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By Corbin Hicks • Issue #245 • View online
Hey {{first_name}},
A few months ago I wrote an update on how soccer team FC Barcelona is handling its debt crisis while trying to remain competitive. When they reached a landmark sponsorship deal with Spotify, they also promised further efforts of fundraising to stay compliant with Spanish regulations. With the season starting in less than a week, we’re finally at a point where it’s time for the organization to put up or shut up regarding how they prepare for the future, and things are off to a horrific start.
In addition to the Spotify deal, which involved allowing Spotify to rename its iconic stadium, the club has decided to activate a few of its other “financial levers” to reach the land of prosperity. Because the team is publicly owned and has shareholders, the club had to bring its spending proposal to its members and have them vote on it. All of their proposals were approved in June and the club has begun implementing the plan. This included selling 25% of their TV rights for the next 25 years to U.S. private equity group Sixth Street. This move was followed up by selling 24.5% of its production company Barca Studios to sports cryptocurrency organization Socios.com. However, Barcelona isn’t in the clear just yet.
Spanish league La Liga does not have a salary cap so to speak, but they do provide a limit for how much a team can spend in any given calendar year. This is based upon a financial audit that balances how much the club makes in revenue versus how much they spend. After review, it was determined that for the upcoming season Barcelona’s spending limit was negative $158M. That means that to spend money and register new players appropriately with the league, Barcelona would have to prove that they had come up with funding to cover the $158M in losses and have extra funds needed for new player salaries. So far this is proving easier said than done.
From the aforementioned fundraising efforts, the club has raised some funds but they have now come under scrutiny as claims have been aimed at the organization of using shell companies to overinflate these values. Until the investigation is concluded, the league won’t lift the negative spending limit that the team has. This makes registering new player signings or contract renewals impossible. Barcelona’s first game is less than a week away and there are now serious doubts about whether the team will even be able to use Robert Lewandowski, Jules Kounde, Raphinha, Franck Kessie, or Andreas Christensen. Why a team that’s a billion dollars in debt would buy five new players that they weren’t sure they would even be able to register is indicative of the type of business blunders the organization makes that have led them to this point in the first place, but I digress.
The club seems to have a secret weapon that they can use to fix all of their registration problems. Midfielder Frenkie de Jong is being highly sought after by British clubs Chelsea and Manchester United. A de Jong transfer to England would bring Barcelona somewhere in the range of $80-100M instantly and that would free up the salary cap space needed to register their players. The decision now lies with de Jong on where his future lies and what will be his team for next season, but there’s one small problem. de Jong doesn’t want to leave.
de Jong has publicly stated his desire to remain at Barcelona despite all of their attempts at convincing him otherwise. There’s also the fact of the matter that Barcelona owes de Jong roughly $20M in deferred wages from an agreement that was drafted and signed in October 2020. Barcelona is trying to challenge the legality of this reduced wage contract, but regardless de Jong wants to be paid in full what he’s owed before entertaining switching teams and Barcelona is trying to wipe their hands clean of the situation without paying de Jong. This situation is also happening with other players such as Martin Braithwaite, who also is owed huge sums of money and refuses to leave until this is paid in full. This led to an awkward situation where he was vociferously booed during a preseason game for his perceived stubbornness. This keeps getting worse for Barcelona.
The team has money that their league is not allowing them to spend. They have players who have unpaid wages that they either can’t or don’t want to pay. They have five new players that they are unable to use for their season opener this Saturday. And last but certainly not least, they’re selling off portions of all of their future revenue which will impact their ability to dig themselves out of their financial rut. And if any of this impacts their on-field results, the same members that supported the activation of these financial levers will be calling for all of their resignations.
What could possibly go wrong?
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Yung Gravy - Betty (Get Money) (Official Music Video)
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Corbin Hicks

"The Power Elite" meets "Rules for Radicals"

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