This is not the best time in the history of Barcelona football club, one of the most profitable clubs in the past. The outbreak of Coronavirus in 2020, has affected the club’s finances.
LaLiga on Wednesday reduced Barcelona’s salary spending to €97 million because of its financial struggles, making it seven times smaller than that of rival Real Madrid.
This means Real Madrid’s spending limit for the 2021-22 season is almost €650m higher than that of Barcelona’s, LaLiga revealed.
Barcelona, who are facing financial meltdown after reporting losses of €481m earlier in 2021, have seen their spending power drop from €347m per season to just under €97m.
Barcelona’s struggles had already forced the league to slash the club’s cap from a league-high €670 million in 2019-20 to €385 million last season. In addition to losing Messi, Barcelona also sent Antoine Griezmann on loan to Atlético Madrid, and it’s only signings this offseason were free agents.
The reduction was part of the reason Barcelona failed to give Lionel Messi a new contract and led to him joining Paris Saint-Germain.
Messi reportedly earned nearly €140 million per season but had agreed to cut his salary in half so he could stay with Barcelona, but that was not enough to keep Barcelona finance green.
Each club has a different salary cap calculated based on a series of factors that include revenues, costs and debts. It is proportional to roughly 70% of a club’s revenues.
The new salary cap is part of LaLiga’s financial control measures to reduce clubs’ debts and keep them financially healthy.
Six other clubs now have bigger spending limits than Barcelona’s.
Real Madrid’s cap is the highest, going from €470 million to €739 million, which is €642 million more than Barcelona’s.
Madrid’s figure is high as a result of prudent financial management, profits from player sales and not making big signings in recent transfer windows. Their base budget was €428m, to which they added from their reserves of funds a further €292m – which would have allowed them to sign the Paris Saint-Germain forward Kylian Mbappé for a reported €200m and still have been within the league’s spending limits.
Sevilla followed with a cap of €200 million, up from €185 million a season ago.
Atlético Madrid was third in the list after having its limit reduced to €171 million.
The lowest budget in the league is Valencia’s €30m, with the club hit hard by the pandemic and their poor league performances resulting in a lack of European football.
The league’s total cap for top-tier clubs was at €2.27 billion, 2% lower than it was last season.
Clubs are already starting to budget based on the expected revenue they hope to get from a new investment fund with private equity company CVC that could generate €2.7 billion, but that has been opposed by the Spanish football federation, Real Madrid and Barcelona.
CVC would gain a 10% stake in a new commercial entity with LaLiga if the investment package goes through.
LaLiga said clubs spent €271 million in signings in the latest transfer window, the lowest among the top five European leagues.
Barça and Madrid, like Athletic Bilbao, did not accept a cash injection from the private equity company CVC through La Liga in return for a percentage of their future broadcast rights.
Barcelona’s drop means that they only have the seventh-highest permitted wage bill in the top flight, behind Madrid, Sevilla, Atlético Madrid, Villarreal, Real Sociedad and Athletic.
SOURCE: BUSINESS DAY
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