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Barça CEO presents the numbers that nearly sent the club bankrupt

Ferran Reverter // Image: DIARIO SPORT

On Wednesday noon Barcelona CEO Ferran Reverter presented the results of their due diligence of the club’s previous executive board.

“The exercise that we will do today is an exercise in transparency that is rare to come by in the sports world. During the campaign we promised that we would make public the history record of the previous board. You may think it has taken a long time, and you’d be right. It has been hard to find documentation. Emails were deleted after 90 days. The previous board didn’t have club computers but they rather used personal ones. The documentation has been hard to find”.

“Due diligence is done to know the financial situation of the club as per March 2021, when the new board was appointed. We’ve looked at the financial records. In those records we have found activity we want to share with you and elaborate on. There were indications, due to lack of documentation, that we have had to go down one more degree. That is why we have carried out a criminal investigation of Espai Barça, department of purchases and player contracts. This is done to find indications of illegal activity which we will then pass onto the legal department. This investigation is not finished, we will finish it in the next few weeks and we will make decisions “.

Findings on the due diligence // Image: FUTBOL CLUB BARCELONA

Negative net worth

“In March we found that the net worth of the club was negative, if it were a corporation we would have to declare bankruptcy and dissolute the entire organisation. We found zero operating cash flows so we had difficulty paying our employees their wages. Debt and future commitments were 1,350 million euros for which we had to make an urgent refinancing”.

“There was also a breach of commitments with banks, ratios of the League, UEFA and Statutes, which limited the registration of players. Deteriorating facilities also that led to a precarious situation at Camp Nou and Ciutat Esporitva.”

“Between 2016 and 2020, income rose by 30% and expenses shot up by 55%. When Barça had to prepare for the biggest project in its history, it was already losing money. And it was for four reasons : 1. Salary increase (+ 61%). 2. Management expenses (+ 56%). 3. Financial expenses (x6). 4. Covid impact (108 million) “.

“Without the decisions of this board, the salary mass would be 108% of income, that’s 835 million. In four years, with four players, Barça acquires a salary mass of 1,400 million euros. More than 300 million euros per season with only four players. “

Reverter explained that the blame for the increased wage bill lies with “the signing of new players, new contracts and renewals, new remuneration concepts and high commissions for middle-men.”

“There is an inverted pyramid with the veteran players being on long contracts and young players being on short-term contacts. That makes negotiations extremely difficult”

Regarding the increase in expenses, he says that “there was no protocol to register suppliers, which generates brutal costs for the club because each registration is a cost. If you have many suppliers it is very difficult to control whether you buy at the best price or apply economies of scale, and this begins to generate the splitting of the invoices. It occurs for two reasons: to avoid control (such as I3Ventures or Espai Barça) and also for an operational issue. When a club is unemployed and the people are looking for life and trying to find another way, which creates more confusion. “

Reverter further explained that “there was a lack of financial planning. The previous board signed players without actually knowing if they could afford it. The night after they signed Griezmann they realised they had no money and started looking for funds to restructure the debt. The Coutinho operation, which costs 120 million, ends up costing 16.6 million euros more. . They bought players without knowing if they could pay for it.”

“Covid-pandemic made the club lose 43 million euros in the 2019-20 season, and then a further 65 million euros in losses in 9 months of 2021. No money was lost on television rights. The conclusion is that despite Covid, Barça would’ve had financial losses.”

“The net financial debt went from 159 million to 673. For two and a half years, Barça only generated one million euros to pay for it. Everything else was done on credit.”

Reverter concluded: “We found a negative net worth and we have made a viable plan. Given the zero operating cash flows, we’ve lowered the salary payroll from 155 million in this period. We plan to regain income from ticket and merchandise sales, but that’s on hold due to the pandemic. We have focused on resolving short term issues. We changed the financial structure and changed debt from short term to long term debt. A debt of 595 million at an interest rate of 1.98% in 10 years. We’ve also reduced the wage bill and put our trust in La Masia. With the facilities we have started to reactivate the investment to put up-to-date facilities “.

Reverter revealed the 20-21 season accounts
631 million in income
1,136 million in expenses
Negative 51 million in net financial result.

“According to La Liga, the Covid impact is 92 million euros.”

“Barça has gone through tough times throughout its history, but they have always come out on top. This board has a plan, which investors have accepted. We have to continue to bet on what has made us great in the first place. Three pillars. La Masia, Barca DNA, and we must add sporting excellence and high performance, as well as modernize our facilities. Espai Barça is crucial for FC Barcelona. We’ll also look to acquire new ways of making money but focusing on the millions of Barca fans around the world. We have more than 400 million fans, more than anyone. We have to get to know them and change how we interact with them. All of this has to be done with sustainability.”

“If we do that we’ll bring Barca back where it belongs.”

Questions from the press:

THE MOOD IN THE BOARD
“We’re very calm. I have said it multiple times: we have a very important asset that is the Barça brand, which has more than 122 years of history and belongs to its members. If we continue like this I have no doubts we’ll get back on the right track. A club like Barça have a lot of credibility when looking for money. The price marks the credibility. The interest rate of 1.98% is a reference to the rest of Europe. Several clubs have called wondering how we managed to do it.”

ABOUT THE CRIMINAL INVESTIGATION OF THE PREVIOUS BOARD
“We have detected signs but there was a lot of lack of documentation. The investigation has not finished. I know that there are expectations but the work must be finished, then we will decide if it becomes legal and they will decide the actions to take “. 

ABOUT THE STRATEGIC PLAN
“There are basically three initial pillars. To continue being at the forefront, being sustainable and social. In terms of leaders is Espai Barça, the sports strategy and moving the club from a B2B model to a B2B2T model.”

ABOUT THE PREVIOUS MANAGEMENT
“What I can confirm at the moment is that there is a disastrous management. There was no planning, as i already told you. It was just improvisation.”

SIGNINGS
“First we have to finish our homework. We’ve done a large part by lowering the salary bill, but we’re not finished yet. If we continue to do our homework, we’ll be able to bring in the players we want.”

ON MAKING PROFITS AGAIN
“We want to start making profit again next year. We calculate that we would open from the average 60% of the Stadium. We calculate that from the fifth year the club will be back to having a positive net worth. We will generate profits from year one.” 

ON THE CRIMINAL INVESTIGATION IN MARCH
“Here the legal services will have to say if there is evidence or not. We’re nobody to say if there’s been criminal activity or not. We’ll leave that up to the authorities. Our job has been made difficult by the lack of documentation.”

ABOUT THE ESPAI BARÇA AND ITS COST
“The new Camp Nou may cost 800 or 950. But you have to add a Palau with about 300 or 400 million, and then you have to add the Campus, we will go to the Assembly with a maximum limit of 1,500 million euros.”

SPONSORS  “One would say that it is not the best time to go looking for sponsors but here we are always the most pessimistic. We don’t realise the importance of the Barça brand. We’re maybe not at the top of the world at the moment, but we still have more than 400 million followers and that won’t change”.

ABOUT THE CRIMINAL INVESTIGATION OF THE PREVIOUS BOARD
“Basically the ‘forensic’ focuses on three aspects: Espai Barça, middle-men and suppliers. When the investigation is finished we’ll reveal the findings.

ABOUT PLAYER SIGNINGS AND RENEWALS “Yes, we can sign and renew players. We’re working on renewing Pedri and Ansu Fati. The last player we sold (Griezmann) made us go 20 million in plus on the Financial Fair Play scale, meaning we have 20 million to sign players in January. We still have work to do though, and we have to continue lowering the wage bill”.

ON BECOMING A JOINT STOCK COMPANY
“This is not on the board’s agenda. If we have a plan, which we have, and the financial entities agree to it, we’ll reverse the situation.”

ON THE SITUATION
“We have carried out a unique transparency exercise and learned about the reality of the situation we are in”.

ON IF THERE WERE UNJUSTIFIED PAYMENTS TO JOURNALISTS
“There have been payments for certain invoices, I would not say unjustified, both from the club and fan club’s”.

ON MESSI LEAVING
“I won’t go into this in detail because the president has already spoken. He would say two things. Many people think that we knew the (financial) reality when we got elected but we did not. We have been learning about it every month. , day by day.”

CRIMINAL CHARGES AGAINST PREVIOUS BOARD
“I’ve already said that documentation is missing. The legal services will be the ones that say whether it is criminal or not. What we see is very odd. The legal services will have the final say.”

ON TAKING ACTION AGAINST THE PREVIOUS BOARD
“We have not decided any type of action. We want to wait until we have all the conclusions before we take action. It could take days or weeks.”

ON FINANCIAL FAIR PLAY
“There is a grievance between the Spanish league and Europe. It hurts Barcelona a lot when it comes to making signings. LaLiga is much more restrictive than UEFA. We compete in Europe and in Spain and I’m not saying that it is badly done, I say that there should be more consensus “. 

ON THE IMPACT OF MESSI’S GOODBYE
“There is no doubt that Messi has been the best player for many of us in all of history. We followed up in the first weeks with the jerseys. Surprisingly. Other jerseys such as De Jong or Memphis grew.

ABOUT THE SUPERLEAGUE
“Two things. In our plan we are quite conservative so we don’t include imaginary things. The Super League is not a reality. for now. For us it is a matter of trying to make a more attractive competition, but very oriented to the issue of FFP. UEFA is going in the opposite direction to Barça in terms of FFP. We must reflect on what has happened this summer. UEFA is opening that they can inject money and that the ratios soar. Here, Together with LaLiga we believe in a more sustainable model. If we continue along this path, the state clubs (PSG, Man City) will be better off and that will end up harming the Barça brand “

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