Will Saudi Arabia take over Uefa? It looks like that could well happen.

 

 

 

 

Barcelona’s financial troubles

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By Sir Hardly Anyone

As we know Manchester City are now under investigation both by the other 19 clubs in the Premier League and by Uefa.   And indeed the comments from a few Manchester City supporters in relation to our recent post Manchester City: now Uefa are after them as well as the Premier League are worth a read in terms of gauging the attitude of some Manchester City supporters in relation to that.  Although of course there’s no way we can know if they are typical of the views of the club’s broader support, although it is possible they are.

Anyway, that matter will run and run for years, but in the meanwhile, we also have the issue of Barcelona who like Manchester City, are their country’s current champions.  The Guardian has now pointed out that although Barcelona have been admitted to the Champions League for the coming season, it is only on a provisional basis, while an investigation by Uefa continues into allegations the Spanish club made payments to a senior administrator of the referees’ association.

In this case, Uefa started an investigation earlier this year into the allegation that the club had paid €7m to “companies owned by José María Enríquez Negreira, the former vice-president of Spain’s referees committee, between 2001 and 2018.”   As we noted before SPORT.es has reported that Barcelona has denied that there are possible sanctions coming from Uefa.

This case is quite different and quite separate from the enquiry into Barcelona’s finances, and the decision by Uefa to reject Barcelona’s accounts for last year in which they recorded the income from the sale of their future TV rights, as a profit for last year.   But it is a case of one financial blow coming on top of another.

Now although the technicalities of this are a bit, well, technical, there is a simple point here.  In accounting in virtually all countries, selling something that will happen in the future, can’t be counted as a profit this year.  Even if the money arrives this year.   It gets accounted for when you deliver the product.

In other words Barcelona’s TV money which has now been received to help bail out the club and allow it to pay its debts, will be shown on their account at a rate of 4% of that income, per year, each year for the next 25 years.

So Barcelona have the cash, and can use it to pay their debts (which are huge because of the cost of redeveloping their stadium) but it doesn’t help their book accounts, which still show a massive loss, year by year.  

Now in this regard Uefa haven’t pulled a fast one – this “future accounting” rule has been in place across Europe for years and Barcelona’s accountants must have been fully aware of it.

So what were they playing at?  They must have known the accounts would be rejected.   Of course, I don’t have a spy inside Barcelona’s accounts offices, but it looks to me like a desperate final throw of the dice.  They are quite simply in a mess.   

As I have mentioned before, according to the European press, Barcelona have done this just to be allowed to register the new players they have brought this season and that has succeeded.  But it is still a total financial meltdown.  And now, having presented their financial details to the commission that is there to ensure that all clubs do abide by the rules, they have been found to be cheating.

Bloomberg has stated that Barcelona are currently paying $104m a year in interest alone just on the debts incurred in upgrading their stadium.    Plus they have lost €93 million by having to play home games in the forthcoming 2023/2024 season at the Montjuic Stadium while the work on their ground continues.  

So let’s try and pull this together.  They have sold their future TV rights because they have run out of money.   Their current income is much reduced because their stadium is being refurbished and a big splodge of the TV money they would normally get won’t arrive, because they’ve already had it.  Their expenditure is much higher because of the cost of the stadium rebuild.  Plus they are paying vast amounts on interest on the money borrowed in the past.  Plus they are accused of bribing a senior official in the referees’ association. 

Now maybe they do have a magic trick up their sleeve.  But with out, whichever way I look at this, Barcelona have a problem.

So what happens if ultimately there is no more money to borrow, and no more future rights that can be sold.  What then?  What is Barcelona simply go bust?

The only answer would seem to be that Saudi Arabia would buy the club, just as it has done Newcastle.  Just as it may well want to do with other clubs.  One per country would be allowable under current rules – but might cause a problem if they get drawn against each other in the Champions League.

In short Saudi Arabia is increasingly looking like a “get out of jail free” card.

Is Uefa really going to allow this?  It might (and of course Saudi Arabia might buy Uefa).  But I am not at all sure it should.  But then again, I suspect (and of course this is merely a supposition on my part) a Saudi-backed Barcelona would then move toward a reborn Super League outside of the Spanish League, and outside Uefa.

Two footballing worlds then exist, exactly as they did for a while in golf, until, well, Saudi Arabia takes over Uefa.