Barcelona’s financial turmoil took a new twist this week with president Joan Laporta liable for a €20 million guarantee following the failure of an investor to provide the funds to complete a financial deal that was vital to the club being granted its licence to compete in La Liga this season.
The football finance company Libero, listed on the Frankfurt stock exchange, has seen its share price plummet by as much as 25 per cent in recent days as its deal to buy 9.8 per cent of Barca Vision, a newly constituted subsidiary of the club, has looked in doubt.
Barcelona have been trying to sell off assets in order to boost their revenue and thus increase their permitted wage bill under La Liga regulations. Last summer the club sold €700 million worth of future income streams and were able to sign the players who won the league title.
As the club have scrambled to bolster its finances this summer, with some of the investors from 12 months previous not having been able to pay, the club repackaged some of those deals and sought new investors. This high-wire approach to financing has become known in Spain as “palancas” – financial levers – which are pulled to release capital from future income. The failure of Libero to pay would result in Barcelona’s directors, including Laporta, personally having to cover the cost as per an earlier agreement with La Liga.
It is the latest calamity for a club which has around €2 billion of debt, and is embroiled in the Negreira scandal – payments to a referee official which are being investigated by Uefa and could well result in a ban from its competitions. Meanwhile the club continues to embark on their €1.5 billion rebuild of their stadium which has seen the demolition of the 66-year-old Nou Camp, despite the precarious nature of the club’s finances.
Reports in the Spanish media this week have suggested concern among US lenders on the Espai Barca project as to the security of their financing given the possible consequences of the Negreira scandal – involving former referee committee vice-president, Jose Mara Enriquez Negreira. Among the many financing deals the club have agreed, the stadium is critical – the demolition crews have already reduced much of the Nou Camp to rubble.
Barcelona announced its deal with Libero to great fanfare on August 11, disclosing on its website that the financiers had agreed to pay €40 million for a 9.8 per cent stake of Barca Vision. The subsidiary encompassed a range of media and digital rights including NFTs carved out of a deal one year earlier with two other investors socios.com and Orpheus Media. Barcelona had not received the full agreed payments from either of those two entities.
The deal bolstered Barcelona’s revenues which allowed them to meet requirements from La Liga over wage budget. However, with the payments late last month, the Barcelona board were forced to personally guarantee the deal. Now there would appear to be doubt over whether Libero can meet its obligations. Although a second investor also agreed in August has paid, doubts over Libero has placed the stock market listing of Barca Vision in doubt.
Libero had a market capitalisation of £112 million as of Wednesday with its share price previously having soared by 2,500 per cent over the last year. Yet by the end of the 2022 financial year it reported assets of just €194,000; €60,000 in cash and an annual revenue of €100,000. The former Manchester United and Chelsea chief executive Peter Kenyon is listed as a member of its supervisory board. There was a €4 million capital injection from shareholders.
Libero said that its deal for Barca Vision “has been secured by external strategic European investors” but declined to say who. The company failed to respond to questions over whether its deal with Barcelona will go ahead. Barcelona agreed just one transfer fee this summer, €3.5 million for former academy player Oriol Romeu.
