This article first appeared in Forum, The Edge Malaysia Weekly on February 8, 2021 - February 14, 2021

Talk about bittersweet: one day the “richest” club in the world; the next, facing ruin. That’s Barcelona for you — top of Deloitte’s “Money League” but £1 billion in debt. And half of that is what they are paying Lionel Messi for whom they can no longer claim a transfer fee.

Nothing illustrates the chronic fragility of football’s economy more than this fiscal paradox. The little maestro has dazzled opponents for a decade and a half, but his most devastating impact has been to blind his own club to reality.

Barcelona’s desperation to cling to their prized asset at all costs has seen those costs — salary, image rights, variables and tax — rise to what Spanish newspaper El Mundo has revealed as a “gargantuan €555,237,619” (£492 million, or RM2.7 billion) contract. More than enough, the paper says, to bankrupt the club.

Sustainable only if it was reaching the last four of the Champions League (CL) every year, attracting full houses and at least breaking even in the transfer market, Barcelona has achieved anything but in recent seasons. If this is Exhibit A in a damning case against football profligacy, Covid-19 delivered the coup de grce.

It’s a bleak picture the world over. The New York Times headlined its analysis of sport’s finances in 2020: “The Year Everybody Lost”. Football alone lost £11.1 billion, according to FIFA, which says 150 of its 211 member associations have applied for emergency Covid grants.

At least a sign of realism was evidenced with last week’s closing of Europe’s transfer window. Just over £220 million — what Chelsea alone shelled out in the summer — was all that was spent in Europe's “Big Five” leagues combined. The previous January, the amount was £810 million. The financial hit and doubts about when crowds will be allowed back were blamed for the drop-off.

Take Liverpool. Three years ago, the English Premier League (EPL) champions broke the world transfer record for a defender by spending £75 million on Virgil van Dijk. It proved a transformative signing, with the giant Dutchman the rock on which the subsequent Champions League and EPL title successes were built.

This year, with not only Van Dijk but his partner, Joe Gomez, crocked for most of the campaign and their stand-ins also out for long spells, they eschewed the chance to sign a top replacement.

Even with their EPL title defence faltering, they cited “Covid uncertainties and lack of suitable candidates” as the reason. Only when third choice centre-back Joel Matip was also ruled out did they bring in two youngsters for token sums in the final hours of the window.

“Covid has been a disaster for everybody,” is how one lower league club owner in England described the situation. Of course, it has been a bigger disaster for the smaller clubs, many of which have survived through handouts from the EPL — and those only after elbow-twisting by the government. The Big Boys have also lost massively — and all across Europe.

The total revenue of the top 20 clubs in Deloitte’s table fell to £7.236 billion in the 2019/20 season, 12% less than a year earlier. Among the clubs, no fewer than seven are from the EPL, along with Champions League winners Bayern Munich from Germany, Paris St Germain from France and, of course, Spanish giants Barcelona and Real Madrid. Barcelona was top, with revenues of £627.1 million, fractionally ahead of its greatest rivals.

The absence of fans has meant a loss not just of gate money but also broadcasting revenues, which are down 23% across Europe. Nothing in recent years, except perhaps tech companies, has grown more spectacularly than what TV is paying to clubs, which is behind the explosion in revenues and salaries.

Domestic rights for the EPL were just £600,000 a game in the early 1990s; today, they are more than £10 million. And prior to the pandemic, the overseas rights to broadcast games were heading in the same direction. But thanks to both postponements causing havoc with the schedule and empty stadiums offering an inferior product, clubs have had to make reimbursements. Besides this, matchday income has also dropped — by 17%.

It all adds to the prevailing gloom and is particularly hard to stomach after fans had been allowed back — albeit a small sprinkling — in November before the winter spike in virus cases caused a halt. But the virus has caused the game to refocus: While small clubs worry about their existence once again, the Big Boys seek alternative ways to maximise income once normality returns.

A further blow to the English game is a looming ban on gambling companies as a source of sponsorship — now seen as a social ill, much as tobacco advertising was and summarily dropped. Again, it is the poorer outfits that will suffer more if the rich finally take the leap and set up a long-mooted European Super League.

Making this a reality could be one of Covid-19’s unexpected consequences. Huge sums are being bandied about, with US banking giant JP Morgan as chief backer aiming to attract a different kind of investor — private equity companies. And it’s no coincidence that the renewed interest is being driven by Barcelona and Real Madrid.

No longer able to cherry-pick the top talents from the EPL because of La Liga’s broadcasting deficit, they see a Super League as the way to reassert their supremacy. Real president Florentino Perez says: “The pandemic has changed everything; it has made us all more vulnerable and also football. Football needs formulas that make it more competitive and exciting.”

For Barcelona, it is one of only two ways they can escape from their current plight. The other is to have a third-party investor — which has been an absolute no-no for a club owned and zealously protected by 150,000 members. But such is the parlous state of their finances that all options may be considered.

Their arrears include a short-term debt of £638 million, £236 million of which is owed to various banks and financial institutions and needs to be paid before June 30. Catalan newspaper El Periodico reported recently that the club was trying to secure a further loan of €100 million tied to the future sale of players.

They will be wary, as the last one didn’t go too well. But if forcing Luis Suarez to leave to get him off the wage bill and then watch his goals make an Atletico Madrid title win look increasingly likely was not humiliating enough, what about Eric Garcia?

Barca wanted to buy back their former player and Spain international from Manchester City but couldn’t raise the £3 million fee. To help seal the deal, Garcia offered to defer his wages until the summer, but Barca couldn’t even come up with the £220,000 down payment for a loan. This is when Spanish newspaper Sport called them, “More like the Marx brothers than a football club.”

You suspect that even if Messi offered to play for free, it may not be enough to save them.

Bob Holmes is a long-time sports writer specialising in football

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