Jaume Giró explains the keys to the deep economic crisis that strangles Barça
It reveals that the club will have serious liquidity problems in its treasury in May
“This situation has no comparison in the contemporary era of Barça,” he confesses
“We know what to do. And how to do it,” he says, convinced that the prepared shock plan will work.
He takes a seat in a bright room in his professional office and unfolds a voluminous folder with documents scattered on the table. Jaume Giró, the financial manager of Joan Laporta’s candidacy, is not in a hurry. He does not look at his watch at any time during the hour of conversation he has with EL PERIÓDICO. He knows that he is looking out on a very delicate stage.
The club’s economic drama starts in the summer of 2017 with the departure of Neymar to Paris SG
Barça has no money, it deferred salaries to the staff (43 million must be paid every year until 2025), and it lives submerged in a deep crisis. But he sends, at all times, a message of confidence to “reverse”, that is the word he chooses carefully, those dark years in which the club has entered a dangerous spiral, further aggravated by the pandemic.
But “not everything is the fault” of the coronavirus, Giró maintains. The Camp Nou, a machine to generate money (150 million euros per year), has stopped abruptly. The doors are closed and the Museum is more lonely than ever, without a single tourist stepping on it, leaving the box empty. The economic drama, according to the head of Laporta’s candidacy, starts earlier. When? In the summer of 2017, when he received a check of 222 million for Neymar.
1.- “The first thing is sit with the benches “
“Not everything is the fault of the pandemic, although we have explained with data that it already comes from before. It is what the English call ‘the curse of unexpected wealth’. When the Barça accounts are carefully studied and you see the exit of Neymar to PSG for 222 million, you also see that there is a board without leadership. He is earning 30 million and here there is a salary increase in several players. The salary mass is skyrocketing. There is a phrase from Warren Buffett, an investor philanthropist to that many people in the world follow, that sums it up: ‘When the tide goes out you can see who was bathing naked.
“Since 2017 the wage bill has gone off. It goes from 330 million to 650”, Giró emphasizes
He explains that when a crisis comes, it looks very good who does things right and who does things wrong. It talks about the economy in general, but it can also be applied to football clubs. If the tide is high, everything is going well and there is money for everyone, even allowing you to go into debt. In 2017 the real problems of Barça began to appear, which later surfaced with the Covid.
🗣 Jaume Giró, on the economic situation of Barça: “The issue of equity or equity has only one solution: to generate profits and surpluses year after year that can compensate the assets”.# EstimemElBarça pic.twitter.com/jAJuUoQT5B
– We estimate Barça (@estimemelbarca) January 28, 2021
We have studied the club’s accounts from 2015 up to now and we saw that teams like Bayern Munich or Madrid already had less debt than Barça then. They also saved income to undertake investment works that they had to do in their stadiums. Here, on the other hand, everything that was entered was spent. Barça entered at a time when they wanted to bill 1,000 million euros, they wanted to be the first billion-dollar club. Turnover goes up, profits go down, and debt goes up almost to the level of billing. Barça loses 93 million euros and Madrid, on the other hand, wins 300,000 euros. It is little money, but it wins. That indicates that there is a lot of difference.
“In our crash plan, the first thing is the R of refinancing the debt,” he admits.
Since 2017, the wage bill has skyrocketed. It goes from 330 million to 650. And the amortizations of the players, which used to be between 50 and 60 million, increases to 120. And in this 2021 we must pay 186.6 million. Amortizations must be paid yes or yes. Let the partners know. The debt is 1,173 million. And if you have enough skill and enough left hand you can sit down with the banks and ask for payments to be delayed. In our crash plan, the first is the R of refinancing the debt. In addition, those 730 million in the short term must be spent in the long term. So the first thing is to sit down with the benches. ”
two.- “You have to get ‘new money’ “
“To begin with, in the month of May there will be no liquidity to pay the payroll. It is important that people know it. We will not have liquidity at Barça. But we do not want to give an alarmist or tremendous message. Although what is objective is that If you do nothing, there will be no treasury to pay bills at Barça. When the new board arrives, hopefully it will be us with President Laporta, he will have to refinance the debt, reduce expenses and restore the treasury. That means that we must obtain new money. For companies that are in crisis, there are two ways: some close and the other refinance asking for new money.
“To begin with, in the month of May there will be no liquidity to pay the payroll. It is important that people know it. We will not have liquidity at Barça. But we do not want to send an alarmist or tremendous message,” he says
Moving that short-term debt of 730 million to long is a decision that we must share with the banks. I always explain that the banks are the first interested in that an entity like Barça, with many assets, and in a time of crisis like this, works. It is a time when there are very few people who invest in business projects. What does that mean? Well, if there is little investment, there is a lot of money. Much money available.
“There are amortizations of 186.6 million euros for players that must be paid yes or yes”, warns Giró
When there is economic euphoria, everyone invests, everyone spends, and the interest rate on money goes up. When I hear a candidate say that the situation is worse than before, I can only comment that it is completely false. Now, the situation is much better than when Barça issued the first bonds. I am concerned that this is said because it may be to deceive the partner or because the reality is not known. When they say something alarmist about bonds, banks get angry too. They do not understand it and on top of that they place the club in a more difficult situation to negotiate.
The 90 million euro bridge loan with Goldman Sachs for the construction of the Johan Cruyff stadium expires in June
Banks are also worried because they have no one to sit with. In June, for example, there is a maturity of the bridge loan with Goldman Sachs of 90 million euros. We have amortizations of 186.6 million that must be paid yes or yes, with the salary mass soaring, which is almost 75% of the club’s budget, and we must pay the bridge loan that was requested to build the Johan Cruyff Stadium.
Then, the loan of 825 million signed by the previous meeting with Goldman Sachs for the Barça space, It is not approved by the assembly of delegates, the highest sovereign body of the club. It is signed and there are some commitments that must be assumed. How to pay? The loan is returned with 50 million annually from the incremental amount of income generated, provided for a theoretical figure of 150 million annually when the Espai Barça is in operation. The agreement with Goldman Sachs is for 30 years. One part will be collected directly by Goldman and the other part by two traditional state banks that took part of the agreement. “
3.- “The situation is serious, but reversible »
“Barça is experiencing a moment that will be studied in the history books and, surely, in business schools. We have been on the bridge for many months. There is uncertainty, there is no interlocutor, the situation is deteriorates … But we do not want to give a tremendous or alarmist message. The situation is serious and delicate, but it is reversible. It is a situation that does not admit any comparison in the contemporary era of the club. The photo is much worse. The one from now and the one from what lies ahead.
“Barça is living a moment that will be studied in history books and, surely, in business schools,” he says
The wage bill is very high, the repayments are very high and the credits must be paid. In addition, since the signing of Braithwaite in January 2020, the pacts, which are the financial agreements that you sign with the entities that lend you the money. In August they were broken again. And this situation forced to ask for you resign or waivers of the banks and this makes it necessary to renegotiate the conditions of the credits.
📈Economic management and new boost to income
🔁Reverse transfer policy
🤝Nou relationship model with Sponsors and Sponsorship
🌏Internacionalització and bet on sport
📲Barça Digital Hub
🏟Espai Barça#EstimemElClub pic.twitter.com/0C9h9JM6E0
– We estimate Barça (@estimemelbarca) January 13, 2021
But we are clear about what to do. And how it should be done! We must apply the shock plan that we have prepared to make the club sustainable. So far, it is not. In situations like this, you have to do the jaw strategy, as a well-known banker said. Which? Lower expenses and raise income. Laporta has asked us, in a very Catalan image, to go out with the suitcase to look for money.
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“Something is being lived that does not admit any comparison in the contemporary era of the club. The photo is much worse”, confesses Giró
We will appoint a CEO who is dedicated solely to raising revenue. And expenses will be reduced without making any strategic divestment for the club. We want to strengthen Barça’s human resources area. The talent must not only be in the field, but also in the offices. When there is a big problem, the first thing you should do is make it small. So, it is better managed from the knowledge and experience of Laporta, which sends messages of confidence. Those first 100 days will be key to facing the crash plan. It is a collective and personal challenge. If we do things well and work hard in two years we will see the light. ”
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.