2023-10-10 17:45:37
Barcelona Barça has made the audited accounts available to members after the 2022-2023 financial close. There are ten working days left before the annual meeting and the board of directors is required, by statutory mandate, to provide this information before submitting it to a vote along with the budget for the current year. The club announced a few days ago profits of 304 million euros, but the figure, as deduced from the audit of Grand Thornton, is born of accounting engineering, since ordinary Barça business leaves millions of losses. This portrait shows the problems of the institution to fulfill the fair play finance of the League. Without going any further, the only way to complete the transfers of João Cancelo and João Félix on the last day of the summer market was the issuance of a personal endorsement by executive president Joan Laporta and treasurer Ferran Olivé.
Barça’s remedy to compensate for an expenditure 100 million higher than budgeted is none other than to target, on the one hand, 400 million (between sale and capital gain) from the operation with Sixth Street to transfer 15% of the television rights as operating income and, on the other hand, 400 more for the sale of 49% of Barça Studios and the accounting treatment of the remaining 51%, whose ownership is still in the hands of the club. Both concepts appear in the profit and loss account (with the corresponding discount associated with corporation tax), but only the first is part of the ordinary activity.
Barça Studios, 400 million expectations to fulfill
The auditor validates these practices, but highlights the “uncertainty” surrounding the capitalization of the entity’s audiovisual and digital business, Barça Studios, a tailor’s drawer valued at 400 million of which the club has only paid 40 of the 200 announced in the summer of 2022 and partially repaid in 2023 in two operations made to raise the salary ceiling of the first football team. Of these, 20 were placed between Socios.com and Orpheus Media in the summer of 2022, while the other 20 arrived two months ago from an anonymous Cypriot investor operating from Nipa Capital, a Dutch firm to whom the club transferred 19.7% of the previously sold stake.
“Following the agreement to modify the maturity of the invoicing schedule between the club and one of the new partners, it is expected that during the last quarter of 2023, the latter can make effective the remaining payment of 40 million euros.” This extract from the audit refers to Libero Football Finance, which according to Barça’s initial plans had to pay this amount first before the end of August and then before October 10 for the 9.8% that had acquired from the audiovisual subsidiary. The money has not yet arrived and the offices of Aristides Maillol acknowledge that they are looking for alternatives to cover the hole.
“Additionally, Barça has reached an agreement with the company Mountain Partners & Co | Adquisition Corp through which the activities of Barça Media (new name for the entire audiovisual and digital business) would form part of a business combination that would allow the club to hold a majority stake in an entity listed on the Nasdaq, facilitating the acceleration of the business and the entry of a significant source of income together with the entry of strategic partners”. This is the definition, in other words, of the maneuver to capitalize, through a stock market SPAC, the same tailor’s drawer that Barça values at 400 million and which, by now, does not even have a manager assigned to the organizational chart. The Nasdaq exit operation has been postponed (for now) until March due to Libero’s default and the uncertainty conveyed by other previously committed investors. In fact, it was planned for the board to explain it at the next October 21 assembly, and in the end it has not been included in the agenda.
Between the lever of Sixth Street and the accounting treatment of the sales operations of Barça Studios, according to the auditor, the club “adds profits from non-recurring operations in the amount of 800 million”. In other words, and considering an expenditure of 1,165 million, Barça has sold assets that compromise future income in exchange for cushioning million-dollar losses in the present. Since the volume of ordinary business, estimated at 800 million despite the improvements in sponsorships, ticketing or merchandising, is insufficient to compensate for such an expense, the club must consider the sale to Sixth Street as operating income in the income statement and must add the 400 million Barça Studios as an asset in the balance sheet. Without the first operation, the ordinary loss would go up to 330 million. Without the second, the patrimonial imbalance in the balance sheet would reach up to 500. Despite everything, the board of Laporta are optimistic about the approval of the numbers in the assembly.
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