Last weekend Lionel Messi dotted the i’s and crossed the t’s on his new contract, meaning one crisis has been averted at the Camp Nou. However Barcelona have another problem on their hands: their volatile wage structure.
While Messi’s €43m-per-season contract extension is as much of an anomaly as the player that he is, the Catalan club are also forking out an average of €7m each year to each squad member, according to the 2017 Global Sports Salaries Survey. Like the water level of an unruly toilet with poor plumbing, the club’s wages have been steadily, scarily and malodorously rising over the past few years. Even with Neymar’s wage demands having been offloaded to the French capital, Barcelona have reached the point where their spending on wages is 84% of their income, a ratio which is over the recommended ceiling of 70% and much higher than the optimal 55%. It is a ratio which will have made economists shudder.
Barcelona are shuddering too. “We must keep up our income from marketing and we must ensure that the total wage bill falls,” explained general director Óscar Grau, who made no secret of the club’s fears, at the last members’ assembly. As for Carles Tusquets, the president of an independent financial commission, he echoed Grau’s concerns. “We are worried about the budgets for the coming years,” Tusquets said in October. “It’s difficult to find an extra income of €144m. It won’t be easy for the wages increase to be compensated for by fresh income.” Even club president Josep Maria Bartomeu labelled the situation as “worrying”.
With €630m set aside for the redevelopment of the Camp Nou and the surrounding area, Barcelona literally cannot afford for their player salaries to continue spiralling upwards like a let-go balloon. So what can the club do to keep their head above water? Well, their stated aim is to reduce the salary-to-income ratio down to 60% and they have a three-pronged plan for doing so.
First, there is a desire to bring through more and more youth graduates from the famous La Masia academy. There have been cries of the Blaugrana losing their religion in recent years, with fewer and fewer academy kids making their way to the senior squad. In 2012, the Catalan club fielded 11 La Masia graduates for 62 minutes of a trip to Levante, but we may never see anything like that again. So far in the 2017/18 season, for example, five of the 11 most-used Barcelona players came through other clubs’ youth set-ups, before being brought to the club for big transfer fees and, importantly, on lucrative pay packets. The salaries paid out to recent youth graduates, however, are never as high, at least not until they sign their first bumper contract.
There is a negative linear correlation between the wage bill and the number of youth graduates in the senior squad.
Second, Barcelona have stated that they want to “control spending”. Part of this has to do with transfer fees and the stone of bringing more kids through from La Masia would also help kill this bird. But there are several other areas in which Barcelona could bring down spending and which the club plans to study.
Third, the LaLiga giants want to bring in more income. Nike are set to pay more money over the coming years, while the new shirt sponsorship deal with Japanese e-commerce firm Rakuten is as lucrative as they come. Then there will be the increased matchday income from the new-look 105,000-capacity Camp Nou. Plus, Barcelona expect to make even more money from TV deals, with UEFA set to bring in and dish out even more to its Champions League participants and with LaLiga’s new collective TV deal set to bring in more for the Catalan club too, even if their percentage share of the league’s broadcast earnings is to fall. All of this is already in motion and Barcelona even leapfrogged Real Madrid in this year’s Forbes list of most valuable football teams.
For Barcelona, though, the average annual 7% increase in revenues might not be enough to keep pace with the rocketing wage bill.
Football is changing and star players are costing more than ever before, both in transfer fees and in salary demands. But Barcelona are not backed by Russian money or Middle Eastern oil. They need to sustain themselves and, for now at least, their salary spending is unsustainable.