Friday, 17 July 2009

FCB Finance Report

FC Barcelona’s Finances

I would like to start off my first contribution to the blog, by thanking our dearest PeP for all his hard work and contributions to this blog we all read almost on a daily basis. I can only hope to bring his professionalism and dedication to my first contribution to the blog.

This report is centralized around two key figures, they both have very key roles in the finances of the team. The first of which is the jackass himself, Joan Laporta. He is the Presidente of this current regime. I know he catches a lot of flack for his antics during the summer; however it is only because he is a nerd in the books and numbers. You have to realize that the Treble was not the result of a fluke season, but instead meticulous planning that began at the very onset of this regime. For any business to be successful it takes effective management to properly dictate the course of the business. It turns out our president behind closed doors has been building an effective business model based on sustained growth and paying down debt. What this effectively means is that throughout Laporta’s tenure, he has been focused on increasing revenue for the team while paying down debt so that the team can self-finance its own ventures.

The Second figure Joan Boix. He is the financial Vice President of FCB. These are a few quotes he had to say in regards to the finance of FCB when giving the financial presentation to board members and socios for the 2007/2008 fiscal year. This information has been taken directly from fcbarcelona.com.

Solid economic ground

According to Boix, “FC Barcelona’s economic situation is very solid. Revenue has increased for the fifth year in a row and we have made a profit again”. The financial vice-president has described the financial year’s final accounts as “excellent”. Revenue grew for the fifth year in a row and currently sits at 308.8 million euro, while expenses account for 297.6 million euro. In other words, the financial year 2007/08 closed 16.1 million euro in the black with a profit of 10.1 million euro.

Boix pointed out two areas in which revenue had grown most significantly: the media (increase of 9.5 million euro) and the stadium (increase of 7.3 million euro). He also said revenue from club members had increased by one million euro, with 6,365 new members. “Ours is a sustained growth”, he said.

Control over expenses

With regard to expenses, which came to 292.6 million euro, Joan Boix said that “once again expenses were controlled and followed parameters as set out in last year’s budget”. The most significant increases came in two areas: amortization of players, with an increase of 5 million euro, and players’ salaries, which increased by 14.3 million euro. The club sets aside 52% of income for players’ salaries. “We are still below recommended parameters within the footballing industry”, pointed out Boix.

End to bank debt and more club funds

In relation to the accounts, the financial vice-president wanted to point out two things: the reduction of debts, both bank and in general, and an increase in the club’s own funds. On the first point, Boix revealed that during last season FC Barcelona paid back 26 million euro, reducing the debt from 39.8 million to 13.6 million and that “the bank debt will be wiped clear on 30 October”.

The other aspect which has affected the books is an increase in the club’s own funds. “We now have 12.7 million euro of our own funds. In the five years of this administration’s management, we have generated a total of 88 million euro, going from 75.3 million euro in the red to 12.7 million euro in the black”. And he added: “They are figures which endorse the effort of all those involved during the last five years”.

http://www.fcbarcelona.com/web/english/noticies/club/temporada08-09/08/n080824102955.html

This is a summary of the financial Statement:

SETTLEMENT OF ACCOUNTS 2007/08 SEASON

Trading income: 308.8 million euros

Operating costs: 292.6 million euros

Ebitda (Earnings before tax and depreciations): +68.8 million euros

Operating profit or loss: +16.1 million euros

Income / financial expenses: -8.0 million euros

Operational profit or loss: +8.2 million euros

Extraordinary income / expenses: +0.4 million euros

Before tax profit or loss: +8.6 million euros

Tax payments: +1.5 million euros

Net profit or loss: +10.1 million euros

BUDGET 2008/09 SEASON

Trading income: 380 million euros

Operating costs: 355 million euros

Operating profit or loss: +25 million euros

Financial and extraordinary profit or loss: -10 million euros

Before tax net profit or loss: +15 million euros

All these figures were passed at the Ordinary General Assembly held on September 24, 2008.

http://www.fcbarcelona.com/web/english/club/club_avui/informacio_corporativa/situacio_economica/situacio_economica.html

Effectively what the report is indicating is that Barcelona is currently a self-sufficient team free of debt. Turns out Laporta has been doing an amazing job.

2004 FCB Revenues= 169 million Euros

2005 FCB Revenues= 208 million Euros

2006 FCB Revenues= 259 million Euros

2007 FCB Revenues= 290 million Euros

2008 FCB Revenues= 309 million Euros

2009 FCB Projected Revenues= 380 million Euros

In conclusion, certainly there is two ways of doing business, the way Real Madrid does business and the way Barcelona does business. Barcelona has worked so hard throughout the years to get in the position they are currently in, and I can now greater appreciate the journey to the treble. Remember the Treble was not the result of a fluke season, but instead years and years in the making.

Keep in mind these reports are based on last year's earnings. Deloitte, one of the leading accounting firms in the world, publishes a report called the Deloitte Football Money League. In the 2009 report these are the top 5 teams:

Numbers are (In)Millions-Euros

1.) Real Madrid Revenues = 365.8

2.) Manchester United Revenues= 324.8

3.) Barcelona Revenues= 308.8

4.) Bayern Munich Revenues= 295.3

5.) Chelsea Revenues= 268.9

http://www.deloitte.com/dtt/article/0,1002,cid=246693,00.html


-Je me'appelle Samuel



Read more:
Premier League Clubs Deep in Debt
A profit of 16 million euro halfway the season
Barcelona third richest club in the world

18 comments:

R10FCB said...

lol i thought it was hilarious when you said you wanted to make your first contribution professional and then went and called Joan Laporta a jackass.
its funny because its true.
very good article i never knew anything about the economic side of barca and found it quite interesting, well done.

xaviesta said...

very interesting artikel!
gives me a very good feeling to know that there is no debt left - even more when you think about a real madrid debt of something about 700 millions!

Random Juve Fan said...

the latest edition of World Soccer Magazine did an article on the debt in football. Manchester is the club heaviest in debt with the club owing the banks 699 million pounds (interest 14.25%p.a). The scum from Madrid are second owing 494 million pounds and atletico madrid are third with the club owing 449 million pounds. How is it fair that clubs such as Barca and Juve have to compete with clubs that are without a financial concsious and spend money as if the world isnt in a financial meltdown. Football is losing its morals...FORZA JUVE!!! good article btw

Aussie Barca Fan said...

Very good article and clearly explained. Well done.

The Madrid policy is simply "Spend Other Peoples' Money and Hope You Don't Get Caught Or Go To Jail." lol

Nice add on Random Juve Fan. I just wonder how much in debt Man City and Chelsea will be when these 'backers' pull out and leave the club with huge debts. I can see a Leeds disaster all over again.

Strong fiscal financial policy is not about picking money off an imaginary 'Money Tree' that doesn't exist!

blablabla37 said...

Very interesting article. I knew Barça had this methodology of controlling its finances, but its nice to see some figures along with it now.
However, although i think you're partly right about the treble - that it was in the making - its still the players who have to do it. A solid financial background can support the overall happiness around the club and can therefore increase the players performances, but the players performances arent totally dependent on the financial background. I dont believe you can plan to win a treble step by step, you can only make it more likely to happen and i think that is what you want to point out in this aspect of your article.

BarcaFan(BiH) said...

Very good first article, Samuel. You have raised very good points for discussion. I have a few questions, and I hope you or others on this blog can help answer some of these questions.

1) Because he and his board have done such an amazing job, will Laporta run for next year’s presidency? I don’t know how that works. Do they have a term limit because Laporta would be running for the third time? If he will not run, but would be eligible, what would be some of the reasons for him optin not to run?
2) What Laporta has done is amazing. He has turned Barcelona into a global brand, wouldn’t it be a shame that he won’t be running for President again to further entrench Barcelona’s position as a leading global sports brand?
3) Because our revenues have increased, will we eventually have greater revenues than Manchester United? I know it’s hard to say that regarding Madrid’s income because of the marketing income that the new signings will generate, that is why I am solely comparing us to Manchester. But I am not asking only about having revenues bigger than Manchester United for one year. I am asking whether we will be able to sustain having greater yearly revenue than Manchester United, and thus occupy the top 2 spots along with Real Madrid, year after year?
4) If we elect someone else for President other than Laporta, will he and his board be able to continue keeping the revenue as large as it has become under Laporta? The reason why I ask this is because Barcelona, with its current financial strength, is at a unique point in history because the club has never generated as much revenue and thus has never had so much financial muscle.

jordy said...

I think we need to acknowledge that laporta is the best president ever. We clear our debts and have and had the best players on the planet (ronnie, xavi, iniesta and ofcourse messi)
We also have the prestige real had in 2002.
Also cruijff has played a big part in this.

Je me'appelle Samuel said...

I'm not to familiar with the situation of Laporta.

According to the report by Deloitte, Barcelona is already number 2 for the 2008/2009 season. This report was based on the 2007/2008 season. If you figure all the bonuses from the treble the article points out they are #2.

chris said...

Nice article, but I already knew these facts. I knew we cleared our bank debt last year, but our other debt is never mentioned. Does anybody know how much is it?

Ramzi said...

Good job, Samuel. Keep the good work!

BarcaFan(BiH):

- Laporta cannt run for Next year presidency.

- I think limiting the number of presidencial periods has something rooted in the Catalan culture where democracy practice means continious changing of the people in power to avoid the franco-like regimes. Not sure about this detail, but I guess in a way or another it has to be related subconciously at least to that factor.

- Regarding finance. Lot of factors concur to give Man Utd their marketing Value (not nessesarly financial stability, not that they have a big loan to clear) some of the factors are club related, including global success. which is achievable for barcelona and we are heading fast in that sense. Another factor is the club Mission. With sponsors and shirts and stuff, they are more business oriented. They invaded the good potential markets early when it was still raw in a way, rooting their brand name and yielding outcomes. We were absent in that period and will need time to overcome.

But most importantly, the EPL is well organized and promoted in a way that makes it easier for EPL clubs to improve their images/markets. I cant say the same about the Liga.

- It depends who comes next, but I believe there is a good generation of managers in the current time, so unlike previous eras, this time it will be more a competition between good and better, rather than bad and worse. I hope at least.

Athul said...

Can anyone name some other Spanish teams that are relatively debt free???

Does Villareal and Sevilla feature in this??

What about the biggest clubs in Europe other than EPL or La Liga??

BarcaFan(BiH) said...

Thanks Ramzi!!!

Your answers certainly help put things into perspective. Thanks again for taking out the time.

Keep up the good work with your articles.

Kool Keith said...

Great article!

One thing I would like to see here though, is a report on the Barcelona - Uzbekistan link. In Sweden a major newspaper had an article saying Barcelona had shady dealings in Uzbekistan, a place where the people is opressed and a "dictator" rules with ironhands.

I would love to understand more about this link because its something that FCB haters keep bringing up.

Je me'appelle Samuel said...

Uzbekistan? What business does a cule have over there. :D

groga said...

Laporta has a lot of business over there...

Smogen said...

Ramzi


I dont think its down to catalan culture that a president cant sit for more than two periods, remember Núñez? he sat between 1978 to 2000. thats a long time!

sashi said...

i read the entire document of Deloitte :) its a 42 page doc and its wonderfully written!!! am proud to be part of it as well as BARCA!!!

Random Juve Fan said...

@Athul The other clubs that are heavily in debt in Spain are Valencia, Deportivo, Villarreal, Espanyol, Racing Santander, Zaragoza and Sevilla. The article from the magazine also says that Barca are 384 million pounds in debt. Does Atletico Madrid have the same deal with the Government and Madrid banks as Real?

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