Messi generates more than he earns and did not “ruin” Barcelona: myths and truths of the club’s crisis, under the magnifying glass of Spanish economists

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Barcelona is the club with the highest turnover in the world at the level of commercial and box office agreements, but at the same time poor decisions when hiring conditioned its future (Reuters / Nacho Doce)
Barcelona is the club with the highest turnover in the world at the level of commercial and box office agreements, but at the same time poor decisions when hiring conditioned its future (Reuters / Nacho Doce)

One week before the alleged contract he has signed was leaked Lionel Messi for 555 million euros gross, in the Barcelona there was already talk of a economic crisis. Billionaire debt. Possible bankruptcy. Bankruptcy. Words that began to be strikingly associated with the name of the Blaugrana club when the numbers of their balance sheets became official: 1,173 million euros of debt. A shocking figure.

Now, was that contract with Messi what produced the so-called “ruin” of Barcelona? Or were there maneuvers and mistakes that sunk it in the last four years?

Messi, does it generate more than it costs or did it mean an irreparable loss of money?

Faced with this unclear situation, Infobae spoke in Spain with specialists in economic matters in the football industry, such as Professor José María Gay de Liébana, doctor in Economics and holder of the Faculty of Economics and Business of the University of Barcelona.

According to Gay de Liébana, these red numbers for Barcelona are not surprising and are not so much due to what Lionel Messi is paid. “I had already commented on it in December at the College of Economists of Catalonia, in a conference. The main problem that Barça has is that income has fallen a lot compared to previous seasons”, Says the expert.

And a passionate soccer fan as he is, in addition to being a student of business cases in football, he was encouraged to give an accurate diagnosis to understand the true drain of money in recent years that does not refer to Lionel Messi, precisely: “Barcelona has made a lot of shit since 2017. He paid and still pays what I call the ‘Neymar psychosis’, which occurred when the Brazilian left and gave them all an attack; fans and board of directors. And he began to sign like crazy. Dembelé (140 million euros for his pass) who plays little, Coutinho (160 M €) who performs everywhere except at Barcelona, ​​they paid a lot for Antoine Griezmann (120 M €); and then it becomes clear that they have made investments that did not pay”.

To the data provided by the economist, it is added that strikingly Barcelona still owes money for players who are no longer in the club: Arthur (20.5 million to Gremio), Malcom (20 million to Girondins) and for Arturo Vidal (10.5 million to Bayern).

Marc Menchén is director and founder of 2PlayBook, a site specialized in the sports industry, and states: “Messi is a footballer who generates equal or more than what he is paid. It is true that it is very difficult to attribute exact income to his activity, but we can agree that Barça is at a sporting and media level that it would not have reached if he were not there. This is clear: Barcelona is the club with the highest turnover in the world in terms of commercial and box office agreements, and we know that a large part corresponds to Leo Messi. The proof that Messi charges what he generates is that he has been a sustainable club until the pandemic has broken out. The viability of Messi’s salary was not put into discussion until the appearance of COVID-19, which changed the scenario. Messi always had a high contract, Barcelona’s problem is what he signed in the last four years, paying more than 100 million euros for each player ”.

José María Gay de Liébana, soccer fan and Espanyol fan, is a permanent source of consultation for clubs in Spain
José María Gay de Liébana, soccer fan and Espanyol fan, is a permanent source of consultation for clubs in Spain

During the 2018/19 season, the last full season without a pandemic, Barcelona had revenues of almost 900 million euros, and it is clear, from the analysis of the specialists, that the image of 10 contributed in a huge part to Barça receiving so much money. The problem was that he mismanaged it, he made purchases by paying high money for players that he will not be able to resell for those same figures, and according to the president of La Liga, Javier Tebas, COVID-19 also produced a devastating effect on the economy of football.

Another significant fact when the money agreed by Messi is questioned about these lands is that of the aforementioned 550 million only half goes to Lionel Messi’s bank account, since the other 50 percent ends up in the coffers of the Spanish treasury. In addition, it cannot be avoided, in the analysis of the contract, that it had an astronomical termination clause: the famous 700 million euros that Bartomeu asked, last August, to pay the club that took the Argentine. So, what was perceived by Messi was not only according to what he generated and still generates, but also to the market price that the club itself put on him.

The sponsors, a key to understand the positive effect of Messi

Menchén clearly explains the case of the sponsors in the current context of imprecision about Messi’s continuity. “Rakuten (sponsor on the shirt) renewed only for one year and lowered 45 percent of the contract because they don’t know if Messi is still there. Beko (an appliance company) would cut 50 percent for next season, because without Messi it will affect its brand visibility. If Messi does not follow, these companies already know that they will have a very important loss of impact on social networks and television image ”.

More data: Barcelona’s tours in repeated trips and presentations in Asia, Africa and the United States, with Messi were paid twice as much as without him.

Red numbers

Gay de Liébana, meanwhile, studied with precision the mismanagement in Barcelona in recent years and explains: “The income he achieved last season (2019/20) was 730,000,000 euros and the previous one (2018 / 19) were 854,000,000 euros. This reduction was clearly a consequence of the pandemic. Then, as it maintained fixed costs of the workforce mainly, plus operating expenses at the level of what it has, they have led it to end the year with a loss of 97 million euros. But it is not only that, because it has a big problem. Many short-term debts. Last year he had 687 million to pay and now he has 960 million. So all of this is scary, it creates tension. Barça must convert that debt from short to long term. Negotiate a refinance for at least 4 or 5 years, because I don’t see this improving in a year. In addition, it has not been able to liquefy expenses to this current bleeding scenario, which is the cut in income ”.

The contract of "the flea" with the club expires on June 30.  Will the Blaugrana entity have the money to renew him?  (Reutrers / Albert Gea)
The contract of “la Pulga” with the club expires on June 30. Will the Blaugrana entity have the money to renew him? (Reutrers / Albert Gea)

Messi and the future

And then, will a renewal of Messi’s contract be possible so that he will last at Barcelona until the end of his career?

Menchén thinks not, due to the current economic context of the club. While Gay de Liébana agrees and sentences: “As everything is, I think he cannot continue. One thing is wanting and another is power. Messi represents a quarter of what the institution allocates for salary payments to its players. Then, in addition, I wonder: what club in the world can pay him what he earns that goes for 50 million euros net per year? And there the two clubs that are behind the financing of two states appear on the scene: Manchester City from the United Arab Emirates and Paris Saint Germain from Qatar. Today they are the only ones who can pay that in the world in which we live ”.

The 68-year-old economist is a permanent source of consultation in the Spanish media to talk about the reality of the country. Futbolero, Espanyol fan of those who have been to the stadium all their lives to see their team, regrets very much this current situation of matches without an audience because he understands that the charm of always has been lost. Loquacious, active, always with a friendly and cheerful tone beyond fighting a disease, he is also recognized as a friend and admirer of Mauricio Pochettino, which is why he imagines Messi being led by the former Parakeet coach at PSG. Gay de Liébana regularly exhibits on economics at congresses and published several books, among them, The great soccer bubble, referred to the business numbers in the most important clubs in the world.

The fall of a giant

“Barcelona was in a billing growth stage with a projection. It is true that many times to grow, you need to take on debt. The club had the intention of reaching 1000 million euros in annual turnover, which would have meant a brutal brand positioning. He still has an icon at a global level like Messi, who opens doors for him anywhere, but of course, that was under normal conditions, not in the middle of this pandemic. In economic matters, as we say in the jargon, the Barcelona thing was a ‘leveraged growth’, clearly based on debt. They had three main sources of income that were altered by the context of COVID. First the stadium, the exploitation of it, the Messi phenomenon to see it on the pitch (almost 100 million income per year). Second, the TV: for something La Liga tried to play fast even in the confinement stage, so that it does not happen like in France that they did not resume their championship and they were left without a television contract. And finally the sponsors, who of course want an audience in the stadiums and today that is not there. Now nobody can borrow more. Growth in this football is very difficult so I predict that for at least three seasons we will have a downward readjustment and we will see what happens ”, commented José María Gay de Liébana.

Marc Menchén is the director and founder of 2PlayBook, a site specialized in the sports industry
Marc Menchén is the director and founder of 2PlayBook, a site specialized in the sports industry

The ghost of bankruptcy and the loss of the stadium, myth or reality?

Asked about a possible sale of an asset for how the stadium may be, Gay de Liébana was blunt: “No, man. The Camp Nou is not going to sell it. What you would have to do is a naming right of your stadium (bear the name of a company). It is true that this is not the best time to reach an agreement of that type, but you have to go there, give up the name. I also believe that it will be the opportunity to convert itself into a Public Limited Company, it is now when it has to look for a model like Bayern Munich, something I anticipated in my book. Bayern is an SA with a majority of private shareholders plus the 3As, which are Audi, Allianz and Adidas, which also have their shares. Then Barça will have to think something similar to that with a large portion of Barça’s own shares distributed among partners and fans, and add Nike and Rakuten, for example. It is an alternative that must be considered in the face of all this situation. In addition, you must get rid of players because you need liquidity to lower debts. I explain something: Barça is the same thing that happens to many companies at the moment. They have to cut costs, maybe lay off people and lower wages. But you have to understand that the club has a great advantage, which means with or without Messi; so it has to better develop the intangible, that is, the Barça brand should have greater worldwide visibility. You have to better monetize your name. Now, today the viewer is no longer real, but virtual, so then they have to strengthen the area of ​​networks and platforms and look for alternatives to hook the young public, who are increasingly disconnected from football and without leaving their room they have everything at their fingertips. It will have to look for alliances with companies like Amazon perhaps ”.

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