Barcelona referred to financial and structural obstacles in the Spanish LaLiga’s financial fair-play rules, which are among the strictest in the world.
Barcelona’s inability to hold on to its most prized asset Lionel Messi has sent shock waves around the world. The sight of a teary-eyed Messi bidding goodbye to a club he joined as a 13-year-old has brought immense grief to the club faithful.
Now 34, the Argentine superstar is set to don the colours of another European heavyweight club, Paris Saint-Germain (PSG), bringing an end to his Barcelona career that saw him win 35 trophies, including 10 league titles and four UEFA Champions League crowns.
The Catalan club announced last week that “despite club and player reaching an agreement and their clear intention to sign a new contract, this cannot happen because of financial and structural obstacles.” The “obstacles” Barcelona referred to were the Spanish LaLiga’s financial fair-play rules, which are among the strictest in the world.
What are these rules?
Back in 2013, LaLiga set up an economic control department which was tasked with reviewing the finances of each club and establishing a cost limit for each season. This squad limit is the amount an outfit can spend on its players, coaches, physios, reserve teams etc. Clubs have the flexibility to decide how the money is split between transfers and wages, provided the overall limit is not breached. Factors considered to arrive at the limit include expected revenues, profits and losses from previous years, existing debt repayments and sources of external financing among others.
How have these affected Barcelona?
For Barcelona, this limit has fallen drastically in the last few seasons. According to football website The Athletic, Barcelona’s limit for 2019-20 was €671m. Last year it fell to €347m, and unconfirmed reports have suggested that the limit for the upcoming season is in the region of €160m. Barcelona, for the upcoming season, has to pay a combined €144m per annum in wages, including Philippe Coutinho’s €20m, Antoine Griezmann’s €27m and Ousmane Dembele’s €24m. This meant there was very little wriggle room to accommodate Messi, despite the Argentine agreeing to a 50% pay cut that brought his wages down to around €50m.
Shouldn’t Barcelona prioritise Messi over others?
True. But Barcelona’s hands are tied because the likes of Coutinho, Griezmann and Dembele are still contracted to the club and are legally entitled to be paid, while Messi’s contract ran out at the end of last season and he had to be added as a fresh player for 2021-22. It may be noted that Messi, with still one year remaining in his deal, wanted to leave last year but made a last-minute decision to stay put and reassess his options after 12 months. Barcelona could not have added Messi even if he had opted to play for free, and his signature would have only been possible if the club had sold players and renegotiated contracts with high-earners, both of which have proved unsuccessful thus far.
How did Barcelona get into this mess?
Much of Barcelona’s woes have been traced back to the tenure of Josep Maria Bartomeu as club president (2014-2020). Neymar’s move to PSG in 2017 caused much consternation and as a face-saving gesture the club made rash decisions in the transfer market and paid exorbitant fees and salaries. The loss of revenue due to COVID-19 only exacerbated this situation, resulting in liabilities worth a staggering €1.3 billion. Last year, Barcelona was able to keep its squad together because LaLiga had temporarily removed penalties for over-shooting the budget threshold, because of the pandemic. League rules currently allow 25% of the profits from transfers to be used for fresh investments, in order to deal with the effects of the pandemic. However, 75% of all profits must be set aside to pay off the club’s liabilities and cannot go towards adding players.
How does PSG have the money? Doesn’t it have to play by financial fair play rules?
It is generally accepted that LaLiga’s rules are among the strictest and the league is known not to budge despite pressure from high-profile clubs. UEFA, the governing body of European football, has financial fair play rules that apply to all clubs, but unlike the LaLiga’s they look back at spending in past seasons and do not stop players from being added in advance. So, a club outside Spain can potentially add Messi at an inflated salary, win the biggest titles, and if deemed to have breached fair play rules, can get away by paying a fine. This is the kind of distortion in competition LaLiga seeks to avoid by applying the rules in advance.
What is the future for Barcelona?
Despite the Messi saga having ended, the future is still precarious for Barcelona. In the last few months, the club has announced the signing of four new players — Sergio Aguero, Eric Garcia, Emerson Royal and Memphis Depay – but cannot register any unless it proves to LaLiga that the total squad cost limit will be within the said €160m. Supporters now fear that the club may have to sacrifice established players like goalkeeper Marc-Andre ter Stegen and midfielder Frenkie de Jong, and emerging stars like Pedri and Ansu Fati. In Messi’s absence, the club is also staring at a potential loss of brand value, diminished match-day revenue and merchandise sales.
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