Barcelona was officially insolvent when its new president, Joan Laporta, took over earlier this year, according to the club.
While releasing the results of a Deloitte audit that began after Laporta arrived in March following the departure of former president Josep Bartomeu and his board of directors last year, Barcelona CEO Ferrán Reverter painted a bleak image of the club’s financial condition.
The audit found “severe administrative flaws” during Bartomeu’s administration, according to Reverter, who has previously denied responsibility for the team’s present financial woes.
“The new board of directors and its new executive structure were confronted with a negative equity and technical insolvency economic and financial situation,” Barcelona stated.
According to Reverter, the new administration discovered 1.35 billion euros ($1.55 billion) in debts and potential obligations.
“The club struggled to pay all the wages,” he claimed, adding that there was no operating cash flow. “The necessity for refinancing was pressing.”
He said that the new administration had to completely reorganize the club’s finances and substantially decrease its payroll in order to begin getting back in shape, which was one of the reasons why Lionel Messi was not offered a new contract. Messi finally signed a contract with PSG.
Reverter stated that the club’s future success would be dependent on young people from Barcelona’s renowned “La Masia” program.
“If we keep doing that, we can return Barça to its rightful place,” he added.
Barcelona lost 481 million euros ($554 million) in the fiscal year 2020-21, due to “both declining income and failure to manage to spend.”
Revenues were 631 million euros ($728 million), “well below the budgeted amount of 828 million euros ($955 million),” according to the club. Revenues fell by 224 million euros ($258 million) compared to the previous year, while costs climbed to a new high of 1.14 billion euros ($1.32 billion).
Barcelona’s pay limit had to be cut to 97 million euros ($113 million), down from 334 million euros a year ago and more than seven times lower than Real Madrid’s.
After Bartomeu resigned amid his feud with Messi, Reverter claimed the audit was necessary to properly comprehend the club’s financial condition. The audit took longer than planned, according to Reverter, because Several papers, including emails that had been erased, were missing. A “forensic investigation” is still underway to look for any anomalies.
The club attributed the financial difficulties to a six-fold rise in financial expenditures, as well as an increase in the players’ salaries and administrative expenses.
Antoine Griezmann and Philippe Coutinho’s moves, according to Reverter, are examples of poor signing management. Griezmann was loaned back to Atlético Madrid this season to free up salary-cap space for the club.
“There was no budgeting done. “They signed players without knowing whether or not they would be able to pay for them,” Reverter explained. “There was an inverted pyramid, with senior players on multi-year contracts and young players on one-year contracts, which makes negotiations difficult.”
According to Reverter, the club has failed to meet its obligations to banks, the Spanish league, and UEFA. He also claimed that the club’s facilities, particularly the Camp Nou Stadium, were not adequately maintained.
The club’s financial troubles, according to Bartomeu, are primarily due to the coronavirus epidemic. According to Reverter, the pandemic’s impact so far has been around 108 million euros ($124 million), which does not include the costs of the epidemic.
