Barcelona's Current Financial Predicament - Explained

Barcelona are in big, big, BIG financial trouble.

In the latest blow in what has been a truly horrific year, even by 2020 standards, La Blaugrana need to reduce their wage bill significantly in order to stave off the actual threat of bankruptcy.

Negotiations with the playing squad regarding cuts have been going on for some time, but despite Barcelona originally setting a deadline of November 5, they are no closer to reaching an agreement.

The whole thing is a mess to be honest, but how did we get here in the first place?

Why Are Barcelona Struggling Financially?

Despite their size, Barca have not been insulated from the financial impact of the coronavirus lockdown. In fact, it's hurt them more than any other elite club in Europe.

As well as the loss of gate receipts, that they have had to deal with since early spring, the club are hugely reliant on the footballing tourism industry. Camp Nou used to attract hundred of thousands of visitors per year but this revenue has dried up due to travel restrictions caused by the pandemic.

Barca have also been especially affected due to their sky high wage bill. Lionel Messi alone pockets a staggering €50m per year, while Antoine Griezmann, Ousmane Dembele, Sergio Busquets and several other senior players also earn obscene money that is not sustainable in the current climate.

What Has Been Done to Address This So Far?

Soon after the coronavirus pandemic caused European football to cease back in March, Barcelona's players agreed a 70% pay cut. The squad even offered to supplement the wages of non-playing staff. In short, everything seemed fairly rosy.

Since then, this harmonious relationship has fallen apart.

When La Liga got underway again in June, now ousted club president Josep Maria Bartomeu attempted to force through a second pay cut - but this was strongly rejected by the players. Messi has been targeted specifically, with the club requesting he reduce his salary after it became clear he would be staying put.

Though a second pay cut has not been achieved, Barca have raised some revenue in the transfer market. The hefty wages of Luis Suarez and Arturo Vidal have been moved off the books, while Ivan Rakitic, Nelson Semedo and Rafinha have also departed.

Then there's the frankly ridiculous, Miralem Pjanic, Arthur Melo 'swap deal' with Juventus. The move bagged Barca a cool €10m and made their books look a lot more appealing to any pesky Financial Fair Play inspectors.

Meanwhile, following their recent Champions League victory over Ferencvaros, new contracts were announced for Marc-Andre Ter Stegen, Clement Lenglet, Frenkie de Jong and surprisingly, Gerard Pique. All of these deals included a temporary 30% wage cut, but negotiations with the rest of the squad remain unfruitful.

The covert nature of these new deals has apparently caused a divide in the dressing room with senior figures particularly unhappy with Pique, who they feel has undermined their bargaining position.

What Is Being Considered Moving Forward?

Barcelona have now reached a crisis point in negotiations and are considering a series of drastic moves.

One option is to unilaterally reduce wages across the board without seeking the players' approval. The players' union have already argued that this would represent a breach of contract, meaning they would be free to find new clubs.

According to Catalunya Radio (via Cuatro) Barca's preferred measure is to pay out key players contracts over a longer time period. This would relieve some of the short term financial pressure but could seriously reduce the Catalan giants' spending power going forward.

A third, and rather bizarre method, would be hiring the players whose deals are expiring as 'club ambassadors'. In practice this would likely involve Pique working as an after dinner speaker as his hefty playing contract is paid out over a period of several years. Innovative for sure, but surely quite unlikely?

Whatever happens, do not underestimate how much trouble Barcelona are in and how pressing it is that they find a solution.