Football finances: US money funds pricey player deals

FC Barcelona, one of the world’s top football clubs, is having a busy summer. This month it signed two top players, Robert Lewandowski and Raphinha, spending nearly €100mn in transfer fees. That does not include player wages. The deals appear to mark a reversal in fortune.

Until recently, the Spanish club’s finances were dire. There were tensions with league bosses at La Liga, which demanded it cut its wage bill. Last year, the club decided that it could no longer afford its talisman goal scorer Lionel Messi. The rapid switch to expensive transfers is not sustainable, says independent sports consultant Dan Jones.

Selling off star players does not inspire confidence. But an endless stream of clever financiers wait on the sidelines, offering ways to fill cash flow gaps. Increasingly, this money has come from the US. In the case of Barcelona, it has raised half a billion euros by selling a quarter of its media rights to San Francisco-based investment group Sixth Street. The same group, which manages $60bn of client money, also agreed to put €360mn towards refurbishing the stadium of Barcelona’s local rival Real Madrid.

Even these amounts barely register against the billions spent by US investors to buy clubs such as the English Premier League’s Chelsea ($5.2bn) and Italy’s Inter Milan ($1.2bn). More money for clubs will follow. Comcast’s NBC paid $2.7bn last year to screen Premier League matches for six years from this upcoming season. This is nearly triple what it paid in the prior cycle. Soon, US broadcast rights for the European Champions League will be auctioned. The six year cycle could go for $2bn.

The extra funds help pay for pricey players that clubs can barely afford. Since 2012, Barcelona has had a net outflow on players of €650mn, according to CIES Football Observatory. Even then, it was a distant fourth behind clubs such as Manchester United. Fans must hope that American interest in football is not a fad.