Financial causes of Lionel Messi's departure from FC Barcelona
On August 5, 2021, FC Barcelona officially announced that, despite having reached an agreement with the player to sign a new contract, Lionel Messi would not remain with the club “because of financial and structural obstacles related to the Spanish League regulations”. The wording of the announcement had, in my opinion, the intention of directing the blame for Messi's departure to La Liga Nacional de Futbol Profesional (sports association in charge of the Spanish League organization which, for the purposes of this article, we will call “La Liga”) and its President Javier Tebas.
But was it really like that? As will be discussed below, it was not that La Liga prevented/ forbid FC Barcelona from renewing Messi's contract, but it was FC Barcelona the one that failed to comply with La Liga's financial regulations that would have allowed them to keep Messi.
1. Lionel Messi's numbers at FC Barcelona
Impossible to understand why the departure of Messi created a world scandal without briefly presenting a summary of his record breaking numbers during his career at FC Barcelona.
Messi played 17 seasons for FC Barcelona’s first team in which he played a total of 778 official matches between the different domestic competitions (La Liga, Copa del Rey and Spanish Super Cup) and international competitions (Champions League, European Super Cup and Club World Cup) in which he scored a total of 672 goals. He won 10 La Liga, 7 Copas del Rey, 8 Spanish Super Cups, 4 Champions League, 3 European Super Cups and 3 Club World Cups, making a total of 35 trophies (sometimes it is debated whether they were 35 because Messi did not play a single minute of the 2005 Spanish Super Cup).
Better not to mention Messi's Ballon d'Or and other distinctions or individual records because I would stay writing for two weeks and wouldn't end.
2. Lionel Messi's last contract with FC Barcelona
Knowing the exact figures of a footballer's contract is always a difficult task as it is private information, however, in this specific case, in January 2021 the newspaper El Mundo obtained access to Messi's last contract in force with FC Barcelona, dated November 2017. On its infamous front page, El Mundo revealed the astronomical amount of money that Messi would receive for the 2017/18, 2018/19, 2019/20 and 2020/21 seasons: A gross salary of 555,237,619 euros distributed in two contracts, one for employment concept (472 million euros) and the second one for image rights concept (83 million euros). An approximate salary of 128 million euros per season.
3. Financial Fair Play in Spain
Before a new season begins, each Spanish club has to send a financial report to La Liga regarding its estimated income and expenses so that La Liga can determine the maximum salaries spending budget allowed for each club for the following season (Salary Cap).
The expenses that fall within the Salary Cap can be, according to La Liga, of two types: player transfer payments (federative right of a footballer) and salary payments (including salaries of the minor divisions, first team coaches and physiotherapists). What is La Liga looking for with the Salary Cap? Ensuring the long-term solvency of Spanish clubs, too used to spending large amounts of money to acquire new players, to those who then have to pay stratospheric salaries that increase with each renewal.
So, with lower expectations of income, higher operating costs and higher financial debt expenses, the Salary Cap gets reduced until the Spanish clubs are forced to alleviate their salaries expenses and transfers expenses. To increase their Salary Cap, Spanish clubs could, for example, sell players or release them after the expiration of their contract -as it happened with Messi- both scenarios help clubs generate earnouts either from payments for the sale of players or from savings/reduction of the wage bill.
4. FC Barcelona financial crisis
FC Barcelona is probably one of the worst managed clubs in recent years, this added to the pandemic has plunged the club in an unprecedented financial crisis.
Regarding the pandemic, according to its audited financial statements, during the 2019/20 season FC Barcelona loss 203 million euros in earnouts and only saved 74 million euros in expenses, which led to its expected profit for the 2019/20 period (net profit of 1.9 million euros) becoming a negative result: net loss of 97 million euros.
Regarding FC Barcelona management, from the 2017/2018 season onwards, FC Barcelona has spent, according to Swiss Ramble (a twitterer that analyzes football finance), an approximate of 960 million euros on player transfers. By far the strongest investment of a club in players. Dembelé, Coutinho, Griezmann, Vidal, De Jong, Vidal, Braitwaite, Arthur, Pjanic and many, many other players that, at one point, join the club. The result? 2 La Liga, 2 Copas del Rey and 1 Spanish Super Cup in 4 seasons. That is to say, a multimillion-dollar investment that was not reflected in sports results and a list of players that ended up leaving the club without any glory (does anyone remember Paulinho?).
5. Season 2021/22, the Titanic sinks
According to its audited financial statements for the 2019/20 season, FC Barcelona spent 436 million euros on sports salaries. According to Swiss Ramble, the Salary Cap of FC Barcelona for the same season was 671 million euros. It means, there was a Salary Cap of 671 million euros and they only spent 436 million euros. No problem. However, the financial crisis mentioned in the preceding point led to the FC Barcelona Salary Cap for the 2020/21 season being reduced to “only” 347 million euros. This resulted on the club reducing its salary expenses through salary reductions in the first team and the sale of players such as Arthur, Semedo, Suarez, Suarez, Rafinha, among others.
However, even with all these adjustments, FC Barcelona was impacted in such a way by its financial crisis that it was reported in the media that their Salary Cap for the 2021/22 season would be in between 160 and 200 million euros. Between three and four times less than the Salary Cap of two years ago. And THAT is the reason for Messi's departure. Between 160 and 200 million of maximum allowable spending in salaries for a club that, only in Messi’s salary, spent something of 128 million euros per season since 2017. The problem, in that sense, was much more serious than previously thought. In fact, not even removing Messi from the calculation did FC Barcelona stop having problems with Salary Cap to the point that Gerard Piqué had to reduce his salary to the minimum expression so that La Liga would allow FC Barcelona to register its new signings (Agüero, Eric García, Depay, Emerson). The near future does not look good at all for FC Barcelona.