“Over the past few years, we have made considerable progress in the digital ecosystem, turning our assets into a creative hub that boosts FC Barcelona’s brand to unique levels in the world.”
These words were attributed to club president Joan Laporta in a press release announcing a new ‘Barca Media’ brand in August. The brand, containing all of the club’s digital and audiovisual production activities, was valued at $1billion (£824m at current exchange rates).
This new Barca Media company was to be floated on the NASDAQ stock exchange in New York by the end of 2023, providing a new revenue stream of $100million a year from fans around the world paying for content the club would produce internally.
Just two months on, that NASDAQ launch has been pushed back to March next year, and this report, informed by several sources with inside and expert knowledge of the situation but who did not wish to comment publicly to protect their positions, raises questions as to whether the $1billion floatation will ever actually happen.
Before this weekend’s Clasico against Real Madrid at Barcelona’s temporary Montjuic home, most of their fans will be talking more about the fitness of key players Robert Lewandowski and Pedri rather than the club’s financial health or accounting practices. However, the way in which the Barca Media scheme has come about, and the fact questions are being raised about whether a successful floatation is possible, should be a real concern.
Laporta’s board are always looking for the next short-term opportunity to raise money for Barcelona to use in the transfer market. Some supporters may well back him in that endeavour — but Barca Media is another example of how the club are making such decisions that could eventually have long-term consequences for their future.
The idea of making money from producing content to sell to fans all around the world is not a new one at Barcelona.
During Josep Maria Bartomeu’s presidency (2014-20), Barca Studios was established to produce audiovisual content for the club’s Barca TV channel and also to sell to other broadcasters including Netflix, Sony and Rakuten TV. The club had dedicated and experienced executives working on initiatives such as the ‘Culers’ membership programme, which costs subscribers €39.99 a year.
After taking charge in March 2021, Laporta’s regime saw the potential to fit Barca Studios into its ‘levers’ policy of selling stakes in the club’s future business to generate funds to deal with more immediate problems. So, in the October of that year, they asked for, and received, permission from socios (club members) to sell 49 per cent of Barca Studios to an external investor.
Laporta’s board hoped to raise around €200million by doing this, and talks were held with potential buyers. Initial discussions with traditional industry financiers went nowhere though, and many expert observers felt this was confirmation that Barca’s valuation was considered unrealistic.
Laporta is in his second spell as Barca president (Guillermo Martinez/Europa Press via Getty Images)
However, in early August 2022, Barca announced they had sold a 24.5 per cent share of Barca Studios to crypto company Socios.com for €100million. A few weeks later, they handed another 24.5 per cent to Orpheus Media, a firm run by Catalan businessman Jaume Roures, for the same amount. These deals allowed Barca to register new signings, such as Lewandowski, Jules Kounde and Raphinha, within La Liga’s salary limit rules for the 2022-23 season.
As Xavi’s rebuilt team went on to win Barca’s first La Liga title in four years, Laporta and his directors could argue that their levers policy had paid off.
There was also some evidence of the club’s digital plans with the launch this summer of Barca Vision — which the club said was a new subsidiary containing all its ‘Web 3.0’, NFT and metaverse activities, as well as what was previously known as Barca Studios. This was presented by Laporta in late June, with a new NFT release featuring women’s team star Alexia Putellas called ‘Empowerment’, which was sold a few days later for just over $300,000.
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El Barça lanza ‘Empowerment’, el segundo NFT de su colección ‘Masterpiece’, inspirado en Alexia Putellas.
La pieza de arte digital conmemora la excepcional actuación de Alexia en la semifinal de la Champions League vs Wolfsburgo, y será subastada en @OpenSea el 26 de junio.
— FC Barcelona (@FCBarcelona_es) June 22, 2023
That may have looked promising, but problems with the Barca Studios/Vision ‘levers’ soon arrived.
It emerged the club had not received the full €200million from those 2022 deals — indeed, Socios and Orpheus had paid just €10m each.
Catalan media reports said that further payments of €30million had been due in June but, as a result of the deal being restructured, were being deferred until later in the year. This now meant serious problems for Barca in registering new signings and new contracts with La Liga for the 2023-24 season.
Once again, the Barca Studios stakes emerged as the apparent solution to the problem.
In early August, the club announced deals with German company Libero Football Finance and “private investors” advised by an Amsterdam-based investment firm (NIPA Capital). A club statement said these companies had between them “acquired a total of 29.5 per cent of the ownership of Barca Vision (the new name given to the subsidiary in which Socios and Orpheus originally invested) for €120million corresponding to part of the participation being held by Socios.com and Orpheus Media”.
Initially, this was widely reported as Libero and the NIPA investors agreeing to pay €60million each to Barca, relieving Socios and Orpheus of their responsibilities to give the club that money. Libero, however, said it would pay €40m for 9.8 per cent of Barca Vision.
Meanwhile, at the same time, Barcelona announced a simultaneous agreement with a Swiss company, Mountain & Co I Acquisition Corp. This would see Barca Vision and the club’s other audiovisual content units (including what was previously called Barca Studios) now grouped as ‘Barca Media’.
Mountain had already raised €120million from investors looking for a suitable media company venture. Now it would help Barca Media float on the NASDAQ, using a financial manoeuvre called a SPAC (special purpose acquisition company). And it hoped that an exciting partnership with such a global sports brand would attract further investment, too.
Not many Barcelona fans — or football reporters, if we’re being honest here — were familiar with the concept of a SPAC. However, everyone’s attention was drawn by the $1billion valuation of this new Barca Media company.
The Athletic was told in mid-August, by sources close to the situation, that the estimated annual income of $100million a year was based on a projection that one per cent of the team’s 460 million social media followers worldwide would pay $25 a year, on average, for personalised digital content and experiences.
A timeline was set — Barca’s socios would vote on the SPAC plan at their October 21 assembly, and Mountain would finalise its side of the investment by November 9.
But almost immediately, problems arose.
Before the summer transfer window shut, it emerged Libero had yet to pay €40million to Barca. Sources told The Athletic the German company wanted certain guarantees that the club would not accept. So Laporta and other directors had to give personal bank guarantees for La Liga to accept the registration of last-minute loan signings Joao Felix and Joao Cancelo. It was the third such bank guarantee Barcelona executives had arranged over the past 12 months.
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Further issues with the Barca Media plan quickly emerged.
On September 8, the date for financing to be completed was moved back — from next month to March 2024. On October 13, Mountain notified the United States’ Securities and Exchange Commission, a government agency overseeing the financial world, that its SPAC was no longer in compliance with NASDAQ regulations as some of its initial investors had withdrawn. Mountain now had 45 days to submit a plan to NASDAQ showing it could replace that lost investment.
Instead of putting the final touches to a deal that Barca and Mountain had claimed was close to completion, all involved were now back trying to land new investors at short notice to keep the original plan alive.
With the Barca Media SPAC plan wobbling, the idea to ask club socios to vote on it at last weekend’s assembly was quietly withdrawn. However, the ‘levers’ plan to use the old Barca Studios concept to boost finances was very present in the 2022-23 accounts presented to members.
The accounts included an “extraordinary profit” of €194million from the sale of 49 per cent of Barca Vision, and a revaluing of the club’s shares in this company. The remaining 51 per cent was listed as an asset valued at €208m. These figures were based on Socios and Orpheus agreeing to pay €200million combined for 49 per cent of Barca Studios in August 2022 — even though both companies only actually coughed up €10m each, and the other €180m has not been handed over.
Barca vice-president Eduard Romeu was asked before the assembly about the Barca Studios money in the club’s accounts.
“It is nothing strange,” he said. “We could call it financial engineering, but it is nothing more than applying the accounting plan.”
Barca vice-president Eduard Romeu, pictured in February 2022 (Joan Valls/Urbanandsport /NurPhoto via Getty Images)
August’s press release containing the $1billion valuation for Barca Media said its “mission” was to “produce dynamic and engaging content” the club could either distribute themselves or sell to broadcast partners.
However, Barcelona’s ability to create such content has been diminishing in recent times. It has produced some ‘Web 3.0’ material since linking with Socios.com but under Laporta, most of Barca Studios’ senior executives have left or been fired, while Barca TV was shuttered last June as a cost-cutting measure.
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Also, the money that has been raised through selling stakes in Barca Studios seems to have been spent on player wages and transfer fees, not invested in media production.
The Socios and Orpheus deals were done in August last year, and the Libero and NIPA ones announced this August — both just as money was needed for summer-window transfer business. Orpheus’ owner Roures appeared to confirm this, when speaking on Catalan radio early this month. “The ‘lever’ allowed players to be registered last season,” he said. “More levers, in which we have collaborated, allow them to register players now. That was the objective of Laporta and company.”
Roures was speaking soon after La Liga announced it now had doubts about how Laporta’s board had used the transfer of Barca Studios shares in August to register new signings Ilkay Gundogan and Inigo Martinez, and hand new contracts to Gavi, Ronald Araujo and Alejandro Balde.
La Liga’s statement said that Barcelona showed it contracts for the sale of 49 per cent of Barca Studios, accepted by the club’s auditors, and with the first payment already made. But La Liga said it was now aware this payment had not been made, so it would reduce Barcelona’s salary limit, affecting their ability to sign new players in the future.
Barca did not reply to a request for comment from The Athletic.
One way to avoid this hit to Barca’s salary cap would be for Libero to make the full payment now. This remains possible — if the club and the investors can agree on the guarantee.
Former Chelsea and Manchester United chief executive Peter Kenyon joined Libero as deputy chairman in late June, just a few weeks before its investment in Barca Media was announced. Sources have told The Athletic that Kenyon’s long-standing relationship with Laporta was key to Libero getting involved in the SPAC.
At last Saturday’s assembly of ‘compromisarios’ (club members with voting rights), Barca’s 2022-23 accounts were approved with 376 votes for, 45 against, and 20 abstentions. Most were apparently untroubled by how the accounts represent the Barca Studios money, or whether the Barca Media SPAC plan will succeed.
Mountain remains confident the operation can be completed, with new institutional investors joining the SPAC so a restructured Barca Media could be floated on the NASDAQ early in 2024.
“We’d like to mature the operation more before taking the leap (to the NASDAQ),” Romeu said last week. “We cannot allow a value of ‘X’, and then some days later it would drop. That would hurt our brand. We do not want to get ahead of ourselves.”
Another reading is that perhaps Barcelona’s financial brand is already very devalued. Romeu said last week the club’s debts remained at $1.2billion, down from the $1.3bn inherited from the Bartomeu-led board two and a half years ago, but still among the biggest in all of world football.
Laporta’s regime has been able to do deals with some financial partners, but the €1.45billion arranged by Goldman Sachs in funding for the Camp Nou renovation and the €667m from Sixth Street in exchange for 25 per cent of the club’s La Liga TV rights over the next 25 years both featured a solid, reliable asset that could be used as a guarantee.
Barca’s Camp Nou, pictured in September (Joan Valls/Urbanandsport /NurPhoto via Getty Images)
With Barca Studios, there is less evidence of tangible, physical anything. Lots of numbers have been talked about — €1billion on Barca Media, another €400m for Barca Vision — but these are paper values, not actual sums the club have received.
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And the partners currently involved — Socios, Orpheus, NIPA, Libero — are not established financial firms with experience of traditional stock market operations.
This has led to fears — including among socios and former Barcelona executives — that Barca Media is a bubble that could burst and cause serious damage to the club. There are also concerns about the increasing influence of outside partners over the board’s financial and transfer decisions.
The club did not reply to questions from The Athletic about how much they had already spent in legal and consultancy fees in planning the Barca Media project. Socios, Orpheus, NIPA, Libero and Mountain all declined to comment for this article, too.
Barcelona’s La Liga salary limit has already been affected, meaning that players may have to be sold in coming transfer windows — unless further short-term solutions can be found to keep pushing the problem further into the future.
Just like so much that has happened at Barca in recent years, all this could make for a great documentary, or even a feature film — something like Moneyball meets The Wolf of Wall Street, perhaps.
It would surely be a real hit, maybe even taking enough at the box office to pay off a big chunk of the club’s huge debts.
Perhaps it could even be their first in-house project.
(Top photo: Getty Images; design: Sam Richardson)
