Barcelona's debt problems part 2

FC Barcelona need to reduce debt and 'generate more income'
Cesc Fabregas
Crunch Sports Staff - 15 Sep 2011
Barcelona's economic vice-president, Javier Faus, has revealed that the club are still in a tight financial situation following the signings of Cesc Fabregas and Alexis Sanchez this summer.

The Spanish and European champions spent over £50million to lure Fabregas and Sanchez to Camp Nou over the summer, and although they have reduced their debt, Faus has admitted that the Catalans "need to generate more income."

Barca are around £317m in debt, although the figure is down from around £375m twelve months ago.

And speaking via the club's official website, Faus said: "We followed an austere line, as we’re committed to growth, and we’ve reduced the debt, but we are still in a delicate situation.

"The debt is still too high for us to be able to dictate our future.

"It’s not the debt that we want, and we have to reduce it further to sustainable levels with regard to the cash flow generated by the club.

"We’ll continue to work on it. We can’t afford to owe so much money to the bank, and we need to generate more income."

jiopsi wrote:What's the problem, with the way things are going, they can reduze debt to 0 in six years, and still use 45mil for players annually?

jiopsi wrote:What's the problem, with the way things are going, they can reduze debt to 0 in six years, and still use 45mil for players annually?

sportsczy wrote:

jiopsi wrote:What's the problem, with the way things are going, they can reduze debt to 0 in six years, and still use 45mil for players annually?

Problem is that debt wasn't reduced with retained earnings. It was reduced by non-profit driven balance sheet transactions. That is unsustainable unless there's a huge amount of untapped goodwill value that Barca is counting on monetizing.

sportsczy wrote:

jiopsi wrote:What's the problem, with the way things are going, they can reduze debt to 0 in six years, and still use 45mil for players annually?

Problem is that debt wasn't reduced with retained earnings. It was reduced by non-profit driven balance sheet transactions. That is unsustainable unless there's a huge amount of untapped goodwill value that Barca is counting on monetizing.

Yuri Yukuv wrote:

sportsczy wrote:

jiopsi wrote:What's the problem, with the way things are going, they can reduze debt to 0 in six years, and still use 45mil for players annually?

Problem is that debt wasn't reduced with retained earnings. It was reduced by non-profit driven balance sheet transactions. That is unsustainable unless there's a huge amount of untapped goodwill value that Barca is counting on monetizing.

Have you ever heard of a small place called qatar? Barca is set

jiopsi wrote:

sportsczy wrote:

jiopsi wrote:What's the problem, with the way things are going, they can reduze debt to 0 in six years, and still use 45mil for players annually?

Problem is that debt wasn't reduced with retained earnings. It was reduced by non-profit driven balance sheet transactions. That is unsustainable unless there's a huge amount of untapped goodwill value that Barca is counting on monetizing.

Which are?

sportsczy wrote:

jiopsi wrote:

sportsczy wrote:

jiopsi wrote:What's the problem, with the way things are going, they can reduze debt to 0 in six years, and still use 45mil for players annually?

Problem is that debt wasn't reduced with retained earnings. It was reduced by non-profit driven balance sheet transactions. That is unsustainable unless there's a huge amount of untapped goodwill value that Barca is counting on monetizing.

Which are?

Actually it can go through retained earning. But it's non-recurring. What i meant is that you create a gain from an undervalued asset. For example, real estate is booked at the acquisition cost, not what its worth in the current market. If you sell the real estate, you realize non-operating gains. These types of things are not included in operating profits, but in a separate P&L line below the operating profit line (one-off transactions). The bottom line is that it's not shown as an operating profit because it's non-recurring.

You could also get capital via equity by selling shares. But i don't that happened at Barca.

When you have an operating loss and you reduced debt, you either had extra cash hanging around that you used or had an event as i described above.