Two questions started popping up a lot on social media timelines and groupchats on Tuesday afternoon.
What the hell are Barcelona doing? And…why?
In case you missed it, they’re selling Arthur – one of their brighter talents – to Juventus for about €80m.
Sorry, that should read: they’re ‘selling’ Arthur to Juventus for ‘about €80m’. Because in reality they’re swapping him for Miralem Pjanic and about €15m, and the €80m sale is just some creative accounting work. Oh, and Arthur doesn’t want to leave, so the whole thing might yet fall apart anyway.
On the face of it, the swap actually makes less sense than just selling Arthur for what’d be a healthy chunk of change, because the Brazilian is good and Pjanic…hasn’t been for a little while now. To explain why they’re making that move, we have to dive a little bit deeper into years of systematic mismanagement and extreme short-term planning.
The short version is: Barcelona need to recuperate €67m before the end of June, less than a week away, in order to balance their books for the year. That’s not a ‘we’d like to do this’, or ‘it’d be nice if we ended the year on balance’, this is something they really have to actually sort out. That’s put them in a situation where other clubs know they need money, know they need money fast, and can be taken advantage of in the transfer market.
A bit of rough napkin maths would suggest that a sale of Arthur would cover the shortfall in the accounts, and buying Pjanic in July as part of the financially creative swap would push the issue 12 months down the road – assuming the fee is paid upfront in full (rare, but it’s an unusual deal, so it’s possible) and assuming Arthur agrees to go.
If all of that works out, Barça are left with an even bigger hole to dig themselves out of next summer – even before accounting for the impact of COVID-19, which means a lack of revenue from the club museum (which brought in nearly €60m last year), no ticket sales for some time, and fans spending less on merchandise as the global financial situation turns downward.
How did they get into this position? It’s tempting (very, very tempting) to blame it on high transfer fees – €160m-odd for Philippe Coutinho, €105m for Ousmane Dembele, €100m for Antoine Griezmann, etc – but that’s not as big a slice of the problem as it appears.
For a club who bring in more revenue than any other in the world, their net spend on transfers isn’t outrageous. The last two windows have seen a combined spend of around €100m, and the season before they actually broke even. Go back a year further to the Coutinho/Dembele(/Paulinho) summer and it jumps, but not to more than about €150m – remember, they sold Neymar.
Put a pin in that summer. That summer encapsulated Barcelona’s problems in so many ways. We’ll come back to it.
The problem for Barcelona, who are credited with a revenue of €840.8m in the 2018-2019 Deloitte Money League, is the amount they’re paying the players who are already there.
Most costs of running a football club come with an inherent return on investment. You spend to buy a player, yes, but someone will buy them off you for a fee later. You redevelop part of your stadium, and then you get more ticket revenue. You build a new club shop, people come and spend money there. That’s how things keep ticking over.
But wages aren’t like that. You give money to players, and never get it back. That’s also the way businesses work…but most businesses don’t pay their squads an average of €11m a year. Barça’s wage bill is the most outrageously inflated in world football, by far the largest, and takes up about 69% of their revenue.
Compare that to Real Madrid – famously stuck with the bloated contracts of Gareth Bale and James Rodriguez – and it looks even worse. Los Blancos are sat at a nice, fairly sustainable 52%. Bayern Munich, Manchester City, even Paris Saint-Germain, are all sat in the 50s. Barcelona, at 69% (somehow down from over 80% the season before), are in a different stratosphere.
Side-note; the only elite club in Barcelona’s orbit in terms of wages as a percentage of their income are Juventus – after Cristiano Ronaldo’s salary left them with no wiggle room in the market – which is why the Old Lady are so willing to get involved in the Pjanic/Arthur deal. They get a better player on a cheaper contract, offload an ageing, declining star and do it all for close to ‘free’, alleviating their own problems marginally by taking advantage of Barça’s situation.
Barça – or specifically, Barça’s board – are continuing to hand out giant contracts, heedless of the iceberg they’re sailing directly towards. Antoine Griezmann was signed because he had a release clause below his market value and the club sensed an opportunity for a bargain, but he’ll be making the best part of €500,000 a week into his 30s. And he doesn’t fit into the team. And his resale value is falling with every day…and no club wants to take on his wages. Short-term bargain. Long-term noose around the club’s neck.
The idea of the board being reckless brings us neatly back to the sale of Neymar, the flashpoint in the current institutional crisis the club finds itself in. His move to PSG gave Barcelona something no club has ever had – and no club may ever have again. €222m. In full. Immediately. No instalment plan, no spreading the money out over multiple windows, a lump sum of €222m deposited into their accounts.
And every other club in the world knew it. So when they went looking for a replacement, knocking on Liverpool’s door, texting Borussia Dortmund, sliding into Bayern’s DMs, every other club in Europe tried to gouge them for every cent. ‘We know you’ve got the money,’ was the message. ‘So pay up’.
A prudent organisation would have found a less disastrous way to handle the situation. Barcelona’s board basically took the knife and started gouging themselves before their rivals could do it for them. The move for Coutinho was indefensible (and – lo and behold – no other club wants to be shackled to the wages he demands) and putting Ousmane Dembele on over €200,000 a week, borderline unproven, at the age of 20? For five years?
Another side-note; Dembele is probably only Barcelona’s eighth highest paid player (not including Coutinho, whose wages have been paid in large part by Bayern Munich this season). In fact, because of how much Lionel Messi’s wages completely break the entire structure, Dembele’s €11m a year is pretty much smack bang on the average salary for a member of the club’s first team.
In valuing short-termism over anything resembling sensible financial planning, Barça have dug themselves a deep financial hole which – especially thanks to the impact of COVID-19 on clubs’ finances, and their willingness to take on large contracts – will be next to impossible to climb out of without a long and steady series of cost-cutting measures across the first team squad.
In the long term, that means younger players, cheaper contracts, essentially a rebuild. After Messi’s gone, things are getting torn down in a big way.
In the short term, as we’ve seen this week, it means making bad deals out of necessity. Pjanic + €15m for Arthur makes Barcelona worse and adds to their wage bill, but they need that cash so desperately that they have to make the deal and accept that things will get worse before they get better.
There’s only so far they’re able to kick that can down the road though. And they’re getting to a pretty nasty looking T-junction.
For more from Chris Deeley, follow him on Twitter at @ThatChris1209!