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Barcelona Spent Its Way Into Crisis. Can It Now Spend Its Way Out?

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Joan Laporta’s smile was hard to miss. Staring down from an enormous digital billboard last month, the grinning image of the president of the Spanish soccer giant F.C. Barcelona covered almost a complete side of the Palms Casino Resort in Las Vegas.

The billboard scrolled through other images — there was one among a handful of Barcelona’s players, and one other of its coach, Xavi Hernández — but soon enough it was back to Laporta. And it was that sight, a beaming president front and center within the gambling capital of the world, that was perhaps one of the best symbolism of the financial mess by which Barcelona currently finds itself, and of the boundless confidence of the person who says he has a plan to repair it.

Barcelona, in true Vegas style, is doubling down.

A team that lower than a yr ago was unable to satisfy its huge payroll; a business that, with losses of 487 million euros ($496 million) last yr, was described by its own chief executive as “technically bankrupt”; a club that’s currently saddled with debt of greater than $1.3 billion, has decided one of the best ways out of a crisis brought on by financial mistakes, wealthy salaries and lavish contracts is to spend its way out.

It has sold off one club asset after one other to raise roughly $700 million to assist balance its books. Yet it’s plowing ahead with a $1.5 billion project, with financing arranged by Goldman Sachs, to renovate and modernize its iconic stadium, Camp Nou, which due to the rush to lift funds will for the primary time carry the name of a sponsor. And it has paid out more cash on recent signings this summer than almost another major team in Europe, with a recent flashy acquisition announced to great fanfare on a seemingly weekly basis.

The freewheeling spending has raised eyebrows amongst Barcelona’s rivals and concerns amongst a few of its 150,000 members in regards to the club’s financial viability if Laporta’s big bet doesn’t repay. However the president, in an interview on the Manhattan headquarters of The Latest York Times, offered repeated reassurances that he knows exactly what he’s doing.

“I’m not a gambler,” Laporta declared. “I take calculated risks.”

Risk, nevertheless, has change into a fixture at Barcelona.

Laporta was elected club president for a second time last yr after his predecessor and the previous board were ousted for what amounted to the simultaneous financial and sporting collapse of one among the world’s great sports teams. While many expected Barcelona to rebuild slowly, to live inside its means in a period of humbling austerity, Laporta has decided as a substitute to steer Barcelona on a totally different course. He says he has no alternative but to attempt to win every yr.

“It’s a requirement,” he said.

Greater than $700 million has been raised by selling pieces of the club’s business. Twenty-five percent of the club’s domestic television rights — for 1 / 4 century — went to an American investment fund. Spotify, the music streaming service, signed a four-year deal to place its name on the Camp Nou and the much more invaluable real estate on the front of the team’s jerseys. On Monday, Barcelona announced the sale of 1 / 4 of its production business, Barca Studios, to a blockchain company, Socios. It’s in talks to sell a part of its licensing business next.

As a substitute of paying off club debt, nevertheless, the cash has largely gone toward accumulating recent talent: $50 million for the Polish striker Robert Lewandowski, $55 million for the French defender Jules Koundé, almost $65 million for the Brazilian wing Raphinha. Several other players joined as free agents. More reinforcements could also be on the best way.

To Laporta, signing Lewandowski, who will soon be 34, and the others makes perfect sense. It is an element of what he contends will likely be a “virtuous cycle” by which success on the sphere will shore up the team’s funds through a rise in revenue. The strategy is a repeat of the recipe he used during his first tenure as president, a seven-year period that began in 2003 and ended with a Barcelona team celebrated as among the finest in soccer history.

“In my time we put the expectations very high and we were successful,” he said of his previous tenure. “After which the Barça fans around the globe, around 400 million fans worldwide, they require a level of success.”

But times, and revenues, have modified. The club Laporta inherited in 2003 was mired in a financial crisis, too, with losses of just about double its revenue and mounting debts. However the figures were 10 times smaller back then, and the club had not yet begun the technique of transforming itself into the industrial juggernaut it has change into.

Those teams also weren’t required to satisfy exacting constraints on player spending which have since been enforced by the Spanish league, and it’s those rules that pose essentially the most immediate obstacle to Laporta’s revival plan. Because La Liga has insisted it is going to not ease the foundations by a single euro for Barcelona, the club has not yet been capable of register any of this summer’s recent signings. Wary that the team won’t make the deadline, the league has not yet used any of those players, even Lewandowski, the reigning world player of the yr, in any of its branding for the brand new season.

Essentially the most recent asset sales should clear the best way for Barcelona to satisfy La Liga’s financial rules and register its battalion of recent signings, Laporta insisted. “That’s been a choice that in honesty I didn’t wish to do,” he said of the sales, at the same time as they are going to — at the very least temporarily — push Barcelona’s balance sheet into profit.

That variety of maneuver — a combination of boldness and brinkmanship — is typical of Laporta, who advantages from a cult of personality unmatched by previous presidents in the course of the club’s modern history.

It’s why he can put himself on Las Vegas billboards, and why he can proceed to advocate publicly for the short-lived and widely reviled European Super League. (Barcelona, Real Madrid and Juventus — three of the 12 teams that signed up for the breakaway concept — are forging ahead with the project, which Laporta said is now being envisioned an open competition that may profit the most important teams. He met recently with Andrea Agnelli and Florentino Pérez, his counterparts at Juventus and Real Madrid, in Las Vegas to debate the following steps.)

But Laporta’s popularity can also be why he can get away with financial risks that almost definitely would have been unacceptable had they been proposed by previous presidents, and particularly his unpopular predecessor, Josep Maria Bartomeu.

“What would occur if Bartomeu did similar to the present president is doing?” said Marc Duch, a club member who helped oust the previous board. “We’d all be on fire, pointing at him and trying to fireside him.”

Laporta is granted a wider berth, and even backed by fanatical defenders on social media, Duch said, due to his links to the sooner golden era. “There’s successful story behind Laporta,” Duch said. “He has an enormous fan base: He’s just like the Pope, like Kim Jong-un: the supreme leader.”

Laporta’s intensely personal form of leadership has also emerged in other changes on the club. To run for president, Laporta first had to lift a guarantee of 125 million euros, a bond that was established essentially as a protection against mismanagement. However the club’s members recently agreed to rule changes that mean that he not has any personal risk, based on Victor Font, a businessman who challenged Laporta for the presidency. Due to that, Font said, Laporta — by borrowing money and selling assets — is risking the club’s future, not his own.

“If things don’t work out,” Font said, “we will likely be hitting a wall.”

Conflict of interest regulations were quietly altered last yr, too, ushering an array of Laporta’s friends, former business partners and even members of the family into executive roles. To Laporta, those changes were essential given the challenge he inherited. “I want to have the folks that I trust,” he said. However the circle continues to shrink: A chief executive appointed by Laporta quit inside months; as a substitute of replacing him, Laporta took on his duties himself.

At the identical time, he has needed to rebuild trust with a gaggle of players and persuade many to simply accept salary cuts, in some cases value hundreds of thousands of dollars, at the identical time the club is splashing eight-figure sums on recent talent. Laporta described the players who’ve accepted pay cuts as “heroes,” and insisted that by reducing its wage bill and offloading some high-earning players the brand new arrivals would fit inside a rigorously crafted salary framework. However the business of getting there has not all the time been nice.

One player who has to this point refused to simply accept either a pay cut or a move to a recent club is Frenkie de Jong, a 25-year-old Dutch midfielder acquired in the summertime of 2019 at the associated fee of nearly $100 million. De Jong has been the topic of intense speculation all summer as Barcelona has pushed publicly for him to conform to a reduced salary — he had already agreed to defer 17 million euros ($17.3 million) — or accept a move to a recent club. (Manchester United reportedly has been essentially the most eager bidder.)

But de Jong has made clear he desires to stay in Spain, and while Laporta declared his “love” for the player, and said he was not on the market, he added that de Jong needed to “help the club” by restructuring his salary. Unions and the Spanish league president have each warned Barcelona against exerting pressure on de Jong, and in response Laporta has said his club pays de Jong what he’s owed. “He has a contract, and we follow the contract,” Laporta said.

Much of Barcelona’s current plight, satirically, may be traced to the era of success it enjoyed during Laporta’s first term. Those teams played a brand of soccer that was unmatched, producing a string of trophies but additionally a squad of popular superstars commanding ever-increasing salaries. No single player personified that escalation greater than Lionel Messi, whose last contract at Barcelona was value around $132 million per yr.

As Barcelona’s debts grew, though, signing Messi to a recent contract that may align with La Liga’s financial rules became inconceivable. Priced out, Messi bade a tearful farewell to Barcelona, joining Qatar-owned Paris St.-Germain as a free agent. Laporta, who had pledged to retain Messi as a presidential candidate, has since wistfully suggested that he would really like to bring him back.

“I feel like I actually have, because the president, an ethical debt to him in an effort to give him one of the best moment of his profession, or give him a greater moment, for the top of his profession,” Laporta said, offering no explanation for the way that may be done.

The connection, meanwhile, has frayed: Laporta, in perpetual campaign mode, continues to suggest he’ll attempt to bring Messi home. Messi has previously expressed his frustration at how Laporta characterised his exit, and his father reportedly has asked the Barcelona president to stop speaking about his son in public.

Discussion of find out how to resolve that situation, though, can come later. The identical is true for difficult questions on where Barcelona will proceed to seek out ever-increasing revenue streams in a post-pandemic economy, or about what it is going to do if it could possibly’t register all of its signings, or what happens next yr, or the yr after that, when the nine-figure bill comes due.

Laporta resides in the current. “Winning,” he said, “is a universal human motivation.”

But now he’s out of time. Laporta politely ends the interview, saying he has to rush off. He has appointment at Goldman Sachs, to debate a recent financing arrangement.

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