Can Barcelona Afford Robert Lewandowski? 🤔
Plus Messi beats Ronaldo again and the craziest scam in cricket history.
Welcome to Athletic Interest, in this week’s newsletter we are going to try and understand one of the greatest mysteries in sports history…How is Barcelona spending so much on footballers?
We will also take a look at which footballer has sold the most shirts, how TikTok is changing sports and how Indian farmers scammed Russian bettors with a fake cricket league.
But first, what in the name of Zlatan is happening at Barcelona?
Everyone knows that Barcelona is struggling financially, with top players forced to either transfer away or take huge pay cuts.
Surely, the last thing that Barcelona should do right now is bid over €40 million for an aging Robert Lewandowski…oh wait!
“WTF is Barcelona doing, aren’t they broke?” is a question that has dominated many editorial meetings within Athletic interest over the last few weeks. And it turns out we are not alone in our confusion…
Memes like this often circulate on social media anytime Barcelona makes a move on the transfer market.
Even industry insiders like Fabrizio Romano have come out and said that ‘no one in football knows’ where Barcelona is getting this money from.
So, we decided to do some digging and find out exactly how Barcelona plans to pay for all of these new players.
According to the internet, Barcelona is choking on debt and has no money to spend. That is not technically correct. Yes, they have over €1.3 billion in debt, but the club has negotiated to ease that debt, and a recent €500 million deal with Goldman Sachs has made the debt manageable and long-term.
Just because the club isn’t drowning in debt doesn’t mean that its financial troubles are over.
For the last decade, La-Liga has regulated how much money each club can spend based on an analysis of overall financial health.
Thanks to huge losses and that mountain of debt, Barcelona’s spending cap has dropped dramatically over the last few years.
Clubs have two ways to reverse this cost cap.
Reduce costs
Generate more revenue.
Selling top players is a great way to do this because it generates money and reduces salary costs.
But there is one problem. As a punishment for being broke, La-Liga has decided that when a club sells an asset (e.g. player) they can only use ¼ of the money generated to sign new players.
To make matters even more complicated, Barcelona’s salary cap for the next season is MINUS €114 million.
Does that mean that Barcelona players will need to pay to play?
Not really, it simply means that Barcelona needs to find €114 million in extra revenue (or cost savings) before they can dream of signing new players.
This is exactly why the club is not currently allowed to register any of its new signings. That includes €60 million Raphinha and any potential move for Lewandowski.
So, where can Barcelona find all of this money?
Well selling current players is one option. The club is seemingly trying to force Frenkie de Jong to go to Manchester United against his will as the move will free up his salary and put money in the positive balance.
But selling players is not a sustainable approach. Barcelona needs to keep top talent if it wishes to compete, and as explained earlier, it will only be allowed to spend ¼ of the transfer fee.
So, Barcelona needs to sell something huge that will not impact its short-term success on the pitch…introducing the Financial Levers.
Barcelona has decided to sell stakes in its TV rights, merchandising income, and content production arms in order to raise short-term cash.
One deal has already been completed, with the club selling a 10% stake in its LaLiga TV rights for the next 25 years to US private equity group Sixth Street for 207.5 million euros
There are also plans to sell another 15% of the TV money for €400 million as well as around 50% of the merchandising rights for €300 million.
So, they are basically selling out a share of their future income in return for an upfront payment.
The question that remains is…
Will this work?
Based on this article, if you take Barcelona’s salary cap of -114 million and add their current wage bill of €560 million, the club needs to generate €704 million in revenue before they can sign new players. If all of the deals go through then Barcelona should have close to €900 million in cash. 900 minus 704 would mean that Barcelona could spend €196 million on the market. Obviously, not all of the money needs to come from the above deals. Barcelona also plans to reduce its current wage bill to €400 million and will try and offload a number of players to raise more cash.
Barcelona may have secured enough cash for a short-term splurge, but these deals could have negative long-term consequences.
The club’s revenue from TV and merchandising will drop by around 25% over the next two and a half decades. That is not a small amount, and the club will need to invest wisely in order to make up the deficit.
The club’s plan is simple:
Free up cash and invest in players.
Win trophies.
Increase revenues from sponsors.
Obviously, the club will have to spend the next few decades handing over millions to these companies that have given them a cash boost. But the club will probably argue that it’s better to have 75% of a few billion than 100% of nothing.
Perhaps they are right and Barcelona will return to the summit of football, or perhaps the club will collapse under the weight of its obligations and disappear into the sands of time. Either way, the people making the decisions right now will probably not be around to face the consequences.
Sports Business Bites 🍎
👕 Did you know that N’Golo Kante sold more shirts over the 2021/22 season than Neymar! That is according to a ranking of shirt sales released by the Euromericas agency.
🥇 Lionel Messi (PSG): 1,200,000
🥈 Cristiano Ronaldo (Manchester United): 1,050,000
🥉 Robert Lewandowski (Bayern Munich): 970,000
4️⃣ Mohamed Salah (Liverpool): 816,000
5️⃣ Kylian Mbappé (PSG): 799,000
6️⃣ Erling Haaland (Borussia Dortmund): 767,000
7️⃣ Karim Benzema (Real Madrid): 699,000
8️⃣ N'Golo Kante (Chelsea): 655,000
9️⃣ Kevin De Bruyne (Manchester City): 622,000
🔟 Neymar (PSG): 547,000
The top two probably won’t surprise anyone, but it is interesting to see that Lewandowski beat Champions League hero Karim Benzema by over 200k sales. Also, spare a thought for Barcelona who have no players in the top 10.
🎾 How many drinks can you down in one night? Well, the global average consumption for beer is around 6 cans per night out, not that anyone told this lady at Wimbledon.
During the Wimbledon final between Nick Kyrgios and Novak Djokovic, Kyrgios complained to the umpire about a spectator heckling him before each point. To make his case for the fan’s eviction even stronger, Kyrgios claimed that they had clearly downed at least ‘700 drinks.’
While we doubt that she did in fact accomplish such an impressive feet (the fan has since claimed she was on her second drink) the whole situation simply added to the electric drama that was the 2022 Wimbledon final.
🍓 Talking of Wimbledon, the 2022 tournament was a huge hit. Not only did a record 515 thousand spectators attend, but the streaming coverage also hit a BBC record of 53.8 million (almost double the previous record.) Despite this good news, Wimbledon still failed to sell around 25,000 tickets. Some have blamed high ticket prices for the failure, while others point to general nervousness surrounding the pandemic. But the strawberry on top of the cake has to be the fact that Wimbledon sold 2.3 million strawberries this year, a new record. Yum.
🏏 Some farmers in India just undertook one of the weirdest scams in sports history. The men set up their own cricket league called Century Hitters T20 and streamed the matches via YouTube. To add to the atmosphere they played fake fan chants over the speakers. Despite not looking like professionals and playing on a pitch that did not meet IPL standards, the men decided to accept betting money via Telegram. The fake league staged nine matches before being shut down by the police. During that time they collected $4 thousand from betters, mostly Russians.
🏐 Video time and this week we have one of the greatest volleyball points of the year. We could try and introduce it but there are simply no words for something so magnificent.
🏃♀️ We may be called Athletic Interest but we don’t often talk specifically about track and field. It’s not completely our fault, the algorithm gods seem to prefer content about football and Formula 1. But things are about the change. TikTok is helping to turn track and field into one of the most popular sports on the planet.
To learn more about how TikTok could revolutionise the way we consume sports, and elevate track and field to new heights, check out our latest video.