s investment and its €500m JP Morgan loan have renewed optimism. However, the loans and cash inflows are short term saviours with repayment terms and associated financial costs, with the club needed to be more prudent to avoid issues resurfacing in the future. It remains to be seen how long the recovery will take financially, but fans will be focussed on its return to the top in Europe and domestically.
We would also love to hear any feedback on this article, our website or if you would like to contribute! Please use the form below and have a great day.
