FC Barcelona back on the road to profits and looking to initiate a new virtuous circle
This Thursday, FC Barcelona has presented its accounts for the close of the 2021/22 financial year and the budget for the current season, 2022/23, which will be submitted to a vote by the delegate members under items 2 and 3 of the Ordinary General Assembly to be held next Sunday 9 October. Closure of the 2021/22 financial year shows a positive result of 98 million euros after taxes, with operating income of 1.017 billion euros and operating expenses of 856 million euros. As for the budget, the objective for the 2022/23 season is turnover of 1.452 billion and a profit after tax of 275 million.
Financial vice-president Eduard Romeu detailed the figures for a season marked by the effort to recover revenue despite continued difficulties in the aftermath of the pandemic, the rationalisation of costs and the sale of 10% of the television rights to men’s LaLiga matches. This last item has reported a gross income of 266 million euros that were not initially foreseen in the budget, approved at the assembly of last 16 June 2022 and which, once the operation is signed, will be subject to presentation and ratification at next Sunday’s assembly.
Without the effect of this extraordinary sale, the club still received 750 million euros in other operating income, very close to the budgeted target and surpassing the result for the previous year by 119 million euros, mainly thanks to the gradual recovery from the effects of the Covid-19 pandemic.
There has also been a 415% increase in revenue from the operation of the stadium and other facilities, with the 2021/22 season reflecting a return to pre-pandemic levels (131 million euros), following a 2020/21 season with no fans in the stadium or visiting the club facilities.
In contrast, media revenue has decreased by -11% mainly due the elimination of the men’s team from the UEFA Champions League group stages and hence its absence from the lucrative knockout stages of this tournament and the effect of the postponement of competitions in the summer of 2020, which distorts the comparative analysis with respect to the previous year.
Reduction of expenses
On the other hand, the club has presented operating expenses of 856 million euros, 72 million euros above the budgeted amount, due in part to the effort made during the winter transfer window to strengthen the first team squad. Even so, the club has been able to keep the payroll of its athletes at 518 million euros, 99 million below the payroll of the previous financial year.
Note that the club has kept the ratio of payroll over income within the parameters recommended by the main governing bodies of sport, whether or not the extraordinary sale of television rights is taken into account, and that for the first time in recent seasons it has managed to reduce the debt, following the criteria applied by the LFP. The net debt, as of 30 June 2022, was 608 million euros (682 million at 30 June 2021). It is also important to highlight the restructuring of this debt, achieving an important transfer from short to long term through the issuance of senior notes in August 2021.
Regarding treasury, the club is in a more solid cashflow position than the previous year, with 378 million euros available, which implies a rise in working capital, which is the difference between the amounts payable and receivable in the following year, and that thanks to this year's positive result, the downward trend in the club’s Net Worth has been reversed. This had recovered to minus 353 million euros at the end of June (as of 30 June 2021, it stood at minus 451 million euros).
The club has met all of its commitments and obligations. Even so, the situation is still awkward both in terms of outstanding debts and contractual commitments, and there is still a lot of hard work to be done to restore balance to the club’s ordinary profit and loss account and generate sufficient cash to continue growing.
Foreseen budget of 1.255 billion in income
Romeu also presented the budget for the 2022/23 financial year that will be approved at the Assembly next Sunday, as well as the two extraordinary operations signed during the summer of 2022, which have already been approved by the Assembly, and which will be ratified by a special vote among members. The budget includes an operating income of 1.255 billion euros, an all-time club record for turnover thanks to the sale of 15% of men's La Liga television rights for 400 million euros.
Without taking into account this extraordinary effect, the club expects to raise the remainder of its income by 105 million euros compared to the 2021/22 financial year, thanks to the improvement of its sponsorship contracts, especially the agreement signed with Spotify, to the strategic growth plan for the merchandising business and also thanks to the full recovery of income from use of the stadium. The club has been able to enjoy a full season without any effects arising from the Covid-19 pandemic for the first time since the 2018/19 season.
In the operating expenses section, the club made a significant effort to make new signings in the summer transfer market, bringing in several world class players and renewing the contracts of key members of the team, vastly improving the overall quality of the squad, and there are also a number of long-term contractual commitments that have yet to be addressed. The club is working to contain the sports payroll for the coming seasons as one of the most important aspects of the presidential mandate.
Impact of the sale of assets
Regarding the extraordinary operations for the sale of assets signed during the current 2022/23 season, last July the club made a second sale, in this case of 15% of the TV rights to LaLiga matches, thus accounting for an additional gross income of 400 million euros.
Finally, the club sold 49% of its stake in BRIDGEBURG INVEST SL, a company that exploits FC Barcelona’s digital audiovisual business, specifically the sale of metaverses, NFTs and tokens. This operation accounted for 200 million euros of gross income, as well as the inclusion in this deal of two strategic partners, namely Socios.com and Orpheus Media, which will produce an acceleration of the business.