“Over the past few years, we have made great progress in the digital ecosystem, transforming our properties into innovation hubs that will elevate FC Barcelona’s brand to exceptional levels around the world.”
These words were given by the club’s president, Joanne Laporta, at a press conference in August where they launched the new ‘Barca Media’ brand. The brand includes all of the club’s digital and audiovisual production operations and is valued at $1 billion (£824 million in current currency).
This new Barça media company was to float on the NASDAQ stock exchange in New York by the end of 2023, providing a new revenue stream of $100 million a year from fans around the world paying for the club’s internally produced content.
Two months later, NASDAQ’s formation was pushed back to March of next year, according to multiple sources, including insiders and experts with knowledge of the situation but who declined to comment publicly to protect their position.
Ahead of this weekend’s Clasico against Real Madrid at Barcelona’s temporary home of Montjuic, most fans will be talking more about the performances of key players Robert Lewandowski and Pedri than the club’s financial health or accounting. However, questions are being raised about the way the Barça media plan came about and the fact that it has been successfully floated, which should be of concern.
Laporta’s board is looking for the next short-term opportunity to raise funds for Barcelona to use in the transfer market. Some fans may well support him in that endeavor – but the Barca media is yet another example of how the club can make decisions like this that could end up having long-term consequences for their future.
The idea of making money by producing content to sell to fans around the world is not new in Barcelona.
During the presidency of Josep Maria Bartomeu (2014-20), Barça Studios was established to produce audiovisual content for the club’s Barça TV channel, as well as to sell to other broadcasters including Netflix, Sony and Rakuten TV. The club had experienced executives working on initiatives such as the ‘Culers’ membership program which costs subscribers €39.99 per year.
In the year After taking charge in March 2021, Laporta’s regime has seen the potential to sell Barca Studio’s shares in the club’s future business to generate cash to solve immediate problems. So in October of the same year, they asked for and received permission from the socios (club members) to sell 49 percent of Barca Studio to a foreign investor.
Laporta’s board hopes to raise around 200 million euros by doing so, and talks are underway with potential buyers. Initial discussions with traditional industrial financiers went nowhere, and many professional observers felt this was proof that Barca’s valuation was considered unrealistic.
However, in early August 2022, Barca announced the sale of a 24.5 percent stake in Barca Studio to crypto company Socios.com for €100 million. A few weeks later, they gave 24.5 percent to Orpheus Media, a company run by Catalan businessman Jam Rures, for the same amount. These deals allow Barça to sign new signings such as Lewandowski, Jules Kounde and Raphinha within La Liga’s salary cap for the 2022-23 season.
Laporta and his directors could argue that their Leavers policy paid off as Xavi’s rebuilt side won Barca’s first La Liga title in four years.
There was also some evidence of the club’s digital plans this summer with the launch of Barca Vision – which the club said will house all of its ‘web 3.0’, NFT and metaverse activities, as well as a new subsidiary formerly known as Barca Studios. . This was presented by LaPorta in late June, when a new NFT release featuring girl group star Alexia Putelas sold for over $300,000 after just a few days.
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Barça has launched ‘Empowerment’, the second NFT of the ‘Masterpiece’ collection inspired by Alexia Putelas.
The digital artwork commemorates Alexia’s special performance against Wolfsburg in the Champions League semi-final and will be sold at @OpenSea on 26 June.
— FC Barcelona (@FCBarcelona_es) June 22, 2023
That may sound promising, but problems soon arose at the Barca Studios/Vision ‘levers’.
It has emerged that the club did not receive the full €200m from the 2022 deals – indeed Socios and Orpheus only paid €10m each.
According to Catalan media, an additional fee of 30 million euros was paid in June, but the deal was delayed until the end of the year due to restructuring. This now leaves Barcelona with a serious problem in securing new signings and new contracts with La Liga for the 2023-24 season.
Once again, Barca’s studio tricks emerged as the obvious solution to the problem.
In early August, the club announced the deal with German company Libero Football Finance and “private investors” advised by Amsterdam-based investment firm NIPA Capital. The club’s statement said that these companies have acquired a total of 29.5% ownership of Barça Vision (given the new name in which Socios and Orpheus have invested) for 120 million euros. By Socios.com and Orpheus Media”.
It was widely reported that Libero and NIPA investors had initially agreed to pay Barça €60 million each, with Socios and Orpheus shirking their responsibility to provide the club with that money. The Libero, however, said he would pay €40m for 9.8% of Barça’s stake.
Meanwhile, at the same time, Barcelona announced a simultaneous deal with Swiss company, Mountain & Co I Acquisition Corp. This includes Barca Vision and the club’s other audiovisual content units (including what was previously known as Barcelona Studios) which will now be referred to as ‘Barca’. media’
Media company Mountain Fit has raised €120 million from investors looking for innovation. It now uses a financial vehicle called a SPAC (Special Purpose Acquisition Company) to help Barca Media float on the NASDAQ. And he hoped that an exciting partnership with such a global sports brand would attract further investments.
Many Barcelona fans – or football journalists, if we’re being honest here – were not familiar with the SPAC concept. However, the $1 billion valuation of this new Barca Media company has caught everyone’s attention.
The Athletics said in mid-August that the $100 million in annual revenue is based on the assumption that one percent of the team’s 460 million social media followers will pay $25 a year. On average, personalized digital content and experiences.
A timetable has been set – Barca shareholders will vote on the SPAC plan at a meeting on October 21, and Mountainside’s investment closes on November 9.
But almost immediately, problems arose.
Before the summer transfer window closes, Liboro has yet to pay 40 million euros to Barca. Sources told Athletic that the German company wanted certain guarantees which the club would not accept. So Laporta and other directors had to give La Liga a personal bank guarantee to accept the signings of last-minute loan signings Joao Felix and Joao Cancelo. This is the third such bank guarantee that Barcelona executives have arranged in the last 12 months.
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More problems quickly emerged with Barça’s media plan.
On September 8, the deadline for financing has been pushed back – from next month to March 2024. On October 13, Mountain notified the United States Securities and Exchange Commission, the government agency that oversees the financial world. A longer period of compliance with NASDAQ rules that some early investors have issued. Mount now had 45 days to submit to NASDAQ a plan showing it could replace the lost investment.
Instead of putting the finishing touches on the deal Barca and Mountaineer say is close to being completed, all involved are scrambling to find new investors in the short term to keep the original plan alive.
As the Barca Media SPAC plan floundered, the idea of asking club socios to vote on it was quietly scrapped at last weekend’s meeting. However, the ‘Levers’ plan to raise the finances of the old Barca studio concept was in the 2022-23 accounts presented to members.
The accounts included 194 million euros of “extraordinary profits” from the sale of 49 percent of Barca Vision and the rebalancing of the club’s shares by this company. The remaining 51 per cent is listed as property valued at €208m. These figures show that Socios and Orpheus have agreed to pay €200m for 49% of Barca Studios in August 2022 – although both companies have actually only spent €10m each, and the other €180m has not been awarded.
Barca vice-president Eduard Romeu was asked in front of the meeting about the Barca studio money in the club’s accounts.
“It’s nothing strange,” he said. “We can call it financial engineering, but it is nothing more than implementing the accounting plan.”
“The mission is to produce flexible and engaging content,” said an August press release for Barca Media, worth $1 billion, which the club can distribute itself or sell to partners.
However, Barcelona’s ability to create such content has been declining in recent times. After meeting with Socios.com, he developed some ‘Web 3.0’ material, but under Laporta most of the top executives of the Barcelona studio left or were fired, Barca TV was closed last June as a cost-cutting measure.
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It also appears that the money raised from selling Barça studios was spent on player wages and transfer fees, not on media production.
The Socios and Orpheus deals took place in August last year, and Libero and NIPA announced this August – both as money is needed for the summer-window transfer business. Orpheus’ owner Rures appeared to confirm this while speaking on Catalan radio earlier this month. “The ‘Leaders'” allowed players to sign up last season. Additional controllers we partner with now allow players to register. This was the intention of Laporta and company.
Rures’ comments came after Laporta announced that the board had doubts about how La Liga transferred shares in Barca’s studio in August to sign new signings Ilkay Gundogan and Inigo Martínez and offered new contracts to Gavi, Ronald Araujo and Alejandro Balde.
La Liga’s statement showed that Barcelona had been approved by the club’s auditors for 49 percent of the sale of the Barca studio, with the first payment already made. But La Liga has now realized that this payment has not been made, which will reduce Barcelona’s salary cap and affect their ability to sign new players in the future.
Barca did not respond to a request for comment from The Athletic.
One way to avoid this damage to Barca’s salary cap is for Libo to pay in full now. This remains possible – if the club and investors agree on the guarantee.
Former Chelsea and Manchester United chief executive Peter Kenyon joined LeBron as vice-chairman at the end of June, just weeks before Barca’s media divestment. Sources told The Athletic that Kenyon’s longtime relationship with LaPorta was key to Libo’s involvement in the SPAC.
In the ‘compromisarios’ (club members with voting rights) held last Saturday, Barca’s 2022-23 accounts were approved with 376 votes, 45 against and 20 abstentions. Many seem unconcerned about how the bills represent Barça Studio’s money, or whether the Barcelona Media SPAC plan will succeed.
Mount is confident that the transaction can be completed with new institutional investors joining the SPAC so that a restructured Barca Media could float on NASDAQ as early as 2024.
“We want to grow the operation further before we make the jump (to NASDAQ),” Romeu said last week. We cannot allow a value of “X”, and it will fail after a few days. That would hurt our brand. We don’t want to get ahead of ourselves.
Another reading might be that Barcelona’s financial brand has already been largely rejected. Romeu said last week the club’s debt remained at $1.2 billion, down from the $1.3 billion he inherited from Bartomeu’s board two and a half years ago, but still the biggest in world football.
Laporta’s regime has managed to strike deals with some financial partners, but Goldman Sachs’ €1.45billion for Camp Nou renovations and €667m from Sixth Street for 25 per cent of the club’s La Liga TV rights over the next 25 years have both proved a solid and reliable asset.
At Barca’s studios, there is less evidence of anything tangible, physical. Many numbers have been talked about – €1 billion for Barca Media, another €400m for Barca Vision – but these are paper prices, not the actual sums the club has received.
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And the partners currently involved – Socios, Orpheus, NIPA, Libero – are not financial firms with experience in traditional stock market operations.
This has sparked fears that the Barcelona media – between Socios and former Barcelona executives – is a bubble that could burst and cause serious damage to the club. There are concerns about the increasing influence of external partners on the board’s financial and transfer decisions.
The club did not respond to questions from Athletic about how much it spent on legal and consultancy fees to plan the Barça media project. Socios, Orpheus, NIPA, Libero and Mountain all declined to comment for this article.
Barcelona’s La Liga wage cap has already been hit, meaning players will have to be sold in the upcoming transfer windows – pushing the problem further forward unless more short-term solutions are found.
As with Barça in recent years, this could all make for a great documentary, or feature film – like Moneyball meets The Wolf of Wall Street.
Taking enough time at the box office to pay off the club’s huge debt is certainly a huge achievement.
It might be their first home project.
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(Top photo: Getty Images; Design: Sam Richardson)