FC Barcelona: The Business Behind Football’s Greatest Drama

The Business of Barcelona

Money, power, success—FC Barcelona has it all. No other club is as full of drama and entertainment. They just went from near bankruptcy to winning La Liga in less than a year. From having no money to spending millions on transfers, from crazy financial stunts to building a massive new billion-dollar stadium. What if we told you that all those crazy stories can be traced back to the same secretive group of men—Elephant Blau? A group that formed decades ago to plot a campaign that would change Barcelona forever. Between these two individuals has been a complex political struggle that has shaped Barcelona’s history over the previous 20 years, from its greatest highs to its lowest lows. Their story is a fascinating case study that illuminates the business of sports.

The Rise

Before we delve into Barça’s current strategy, it’s crucial to grasp the club’s incredibly rich history. From its humble beginnings, Barcelona evolved into one of the world’s foremost sporting organizations, owing much to the efforts of an accountant, a prophet, a farmhouse, and a flea. In 1899, an accountant named Hans Gamper halted briefly in eastern Spain on his way to Africa to establish a sugar trading business.

Enchanted by Barcelona, Gamper decided to remain, securing employment at a bank while also writing a sports column for a local newspaper. It wasn’t long before Gamper conceived the idea of founding a new football club in the city. Placing an advertisement, he garnered interest from other enthusiasts, leading to the inaugural meeting of Football Club Barcelona.

Over the ensuing years, Barcelona transcended its role as merely a football club, becoming a potent symbol of Catalan identity. While Gamper is credited as the club’s founder, another figure proved equally pivotal to its modern identity. In 1973, Barcelona made a landmark signing by acquiring Johan Cruyff, widely regarded as the best player in the world at the time. In his debut season, Cruyff propelled Barcelona to a league title, notably demolishing Real Madrid 5-0 along the way.

His five-year tenure not only saw further accolades but also left an indelible mark on the club’s ethos and playing style.

Cruyff’s influence extended far beyond his playing career. Returning in 1988 as a manager, he engineered a remarkable run of success, securing four league titles and the club’s inaugural European Cup. Inspired by the principles of Dutch Total Football, Cruyff laid the foundations for future generations, a legacy famously summarized by Pep Guardiola: “Cruyff built the cathedral; it is our job to maintain it.”

A cornerstone of Barcelona’s sustained success has been its famed academy, La Masia, or The Farmhouse, which opened in 1979, just after Cruyff’s departure as a player. Initially catering to junior players, La Masia swiftly became synonymous with Barcelona’s youth development program. In 2010, it achieved a historic milestone as the first academy to produce all three finalists for the Ballon d’Or in a single year.

The impact was underscored by Barcelona’s Champions League triumph, where seven homegrown players featured in the starting lineup under the guidance of Pep Guardiola, another La Masia alumni.

The financial benefits of an effective academy system are profound. By nurturing talent internally, Barcelona not only saves substantially on transfer expenditures but also customizes its talent pipeline to align with the club’s specific needs.

Lionel Messi serves as the epitome of La Masia’s success. His enduring loyalty and on-field brilliance while donning the Barcelona shirt translated into substantial revenue streams, with economists estimating his economic impact on the club to be as high as 200 million euros annually before his departure for PSG.

Ironically, the man responsible for initiating the La Masia project, Jose Luis Nunez, eventually faced challenges to his presidency, precipitated by the very system he championed. However, it was the subsequent leadership under Joan Laporta that reaped the greatest rewards from La Masia’s sustained success.

Elefant Blau

It is the tale of Elephant Blau. In early 1997, a small assembly of lawyers and businessmen convened clandestinely, united by their dissatisfaction with Barcelona’s President, Jose Luis Nunez. Among them, the most vocal was Joan Laporta, a young lawyer deeply aggrieved by Nunez’s decision to dismiss Johan Cruyff and suspicious of alleged concealed debts.

Under Laporta’s leadership, they adopted the moniker and emblem of a blue elephant, initiating a relentless campaign poised to reshape Barcelona’s destiny.

To comprehend this pivotal moment, one must delve into Barcelona’s unique organizational framework. Unlike many professional sports teams owned by wealthy individuals or corporations, Barcelona is owned and governed by 144,000 members, known as socios. These members elect the club’s president and wield influence over its constitution.

While becoming a socio has become more accessible through online registration and an annual fee of approximately 200 Euros, historically, admittance was restricted to those with familial connections, preserving control within a confined local cohort. Thus, the club’s governance is profoundly political—a realm where Elephant Blau found fertile ground.

Elephant Blau seized upon Barcelona‘s mounting financial woes, advocating vehemently for heightened transparency from President Nunez. Their efforts culminated in gathering sufficient signatures to trigger a vote of no confidence. Eventually, Laporta ascended to the presidency, heralding an era of transformation at Barcelona.

Under his stewardship, the club’s mandate expanded beyond mere athletic success; it aspired to embody a moral beacon within football’s increasingly opaque domain.

For years, Barcelona stood alone among top clubs without a shirt sponsor, a stance they maintained until 2006 when a partnership with UNICEF was forged, entailing an annual donation of 1.5 million dollars. This collaboration underscored Barcelona’s evolving image as a familial institution, evidenced further by the expulsion of Davao Island Ultras, who had long controlled Camp Nou’s primary stands.

This act provoked threats against Laporta’s life. Subsequently, Laporta appointed Pep Guardiola as manager, a move that yielded unprecedented success, with the team clinching six trophies in 2009 alone.

Laporta’s tenure saw Barcelona’s profile and global following surge significantly. Between 2003 and 2010, revenues soared from 123 million to 387 million euros, marking a growth rate exceeding 200 percent. This upward trajectory persisted into the subsequent decade, culminating in a revenue zenith in 2019.

Economically, Barcelona outstripped archrival Real Madrid, solidifying its status as the preeminent revenue generator among football clubs worldwide.

The Fall

However, it wasn’t smooth sailing for Laporta. Upon assuming power, he garnered support from two businessmen, Sandro Rosell, a former Nike executive, and Josep Bartomeu. Laporta appointed both friends to key roles within the club. Together, they would meticulously comb through newspapers daily, assessing who received the most accolades. Laporta himself became a prominent figure in broader society, likened to a cardinal.

Yet, tensions brewed within this triumvirate. Rosell felt Laporta disregarded his counsel, while Bartomeu grew disenchanted with what he perceived as neglect toward his basketball interests. Just weeks after jubilant title celebrations in 2005, both Rosell and Bartomeu abruptly resigned. Rosell, once Laporta’s staunch ally, now became his most vocal critic, even publishing a book critiquing Laporta’s management decisions.

The strategies that catapulted Laporta into power via Elephant Blau began to backfire. Rosell ascended to the presidency, accompanied by Bartomeu as his deputy. Rosell’s tenure was marked by controversial decisions, including replacing the UNICEF logo on Barcelona’s jersey with the Qatar Foundation, a move that generated substantial revenue but drew significant backlash from fans and the media alike.

However, Rosell’s legacy at Barcelona would be defined most significantly by his transfer dealings, notably the acquisition of Neymar in 2013 for 86 million euros. Initially heralded as a masterstroke, Neymar’s tenure yielded success on the pitch, but controversy off it. A Spanish court investigated allegations of fraud related to Neymar’s transfer, revealing discrepancies in the reported fee. The fallout tarnished Rosell’s presidency, leading to his resignation in 2014.

Bartomeu succeeded Rosell and grappled with the aftermath of the Neymar saga. Barcelona’s subsequent transfers, such as Dembele and Coutinho, failed to deliver commensurate success, depleting funds without yielding trophies. Between 2012 and 2022, Barcelona’s net spending on players totaled 1.7 billion euros, resulting in a staggering 674 million euro loss—a stark contrast to Real Madrid’s more balanced approach over the same period.

Beyond transfer woes, Barcelona faced escalating player salaries, exacerbated by a global pandemic and limited external investments. The club’s member-centric ownership model, while fostering community ties, stymied potential equity injections crucial for competing with cash-rich clubs like Manchester City and Chelsea. Consequently, Barcelona accrued unprecedented debt, soaring from 217 million to over 1.3 billion euros between 2019 and 2022, underlining Laporta’s admission of financial strain.

Despite these challenges, Laporta orchestrated a remarkable turnaround. Despite the debt burden, Barcelona invested over 150 million euros in new players in 2022, including key acquisitions that propelled the club to a La Liga title shortly after facing near insolvency. This revival underscores Laporta’s strategic acumen and resilience amid financial turmoil.

Rise again?

Instead of consolidating, Laporta pursued a high-risk strategy of spending and selling. Barcelona’s new players arrived thanks to leveraging financial maneuvers. Over the summer, Laporta orchestrated asset sales totaling 700 million euros, relinquishing stakes in core assets. Notably, he sold 25% of Barcelona’s La Liga broadcasting rights for the next 25 years, fetching nearly half a billion euros.

Additionally, Laporta divested 49% of Parisa Studios for 200 million euros. This approach proved effective, at least in the short term, highlighting a critical football business lesson: broadcasting rights constitute a pivotal revenue stream, and forfeiting future earnings entails substantial risks.

From a financial standpoint, these sales diluted Barcelona’s ownership in their primary assets, akin to selling family silver—a bold yet precarious strategy. Alongside these divestments, Laporta secured Barcelona’s largest-ever sponsorship deal, netting over 400 million euros with Spotify. The agreement includes featuring Spotify’s logo on Barcelona’s jerseys and naming rights for Camp Nou, signaling significant changes ahead for the iconic stadium.

Moreover, Laporta’s administration recently secured an additional 1.45 billion euros in loans from JP Morgan and Goldman Sachs. This funding aims to renovate Camp Nou and its surroundings, facilitating an expected annual revenue boost of 250 million euros to repay these loans. These ambitious financial maneuvers mirror Laporta’s initial term, such as appointing the relatively inexperienced Xavi, echoing his earlier choice of Guardiola, both products of La Masia.

However, the success of selling off critical assets for immediate cash remains uncertain. Barcelona’s coherent approach under Laporta’s leadership is a recent development amid numerous challenges. These include navigating the league’s salary cap restrictions, turmoil surrounding the stadium reconstruction, and controversies like referee scandals. Only time will reveal the outcomes of Barcelona’s strategic gambits under Laporta’s tenure, as the club strives to balance financial stability with sustained competitiveness in European football.