Ken Early: Barcelona double down on their actual core value — creative accounting

“The humming buzz of hyper-compressed energy fills the void, barely contained within such an incredibly small singularity; it is the initial spark before the eruption, displayed in its full glory as the very fabric of time is infinitely stretched to its individual threads …”

So claims the blurb on the Sotheby’s auction page for FC Barcelona’s latest money-for-old-rope scheme: an NFT [non-fungible token] of Johan Cruyff scoring his famous drop-kick goal against Atlético Madrid.

To the untutored eye, the style of the Cruyff animation resembles the animated golden lion who roars and puts his paw on the ball in the intro sequence to Premier League matches. It’s a level of animation that would have astonished the world in 1973 when Cruyff scored the goal, but has seemed fairly standard since Terminator 2.

Per the blurb, there is much more going on: “Towering above the surface is the man, graced by the light of his monumental feat, a vessel for greatness made forever immortal … Past, present and future become one with heritage, legacy and ambition … The echo of ten thousand souls cheering disrupts the silence, like the flash of lightning splitting the night. A song reminiscent of ancient empires and civilisations …”

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The ketamine rush of the prose is hardly the most astonishing facet of a vast creative endeavour which, we read, “entailed a total of more than 10,000 production hours.” Since the current leading bid is $55,000, it’s starting to look like Barcelona might not make money on this venture. Could they bargain the creatives down to less than $5.50 an hour? They could try the same tactics they’ve been using on Frenkie de Jong.

While the deal is looking bleak at Barcelona’s end, it might not be so bad for the eventual NFT owner, who will also receive privileges including “Meet & Greets, visits to La Masia, hospitality rights (for a minimum of five years), the right to play at the Spotify Camp Nou …” When you think about it, $55,000 is actually not much more than the price of a single ticket to John Delaney’s Vantage Club.

Thoughts of Delaney are never far away when you look at Barcelona this summer. It appears certain Barca thought leaders have drawn inspiration from Delaney’s feats of financial engineering much as Clausewitz studied the battles of Napoleon.

People say comedy doesn’t age well but that doesn’t apply to unintentional comedy

In August 2020, after Barcelona lost 8-2 to Bayern Munich, the question arose: what are they going to do about this beached whale of a team? Their big signings have failed, Messi is old, their debts are huge and their rivals are rich. How can they rebuild from this point?

At the time, I guessed in these pages that they would react by doubling down on Catalanismo: “There’s never been a better time for Barcelona to remember that football is about more than just winning … [get ready for] a resurgence of community values, ‘more than a club’ rhetoric, a sea of red and yellow stripey flags, Xavi in the dugout and cantera players with good Catalan names out on the field. Such a ‘back to basics’ strategy would have the additional advantage of affordability …”

People say comedy doesn’t age well but that doesn’t apply to unintentional comedy. “Back to basics” and “affordability” — at Barcelona! What Barcelona did I think I was talking about?

Two years on, we can see that rather than turning the Catalanismo up to 11, Barcelona have doubled down on their true core value: creative accounting. The sound of Barcelona’s summer has been president Joan Laporta’s slogan about “activating economic levers” — because “we are activating the economic levers” sounds better than “we’re mortgaging our future” or “to put it in personal terms, it’s a bit like selling one of our own kidneys”

Barcelona have sold 25 per cent of their domestic TV rights for the next 25 years to their American capital solutions partner Sixth Street. The deal is worth a little more than €500 million, while their La Liga TV rights were worth €166 million in 2021. Based on the most recent figures it will therefore end up costing them more than a billion euros to receive the €500 million up front, though the value of the TV rights deal is obviously subject to fluctuation. They are exploring the possibility of selling 49.9 per cent of their licensing and merchandising operation in a deal which they hope will bring in another €300 million.

Much of this money is going to balance the books and satisfy La Liga’s somewhat arcane salary rules. The part that has surprised everyone is they are still paying big transfer fees. Franck Kessie and Andreas Christensen on free transfers are the sort of signings you expect a club in this position to make. Raphinha and Robert Lewandowski (34 next month!) for a combined €100 million are not. They are also interested in €60 million-rated Sevilla defender Jules Koundé and Chelsea defenders Cesar Azpilicueta and Marcos Alonso.

You don’t need to be a financial genius like Joan Laporta to know that taking on long-term debts to fund current expenditure is a recipe for disaster. So why is he doing it?

The simplest explanation is that Laporta knows he’s here for a good time, not a long time. He could launch some boring multiyear rebuild, but how much more exciting is it to gamble everything on vaulting straight back to the top? Underlying this, of course, is the assumption that even if all goes horribly wrong, it won’t matter — because Barca is too big to fail. It’s not like Barcelona is ever going to become the kind of distressed asset that ends up being owned by Mike Ashley … is it?

A more generous reading is that what Laporta is doing makes sense if you believe radical changes are imminent. If Barcelona, for instance, were to be part of some kind of super league which dramatically increased their overall income, then the sale of 25 per cent of their domestic TV rights would no longer be a big deal.

Right now the super league is still a big if. By treating their debt addiction with more debt — in the hope that some game-changing economic development is about to turn up — Barcelona are like a guy who decides not to give up smoking because he’s betting that by the time he gets cancer they’ll have found the cure.

By the time he [Laporta] left in 2010 Barcelona had surpassed United in revenue while building the best team in the world

Don’t worry, Laporta could point out: I’ve done this before. His first stint as Barcelona president began in 2003 when the club reported less than half the revenues of Manchester United. By the time he left in 2010 Barcelona had surpassed United in revenue while building the best team in the world.

But back then Barca were able to boost their income quickly by grabbing a lot of low-hanging fruit — increasing ticket prices, appealing to tourists, targeting fresh markets abroad, signing new sponsorship and TV deals, increasing membership numbers, etc.

The economic landscape of 2022 is different. If any low-hanging fruit remained you can be sure Barcelona would not have been reduced to pawning chunks of future earnings. They would not be playing at the Spotify Camp Nou. They would not be selling one of their best players in Frenkie de Jong.

In the deglobalising world of 2022, there are no obvious paths to further rapid growth. That also means nobody else is growing very fast right now either. Barcelona could have been more patient and not risked losing much ground. There is a desperation about the approach they have chosen instead. They were the laughing stock of Europe for much of last season and still, they finished second in La Liga. They will be the laughing stock of Europe this season if they don’t finish first — and that would be the least of their problems.