Barce in the news for all the wrong reasons again....
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Barce in the news for all the wrong reasons again....
http://www.as.com/futbol/articulo/bancos-le-niegan-barca-ampliar/20120511dasdaiftb_16/Tes
Seems to never end ......
Seems to never end ......
Guest- Guest
Re: Barce in the news for all the wrong reasons again....
Since this is just going to cause more controversy over finances almost no one here understands I recommend everyone read the Swiss Rambler post about this before commenting. Barca are more than able to make their debt payments because they have enough cash flows to cover short term payments.
BarrileteCosmico wrote:http://swissramble.blogspot.com/2012/04/truth-about-debt-at-barcelona-and-real.html
In conclusion, while there are some very real debt problems in Spanish football, the situation is not quite so dramatic at Barcelona and Real Madrid as some would have people believe. It would obviously be better for their balance sheets if the debt was lower, but their ability to generate revenue is unsurpassed, admittedly partly due to the current unfair TV deal, but also their high gate receipts and awesome commercial strength. These operations continue to grow, as seen by Barcelona’s record-breaking shirt sponsorship deal with the Qatar Foundation and Real Madrid’s plans to build a $1 billion holiday resort in the United Arab Emirates.
"Put your shirt on it"
Of course, the two Spanish giants may still come under pressure from their creditors at some stage, especially if they embark on a summer spending spree following the disappointing Champions League semi-final exits. Nor should the impact of Spain’s faltering economy be trivialised, but the fact is that right here, right now, the important debt (bank loans, transfers and tax liabilities) is relatively low, at least for clubs of this size.
When reading reports on how much Barcelona and Real Madrid owe, it’s not quite a case of “don’t believe what you read”, but you do need to understand what any analysis is actually referring to, because, as we have seen, debt has many different definitions.
Caveat emptor – or something like that.
Last edited by BarrileteCosmico on Fri May 11, 2012 5:06 pm; edited 1 time in total
BarrileteCosmico- Admin
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Re: Barce in the news for all the wrong reasons again....
Contrary to popular belief, Real Madrid and Barcelona are relatively profitable: Madrid have made total profits of around €200 million in the last five years, including €47 million last season; while Barcelona’s loss was only €12 million. Adjusting for non-cash flow expenses like depreciation and amortisation plus interest produces very impressive EBITDA of €151 million for Madrid and pretty good €66 million for Barcelona. In the same way, Manchester United’s notable ability to generate cash results in excellent EBITDA of €138 million.
So, Madrid’s cash flow over debt ratio comes in at 26%, much better than the others: Manchester United 14%, Arsenal 13% and Barcelona 11%. Simply put, the higher the percentage, the better the club’s ability to pay its debt.
While it is clearly important to be able to ultimately pay off debt, a club’s ability to service its interest expenses is absolutely crucial. This can be explored with the interest coverage ratio (cash flow/interest payable), which tells a similar story to debt coverage, i.e. Madrid’s ratio of 11.7 is by far the best, though the others are not too bad: Barcelona 4.5, Arsenal 3.9 and Manchester United 2.5 (anything below 1.5 is a bit questionable).
Barcelona's numbers are still very low for all the revenue they acquire.
Guest- Guest
Re: Barce in the news for all the wrong reasons again....
It will be high this time Crimson. We have been winning too much and the bonuses have been very high. No trophies this season, better profits.
kiranr- First Team
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Re: Barce in the news for all the wrong reasons again....
kiranr wrote:
It will be high this time Crimson. We have been winning too much and the bonuses have been very high. No trophies this season, better profits.
And what if there not?
Guest- Guest
Re: Barce in the news for all the wrong reasons again....
The biggest Farce in Spain are the few hundred million tax debt in my eyes...
ELO- Hot Prospect
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Re: Barce in the news for all the wrong reasons again....
Barcelona are more able to pay off their debts than Arsenal, which is hailed as an example of financial sustainability in football as the own part you quoted shows. The debt fears are completely overplayed.Crimson wrote:While it is clearly important to be able to ultimately pay off debt, a club’s ability to service its interest expenses is absolutely crucial. This can be explored with the interest coverage ratio (cash flow/interest payable), which tells a similar story to debt coverage, i.e. Madrid’s ratio of 11.7 is by far the best, though the others are not too bad: Barcelona 4.5, Arsenal 3.9 and Manchester United 2.5 (anything below 1.5 is a bit questionable).
Barcelona's numbers are still very low for all the revenue they acquire.
BarrileteCosmico- Admin
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