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Today, FC Barcelona have publicly presented the accounts for the end of the 2019/20 financial year, which must be submitted for approval of the delegate members at the Ordinary General Assembly convened for 25 October, provided that it can be held while safeguarding the health of all participants and following the recommendations of the Government of Catalonia’s General Secretariat of Sport. Vice-president Jordi Moix detailed the balance for a season marked by the effects of the Covid-19 pandemic, which has had led to major health and social consequences around the world, including considerable economic effects on the club’s accounts. Barça closed the year with revenue of 855 million euros, below the 1.047 billion set in the budget, which had forecast a profit of 11 million euros. The final result was after-tax losses of 97 million euros, largely as a result of lost revenue due to the effects of the pandemic.
FC Barcelona has not been immune to the outbreak of Covid-19, but its consequences have had a massive effect on the entire sports industry, with widespread losses of revenue among all clubs in all the major leagues due to the restrictions that had to be applied to curb the spread of the disease, including competitions first being suspended and then resuming but with matches being played behind closed doors. ECA has estimated the overall loss at around 4 billion euros and Barça, as one of the largest clubs in Europe and with such extensive diversification of its income, is one of the most affected.
It should be noted that the coronavirus pandemic led to the establishment of a state of alarm by the Spanish government on 14 March 2020, which consequently led to all professional sports competitions coming to a standstill, as well as the total closure of the club’s premises. Once the health restrictions were lifted, Barça was able to partially reopen its doors, but always complying with all the safety and hygiene measures required by the authorities. On 11 June, the league resumed, but without spectators allowed inside stadiums.
The Club suffered financially from the consequences of games being played behind closed doors, as well as the total cancellation of the basketball Euroleague, and hence there was a considerable loss of income. The lack of tourists and visitors to the city of Barcelona due to the reductions and limitations applied to international tourism also meant far fewer visitors to Barça’s premises, meaning major losses in terms of such areas as visitors to the Camp Nou Experience and the sale of products in official stores.
All this has resulted in a drop in revenue and expenses, all in addition to the effect of such sports competitions as La Liga and the Champions League carrying on beyond June 30, which was the end date of the financial year, pursuant to the FC Barcelona Statutes. This divergence between the end of the financial year and the resumption of sports activity implied the transfer to the 2020/21 financial year of a series of profit and loss items that under normal circumstances would have been accounted for in 2019/20.
Thus, the combined effect of the pandemic and the transfer of profits and losses to the 2020/21 season has led to lower estimated revenue of 203 million euros and lower estimated expenses of 74 million euros. It should be emphasised that it is the club’s efforts to control and reduce losses to offset the drop in income that has allowed this saving of 74 million (-7%) with respect to the scenario without the pandemic. It is estimated that without Covid-19, revenue of 1.059 billion could have been achieved, which would have set a new record for a football club, breaking the 1 billion barrier as forecast by the 2015-2021 Strategic Plan. Therefore, if the club had not suffered the effects of Covid-19, it is estimated that the result for the year would have been a profit of 2 million euros, rather than the actual loss of 97 million.
Revenue of 855 million, 18% less than budgeted
The operating income figure of 855 million euros in the year 2019/20 represents a reduction of -14% compared to the 990 million euros for the previous year (decrease of -135 million euros) and -18% below the budgeted 1.047 billion euros. The revenue figure this season is significantly marked, as stated, by the global Covid-19 pandemic.
The most affected area in terms of loss of revenue has been the Commercial Area, which has amassed 297 million in revenue (-9% compared to the previous year) and has suffered an estimated impact due to Covid of -72 million, among other reasons, due to the inability to close certain commercial agreements that were at an advanced state of negotiation before the pandemic (-37 million), as well as the losses associated with the sale of products in the club’s official stores (-35 million).
Regarding the operation of the stadium and other venues, 162 million euros of revenue was achieved (-24% with respect to the 2018/19 season) but the estimated loss of revenue is 67 million and that is mainly due to the partial return of season tickets to members, the loss of ticket sales due to games being played behind closed doors (-47 million) and the loss of operating income from such facilities as the club museum (-18 million) and events and catering in the stadium (-3 million).
As for revenue from media and TV rights, 249 million in revenue was achieved, but this was a decrease of -17% compared to the previous year, with a drop by 35 million due to Covid-19. The postponement of competitions meant that part of the television revenue from La Liga and the UEFA Champions League has been moved to the 2020/21 accounts.
Finally, the ‘Other and Transfers’ section presents 148 million euros in revenue, with an estimated 29 million impact of Covid-19 in terms of transfers that would have been made at the end of the domestic season, and which could not be made. The resumption of competitions in June led the summer 2020 transfer market to be postponed, resulting in fewer movements prior to June 30 than usual. Compared to the previous year, there was a decrease of -19 million euros in the transfer and loans section. Other income, which includes miscellaneous revenue, amounts to a total of 53 million.
Expenses drop by -2%
Operating expenses decreased by -2% in relation to the previous season, dropping from 973 million to 955 million euros thanks to the application by the club of measures to control and reduce losses and offset the loss of revenue due to the pandemic, and these resulted in savings of 74 million with respect to the estimated 1.029 billion costs in a scenario without Covid-19. One of the main actions carried out to reduce spending on sports salaries was the implementation of salary reduction agreements and ERTEs (temporary redundancies) as negotiated and implemented during the season of 35 million (-5%), as well as the decrease in variables for not winning La Liga and the transfer of the variables for reaching the UCL quarter-finals to the 2020/21 season.
As for non-sports salaries, these are in line with the previous season, and have also been affected by the inclusion of non-sports staff in an ERTE, which achieved a saving of 2 million (-3%).
Management expenses dropped by -10%. This variation is due to the decrease in some expenses as a direct consequence of Covid-19 of 32 million (games played behind closed doors, decrease in travel, cleaning, etc.), as well as the efforts made by the club to reduce the economic impact of the pandemic.
The net debt on 30 June 2020 was 488 million euros. Taking into account how the total investment made in the development of the Espai Barça project is 109 million euros, the debt adjusted according to the FC Barcelona Statutes is 379 million euros, and the Debt/EBITDA ratio as stipulated by Article 67 of those Statutes is 3.64, above the maximum limit established of 2. However, without the outbreak of the pandemic, the club believes that this debt would have been around 363 million euros, which following deduction of extraordinary investments would be 254 million euros. Therefore, without the pandemic, and given that EBITDA would also have been higher, the club considers that the statutory ratio would have stood at 1.11.
As for sporting investments over the last 10 years, the club has invested 1.682 billion euros in player signings, and has managed to generate 944 million euros in sales. Therefore, the net impact has been 738 million euros in the last ten years, i.e. an average net investment of about 74 million euros per year.
In terms of treasury and equivalent liquid assets, the club closes the year with an available cash balance of 164 million euros.
For eight seasons the Club has been able to improve and strengthen its net worth, and has achieved 193 million in profits. With losses of -97 million in 2019/20, net equity has decreased but has managed to remain positive, with a positive balance at the end of June of 35 million euros.
During the 2019/20 season, investments were made in tangible and intangible non-sporting fixed assets for an amount of 50 million euros, of which the main part, 29 million, corresponds to investments in Espai Barça. Improvements, including the resurfacing of two fields, were also made at the Ciutat Esportiva training ground. In the area of new technologies and digital services, improvements have been made to the corporate systems and to ticketing management systems, and a new CRM has been developed.
Accumulated capital investments since the 2010/11 season amount to 194 million euros, which added to the 109 million euros invested in Espai Barça and extraordinary projects mean the total capital investments for the last 10 years stand at 303 million euros.
In summary, since the summer of 2010, minus the effect of Covid-19, 96 million net worth (193 without Covid-19), a net investment in players of 738 million (74 per season) and 303 million in equity investment have been generated.
2020/21 budget estimate
As for the budget for the 2020/21 season, the figures have yet to be closed and approved by the Board of Directors, as the transfer market is due to close this evening, but Jordi Moix did present an estimated figure of 791 million euros of expected ordinary income.
In fact, the 2020/21 financial year foresees great challenges with a drop in revenue of 199 million euros compared to the last year without Covid-19 (2018/19 season), which featured revenue of 990 million.
This estimated budget of 791 million euros in revenue, which is expected to undergo changes over the next few days before the Board of Directors approves the figures for presentation to the Assembly of Delegate Members scheduled for October 25, has been based on a series of hypotheses, such as the Camp Nou being able to open to the public in December with 25% of its capacity and gradual recovery up to 100% capacity in February. Also in terms of Media, the higher revenues for TV rights corresponding to the end of the 2019/20 season between July and August are expected to have an impact. A gradual recovery of tourism is also expected with a direct effect on the sale of merchandise at the club’s stores in the final months of the year. And finally, regarding transfers, a slightly lower amount is expected than in previous seasons due to the effect that the pandemic has had on the market.
The Club has also conveyed the importance of keeping its salary-revenue ratio within the limits recommended by the various sports bodies, and has therefore emphasised the work done in this department and also the next steps that need to be taken in order to achieve this goal, given the significant drop in revenue that the club and the sector are experiencing.
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