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After A Champions League Exit, How Much Financial Risk Faces FC Barcelona?

Soccer article at Knup Sports

FC Barcelona was eliminated from the Champions League on Wednesday. With the team already at significant financial risk, their early elimination from the competition is unlikely to help the situation.

FC Barcelona was eliminated from the Champions League on Wednesday. With the team already at significant financial risk, their early elimination from the competition is unlikely to help the situation.

After A Champions League Exit, How Much Financial Risk Faces FC Barcelona?

Perhaps one of the biggest storylines in European soccer over the last several years has taken place off the field. Attention and controversy have surrounded FC Barcelona’s financial situation; a series of events that have so far caused a change in the team’s president from Josep Bartomeu to Joan Laporta, pushed the team towards the creation of the European Super League, and has led to drastic measures to restore stability to the club’s finances.

However, this summer, Barcelona completed multiple significant transfer signings to attempt to return to contention to win La Liga and the UEFA Champions League. So far, the strategy hasn’t worked, with Barcelona already eliminated from the Champions League before the final matchday of the group stage.

How Much Can Financial Difficulties Damage a Club?

One of the best examples of financial difficulties causing long-term damage to a team is Leeds United. The club was one of the most important in England for much of the second half of the 20th century, especially in the 1960s and 1970s, but in the early 2000s concerns over the club’s finances began to grow.

By the end of the 2003 season, Leeds United was already facing relegation as a result of having to sell multiple players during various transfer windows in an attempt to repay loans and financial obligations. In May 2004, at the end of the next season, Leeds was relegated and saw almost their entire team depart due to the financial impacts of the past several seasons.

In 2004-05 Leeds’ troubles continued. By the end of the 2006-07 season, the club’s financial difficulties remained, and the team was relegated to EFL League One, the third-tier of English football, for the first time in its history. To make matters worse, Leeds United officially entered administration, preventing the team from signing almost any players during that summer.

It took Leeds United almost two decades to recover from the financial difficulties. They didn’t return to the EFL Championship until the end of the 2009-10 season. After they were promoted to the Championship, Leeds United spent the next 10 seasons in the second tier before finally returning to the Premier League, 16 years after their relegation, in 2020.

Even now, Leeds has not finished higher than ninth since their return to the Premier League. Earlier this year, the team faced relegation on the final day of last season before a win meant they remained in the Premier League, and currently, they are in 18th place after their first 11 games of the season and would be relegated if the season ended today.

Part of the reason Leeds faced so much financial turmoil was that the club had taken out loans assuming that the team would have success in European competition. As the team tried to replay the loans without qualifying for the Champions League it resulted in multiple important players leaving the club as Leeds hoped the transfer fees would repay the loans. The strategy ultimately failed, leaving the team in major financial trouble; resulting in Leeds United’s two relegations.

FC Barcelona’s Finances

In 2020, in part due to the COVID-19 pandemic, and partially due to high salaries, significant transfer fees, and other financial commitments, it became clear FC Barcelona was facing major financial issues. The club faced significant debt and large salary commitments.

The financial troubles led to the team changing presidents, with Joan Laporta, who had previously been the club’s president from 2003-2010, returning to the role in 2021.

Laporta immediately started to implement his strategy for stabilizing the team’s financial situation. Since his return to the presidency, Laporta has set in place what the club describes as “economic levers,” which have so far included selling parts of future broadcasting revenues. The team has also pursued selling part of its licensing and merchandising department.

While FC Barcelona has faced massive financial difficulties over the past few years, the club has still pursued major transfer signings. They let multiple players leave the team on free transfers after the expiry of their contracts this summer, but still spent a total of more than $125 million during the transfer window; including $63.8 million to sign Raphinha from Leeds United, $55 million to sign Jules Kounde from Sevilla, and $49.5 million, in addition to a significant salary commitment, to sign Robert Lewandowski from Bayern Munich.

Barcelona and Laporta’s goal was to translate the summer spending into immediate success on the field to generate more income from the Champions League. However, the group-stage draw immediately presented issues with the plan.

FC Barcelona was selected for one of the most challenging groups in the competition this season, with Inter Milan and Bayern Munich joining the team in Group C along with Czech First League winners Viktoria Plzen. FC Barcelona’s Champions League schedule started with a 5-1 win against Viktoria Plzen, but a 2-0 loss to Bayern Munich and a 1-0 loss to Inter Milan in their second and third games meant FC Barcelona entered match-week four facing elimination from the competition.

In their fourth Champions League game, Barcelona effectively needed to win to avoid finishing in third place. Ousmane Dembele gave the team the lead in the 40th minute, but 50th and 63rd-minute goals put Inter Milan in the lead. Barcelona eventually tied the game in the 82nd minute, and both teams scored in stoppage time, but the 3-3 draw all but guaranteed Barcelona’s elimination from the Champions League; which was formalized after Inter Milan won against Viktoria Plzen on Wednesday.

The team’s early elimination from the most prestigious European competition is sure to make the financial difficulties facing the club even more challenging to solve. FC Barcelona still has to pay salaries that some players agreed to defer during the pandemic.

Most notable among those players is Frenkie de Jong, who FC Barcelona explored transferring this summer. The team actually reportedly agreed to a transfer fee with Manchester United before De Jong refused the move.

As the January transfer window approaches, FC Barcelona will likely have to restart talks with other teams regarding De Jong and other players. Their negotiation position is unlikely to be strong.

It is hard to imagine FC Barcelona going through a similar process as Leeds United, and that possibility is probably still unlikely. However, the team’s on-field disappointment after finishing third in their Champions League group will extend far off the field, to fans, the club’s members, the administrative team, and to Laporta himself.

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