Football News – La Liga: Financial Problems at Barcelona
Barcelona is one of the most successful clubs in Europe for the last five or six years. The have won four league titles, and have been successful in the UEFA Champions League twice. Apart from these big achievements, they have also won a number of other trophies, especially in 2009, when the club lifted six trophies without losing any single competition. Their other achievements include Copa Del Rey, Spanish Super Cup, European Super Cup and FIFA Club World Championship. These tournaments are indirectly transformed into revenue generated by the club, as the biggest source of revenue is the selling of TV rights for the broadcasts.
Despite the success of the club in the 2009-2010 season, their financial situation does not seem stable at the moment. The former Barcelona President, Joan Laporta, reported a loss of €11M at the club. However, the new board, under Sandro Rosell, carried out another audit. The figures revealed in the audit report do not look good for the club, as substantial losses have been reported. The new figure is estimated to be around €77.1M, which is almost seven times greater than the figure initially reported. According to the new audit, the net debt of the club is reported to be €442M, while the gross amount of debt is around €552M.
These figures do not reflect a healthy financial status of the club, and it might put the jobs of certain officials in danger. The club’s success on the field has not been transformed into financial success, as they are facing huge debts and net losses in their successful seasons.
Financial troubles at big clubs are not a new phenomenon. These clubs are always hungry for big players, which cost them a lot of money. For example, last year Real Madrid raised a huge loan from the banks to sign Cristiano Ronaldo, Kaka, Karim Benzema and Xabi Alonso. Also, Barcelona paid a heavy price for the Swedish striker, Zlatan Ibrahimovic; an investment that proved futile. These clubs have to pay a lot to these big players in the form of wages as well. This puts further strains on the financial resources of the club, as the wages of the players are met with further debts from the banks. Last year, Barcelona was short on the wages of the players, so they took a substantial amount of €155M from the banks. The success in terms of winning trophies, therefore, does not reflect the good financial condition of a club. Actually, in some cases, it might cause further problems to the clubs, in terms of finances.
Another way for the clubs to overcome their financial problems is to sell their players. This is a way adopted by Valencia, who have sold David Villa, David Silva and Nikola Zigic in order to raise some funds to keep the club running. Barcelona, like Valencia, decided to sell Dmytro Chygrynskiy to Shakhtar Donetsk for the very same reason. Valencia, however, is actually near bankruptcy and they are unable to retain the big players in the team.
The policy adopted by Arsene Wenger in Arsenal seems quite right, and a model for other clubs to follow. Arsenal always shows big profits at the end of their season, only because Wenger keeps the wages and finances under control. That is why the big players do not like to play for the club, as the club follows a very strict wage structure. On the other hand, clubs like Real Madrid use their exceptional marketing to raise necessary funds. Real Madrid is the biggest brand name in football, which helps them generate profits every year.
Although the reported losses for Barcelona are great, this has not prevented them in pursuing their favourite midfielder, Cesc Fabregas. They have already paid a heavy price in order to get hold of David Villa, while they are ready to pay an equal amount to sign Fabregas. There is no doubt that Barcelona would get out of their crisis, sooner or later, but right now their management must think about the near future. They should go into the upcoming season without any further addition to the squad, as a new player would mean more burdens on the finances of the club.
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