Javier Tebas, president of the Professional Football League (LFP), named this Tuesday the bankruptcy as a possibility for the clubs of the First and Second Division to solve the financial problems derived from covid-19. In the presentation of the salary limits of the 40 teams of the two main competitions, the Spanish soccer president cited the Barça as the Barça entity with the most critical situation, which is why it required the current management board to “take the bull by the horns.”
According to official sources, the institution barely has equity of 30 million, Therefore, if the season closes with losses similar to the previous one, it would enter into bankruptcy. Something unusual in the centenary Spanish club, which would be doomed to sell assets or become a public limited company to balance its assets. The first option would mean decapitalizing the squad, which would mean giving up competing at the highest level, both in the local league and in Europe. “These types of clubs”, also referring to the Real Madrid, “They would have to mark a year of transition, you cannot be competing for the same thing,” Tebas said.
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The second option is to go from a club whose owners are the partners, as currently, to become a public limited company, whose owners would be those who had the shares in their name. This is the case with all members of the League, except Real Madrid, Athletic Club de Bilbao, Club Atlético Osasuna and Barça itself, that just a decade ago avoided becoming public limited companies thanks to their good financial management.
For this reason, Carles Tusquets, the current president of the management committee that presides over the club after the resignation of Josep Maria Bartomeu, has asked the players for a salary cut of close to 40% to prevent the entity from ending the 2020-2021 season again with losses similar to the one previous campaign, which ended with 97 million red numbers. These handicaps, caused by the drop in income due to the pandemic, have reduced equity from 130 million to just 30 million. If the current course ended with similar figures, the club would go into dissolution, so it would have to recapitalize with some of the options listed above.
Tusquets, a Barça historical, who was already treasurer with Josep Lluís Núñez, has raised with the players the “adaptation” of salaries to lower the salary mass, which this year cannot exceed 382.11 million by order of the LFP. This limit represents a cut of 274 million compared to the 656.42 million of the previous season, in which the club saw its income plummet by 200 million due to the effects of covid-19.
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The entity earns about 150 million per year for the membership fees, the tickets to the Camp Nou and the operation of the boxes, money that this year will not be able to count on, since the ban on entering the sports facilities continues. Furthermore, given the current health situation, the public is not expected to be able to return to the stadiums until next season, according to Tebas, despite the fact that Barça had included in the 2020-2021 budget that at least 25% of the capacity could be covered from February, and up to 50% in May. The club had estimated a profit of one million euros for this season, so any downward deviation would lead it to approach the bankruptcy.
Tusquets wants the staff to accept the salary cut in exchange for extending the contracts, so officially it would not be a reduction. But, in case they do not sign, the current president will approve next Monday in a unilateral this decrease in the millionaire salaries of its stars. A measure that, according to financial sources, would mean that footballers could leave the club immediately, as Barça broke the conditions agreed in their contracts. FC Barcelona denies this possibility, stating that the reduction in salaries would be motivated by an extreme situation beyond the ordinary management of the club. But legal sources of First Division footballers of the highest level point out that this situation is very likely.
January, key month
The entity will make a final decision next Monday, because it does not have liquidity to deal with the ordinary invoices of the suppliers, to whom it pays more than 120 days, far exceeding the government limit of 60 days. But the date that worries the club and the creditors is January, since at that moment he has to pay about half of the chips of the contracts of his ‘cracks’, to those who pay a symbolic monthly salary, but to those who earn their contracts in the middle and at the end of the season. In January, the club will need about 200 million to meet current salaries.
Barça, which in June got credit policies for around 100 million euros with State guarantees through the ICO, like Real Madrid, it has already considered creating small companies to bring shareholders into divisions such as museum management or the store network. But any decision should be made by the new president who comes out of the elections on January 24, at which time he will have to face a large part of the player’s file.