tag:blogger.com,1999:blog-487486960623783530.post6695515465186774223..comments2024-02-29T09:58:18.342+01:00Comments on The Swiss Ramble: How Can Barcelona Afford Cesc Fabregas?The Swiss Ramblerhttp://www.blogger.com/profile/11423088862174893998noreply@blogger.comBlogger90125tag:blogger.com,1999:blog-487486960623783530.post-66834631238885844892010-07-30T12:13:10.090+02:002010-07-30T12:13:10.090+02:00@M,
I tend to agree with you.@M,<br /><br />I tend to agree with you.The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-22936740631167192012010-07-28T06:27:23.734+02:002010-07-28T06:27:23.734+02:00and to add something...
I dont think they will go...and to add something...<br /><br />I dont think they will go bankrupt... cashflows are healthy as long as they play Champions League and get into semi-final or so...<br />They have rather a balance sheet problem and also... they can still sale some of their big names... There are other clubs out there were default risk is much higer...Mnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-40335927904509616112010-07-28T06:24:16.459+02:002010-07-28T06:24:16.459+02:00As we can see now... two things became true (I com...As we can see now... two things became true (I commented also on June 16 in this great blog)... Indeed, Barcelona has some refinancing problems (they got a 155mn credit facility from 10 spanish banks) and, to my surprise what I couldnt believe due to these problems, they still chase Fabregas... 45mn was the last number for him...Mnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-9172198625092199972010-07-19T08:35:02.948+02:002010-07-19T08:35:02.948+02:00@Anonymous (8:14),
My views are in the comment ab...@Anonymous (8:14),<br /><br />My views are in the comment above yours, but I would consider this unlikely. If Mediapro's problems result in no payments, it's difficult to believe that another TV channel would not want the broadcasting rights. They might pay less, but I doubt whether Barcelona's TV revenue would disappear altogether.<br /><br />If Barcelona need to increase revenue, they have two obvious possibilities:<br /><br />1. Raise the membership fees.<br />2. Sign a lucrative sponsorship deal.<br /><br />Plus, they have plenty of scope to reduce costs, e.g. they have removed Henry's high salary from the wage bill following his transfer to New York. They could also renegotiate their bonus scheme, as this has cost them a huge amount over the last two seasons.<br /><br />I think reports of their demise are a little premature.The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-74216757822329025622010-07-19T08:14:18.193+02:002010-07-19T08:14:18.193+02:00Rambler,
With MediaPro since filing for Bankruptc...Rambler,<br /><br />With MediaPro since filing for Bankruptcy protection, and risking the loss of 150 million euros in revenue for the club. As well as the addition of 150 million euros in debt (with an approximated 5.25% interest rate based on Spanish Bond issues). And an addition 7 million Euro in wages (+David Villa (12m) -Toure (3m) -Chygy(2m)), and rapidly increasing wage payouts relative to revenue growth (18% vs. 10%). How likely is it we will see FC Barcelona filing for bankruptcy within the next 2 seasons? It would seem as if Costs will soon be greater than Revenues, and the debt payments are mounting.. Is it me or is Rosell going to be captaining a Titanic?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-24716672829562767982010-07-14T08:52:28.204+02:002010-07-14T08:52:28.204+02:00@Anoynmous (8:12),
Well, it adds something to the...@Anoynmous (8:12),<br /><br />Well, it adds something to the extent that those figures refer to the latest accounts (2009/10), while my analysis was based on the previous year (2008/09). However, in essence, not much has changed: they still made a small profit (€9m); revenue is still very high (up to €446m); but costs (and salaries) are also very high (up to €437m).<br /><br />The issue with Barcelona is that they have a lot of liabilities, but not a huge amount of bank debt, though this has increased over the last 12 months following their frenetic transfer activity last summer and, of course, the purchase of David Villa a few weeks ago.<br /><br />Total liabilities have increased over the last 12 months, but not by a huge amount (from €489m to €518m), though the bank debt is now a higher proportion (up from €29m to €114m).<br /><br />So, as the Guardian piece indicates, the challenge for Barcelona is that they must meet these ST liabilities - like tax payments and payments to other clubs (as I outlined in my article). This impacts on cash flow, which suffers when you have high ST payables. Often, when clubs have problems with debt, it’s not so much the magnitude that’s the problem, but the timing of the repayments. This is why Arsenal’s LT debt is not a concern, but Liverpool’s ST debt is.<br /><br />My guess is that Rosell is looking to replace the short-term payables with long-term debt, as they need to pay outstanding fees to other clubs, tax authorities, etc. To a certain extent, they are also paying the price of their success on the pitch, as this has triggered hefty bonus payments to the players, which are probably now due.<br /><br />Looking at Barcelona’s presentation, there are some scary figures that indicate the logical result of their player acquisition strategy: salaries have increased by 18% to €234m; player amortisation has risen by 32% to €71m. Barcelona’s wages to turnover ratio has also increased to 57%, though this is still a lot better than most clubs in the Premier League.<br /><br />The most threatening issue for Barcelona could be the problems at Mediapro, who are seeking bankruptcy protection. Strangely, Barcelona appear to have a different deal with Mediapro to Real Madrid with only verbal payment guarantees. Of course, there’s a broader danger here, as the other clubs in La Liga attempt to implement collective bargaining with its potential implications for the business model of the “big two”.<br /><br />I also wonder whether there is an element of politics here. Rosell was elected on a platform of sorting out the financials, so he is hardly going to say that everything is hunky dory once he’s put his feet under the desk. Furthermore, the new president might be getting all the bad news out of the way early in his tenure, so that any problems can be blamed on his predecessor. We see this type of behaviour time after time when a new CEO starts his job in a company in the “normal” business world.The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-88910213865579687012010-07-14T08:12:59.622+02:002010-07-14T08:12:59.622+02:00Hi,
I just read an article from the Guardian'...Hi,<br /><br />I just read an article from the Guardian's "Digger" about this same subject, saying it had received information about Barcelona's finances:<br /><br />http://www.guardian.co.uk/football/2010/jul/14/barcelona-debt-finance-fabregas<br /><br />Wondering if it added anything further to your analysis...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-79301455438441327752010-07-10T13:14:08.621+02:002010-07-10T13:14:08.621+02:00An excellent article and very informative, even fo...An excellent article and very informative, even for a 21 year old like me who has no financial knowledge what so ever, also i noticed u 'predicted' barca would take a loan out in about may i think, so everyone together now... <br />''ALL HAIL SWISS-RAMBLER''<br /><br />smoke weed evryday ;)M-DOT-DIZZLEnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-75080942805338511522010-07-09T21:28:56.764+02:002010-07-09T21:28:56.764+02:00Very good article but one point I would like to ad...Very good article but one point I would like to add is Barcelona's TV deal - MediaPro has a verbal agreement with Barcelona unlike the written contract with Real but as you may well know MediaPro which is the equivalent to ESPN and Sky are facing bankruptcy having taken measures in conjunction with the Spanish government - perhaps their future is not quite as rosy as first thought.....Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-61287922958749685542010-07-08T10:10:06.293+02:002010-07-08T10:10:06.293+02:00Hi Matt,
Yes, I saw that and commented on it. I h...Hi Matt,<br /><br />Yes, I saw that and commented on it. I have written a comprehensive response in the comments under my latest blog on the Football Association, if you're interested.<br /><br />In short, their total liabilities have only slightly increased since last year, but the bank debt is now a higher proportion. My guess is that this is a combination of the club sorting out the creditors (essentially swapping ST liabilities with LT debt) and some politics from the new president.The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-80662709492646759582010-07-08T09:30:39.359+02:002010-07-08T09:30:39.359+02:00Interesting development with the Barca players not...Interesting development with the Barca players not being paid this month and the club looking for an emergency loan of 150 millions euros. Untold Arsenal has a post on it. How quickly things can change in less than a year!Matthttp://www.arsenalfootballclubnews.comnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-5973575306001807482010-07-07T16:52:11.648+02:002010-07-07T16:52:11.648+02:00Mighty fine wrastlin' right there!Mighty fine wrastlin' right there!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-8639943731345464712010-06-25T09:02:40.131+02:002010-06-25T09:02:40.131+02:00@Anonymous (7:38),
Clubs do not have a significan...@Anonymous (7:38),<br /><br />Clubs do not have a significant amount of foreign exchange risk, but have some due to participation in the Champions League and player transfers. They will hedge this exposure, but will not really aim to make a profit.The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-32990901284509364042010-06-25T08:57:16.826+02:002010-06-25T08:57:16.826+02:00@Anonymous (10:48),
You might also want to take a...@Anonymous (10:48),<br /><br />You might also want to take a look at my article on Stan Kroenke, which looks at some of the ownership/investment issues:<br /><br />http://swissramble.blogspot.com/2010/03/is-stan-man-for-arsenal.htmlThe Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-66287127432079069982010-06-25T08:55:52.107+02:002010-06-25T08:55:52.107+02:00@Anonymous (10:48),
There is nothing legally that...@Anonymous (10:48),<br /><br />There is nothing legally that would prevent an acquisition of the club being financed by debt, but any purchaser would have to convince the many different shareholders to sell on that basis.<br /><br />You also have to ask yourself what return any purchaser would get from such an investment. He's hardly likely to receive large dividend payments, as the operating profits would probably be eaten up by hefty interest charges.<br /><br />From a financial perspective, any return is likely to be capital growth, i.e. sell the club on for a higher price at a future date. This is clearly what Hicks and Gillett hope to do at Liverpool. The question I would ask with Arsenal is whether an investor could achieve a good return, given that they would have to pay top dollar to acquire the shares? On the other hand, Arsenal will be a "cash cow" with the stadium throwing off cash and plenty of upside on the commercial side.The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-48880437149513767212010-06-25T07:38:06.709+02:002010-06-25T07:38:06.709+02:00Thank you for this very interesting and informativ...Thank you for this very interesting and informative article :)<br /><br />I was just wondering what do these big clubs do to hedge against their foreign exchange risk? Forward Contracts etc? and do they make any significant profits from these?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-22834256557159382362010-06-24T22:48:58.096+02:002010-06-24T22:48:58.096+02:00I never post on blogs or message-boards, but I tru...I never post on blogs or message-boards, but I truly, truly enjoyed this article. It seems as though it means something to you that people like your blog. Keep up the good work!<br /><br />I was wondering how easy it is for someone like Hicks and Gillette to come along and overnight put hundreds of millions of debt directly on the club due to their ownership. Is there anything in the structure of the club to stop this happening?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-14035622696031619562010-06-24T18:27:48.219+02:002010-06-24T18:27:48.219+02:00Let me know if you have any questions about the ge...Let me know if you have any questions about the general baseball structure (should you decide to look into American sporting structures and their ability to pay these wages). I do suspect the fact that there aren't transfer fees (only player for player/draft picks) in trades may well contribute to this. Not to mention the cap system.FrogSoxnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-25710639763742334122010-06-24T17:12:18.884+02:002010-06-24T17:12:18.884+02:00@Jai,
Thanks. I hope to finish a new article soon...@Jai,<br /><br />Thanks. I hope to finish a new article soon - in between World Cup games.<br /><br />I actually wrote a piece on Liverpool's finances last month, which you may find interesting:<br /><br />http://swissramble.blogspot.com/2010/05/are-liverpool-good-investment.htmlThe Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-55909400508035723822010-06-24T17:10:44.298+02:002010-06-24T17:10:44.298+02:00@FrogSox,
I'm not really an expert on America...@FrogSox,<br /><br />I'm not really an expert on American sports finances, but I may well take a look for the very reason you suggest, namely lessons that could be learned by football clubs.<br /><br />One thing that is very obvious is that English tams have been very slow to capitalise on commercial opportunities, probably as they have grown complacent with the constant increase in TV money.The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-85897763833380879352010-06-24T16:55:44.742+02:002010-06-24T16:55:44.742+02:00Just found this blog via a bbc article. Love it a...Just found this blog via a bbc article. Love it and will be following it via the RSS...keep up the good work. Would love an article into Liverpool's finances. And true valuations of the club.Unknownhttps://www.blogger.com/profile/14975029388325974100noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-49341394103209932442010-06-24T15:16:47.753+02:002010-06-24T15:16:47.753+02:00Thanks very much for the very detailed look at the...Thanks very much for the very detailed look at the situations for both clubs in financial terms. Have you ever looked at American sporting models? I'm interested because you see players like Joe Mauer getting a 180 million USD contract extension paid over 8 years. How is it that a relatively small market baseball team can afford astronomical wages like that? This is especially interesting given that the Twins (Mauer's team) have just moved into a brand new stadium which obviously cost them money to develop.<br /><br />I'm interested in this line of investigation because it most likely shows that there are significant opportunities for Arsenal (and others) to improve their revenue streams. I imagine that's where Ivan Gazadis comes in with his new team of back room staff. <br /><br />Thanks for the blog and any insight you can give me on these points.FrogSoxnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-88183359556201668162010-06-24T14:11:09.894+02:002010-06-24T14:11:09.894+02:00@Anonymous (2:08),
Thanks. Actually, I have alrea...@Anonymous (2:08),<br /><br />Thanks. Actually, I have already written an article on Man Utd's finance called "Greed is Good". It was done in February, but the salient points are much the same:<br /><br />http://swissramble.blogspot.com/2010/02/greed-is-good.htmlThe Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-15810814448132199282010-06-24T14:08:39.317+02:002010-06-24T14:08:39.317+02:00@Paul,
Thanks. I'm happy that the hard work i...@Paul,<br /><br />Thanks. I'm happy that the hard work is appreciated.The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-13257677915387998262010-06-24T14:08:09.157+02:002010-06-24T14:08:09.157+02:00Great article,thanks! Would you be able to do a si...Great article,thanks! Would you be able to do a similiar,in depth,probe on the ManUtd.situation? It's certainly time the real state of the club was exposed.<br />Mike.Anonymousnoreply@blogger.com