The Magic Money Tree
It might be afternoon by the time this gets published,right enough! Theresa May famously lambasted Labour’s manifesto spending plans of 2017 by telling everyone that there was no magic money tree. How strange that a future Conservative chancellor should prove her wrong,and that there is some basis after all for Modern Monetary Theory. But we don’t do politics here,that’s just an explanation of the title of today’s article.
It concerns Joan Laporta,president of FC Barcelona. He inherited a train crash of a club post-pandemic when he was voted back into office,granted,but he seems to be going out of his way to make things worse. At that time,Barca were reported to be around 1.5 billion euros in debt,and had had to ask various players to take a wage cut or deferral just to stop the club from folding. And indeed,they still are. Gerard Pique for instance is owed vast sums since his own deferral over two years ago. As too is Lionel Messi,who no longer even plays for them!
Their situation is further complicated by the fact that each club has a total salary cap imposed on them by the Spanish FA-and this year it is set at MINUS 122 million euros. No,I have no idea how that works either.
Now that huge debt didn’t arrive overnight. It had built up over the years,mainly due to their profligate spending on new players. Real Madrid had their Galacticos,and Barca weren’t for being left at the starting gate. Their big spending really took off when they signed Neymar and Suarez about eight years ago for combined fees of around £125m,and continued since. True,they took in 222m for him from PSG four years later,but I reckon that they spent much of that on his transfer fee,agents fees,his Dad and of course wages. There was certainly little profit overall from the sale.
So,given the clearly parlous state of the club accounts,did they bank the money? No,this is Barcelona we are talking about. They went out and spent all of it and more on Coutinho and Griezeman,then added a few others for good measure. And I can’t think of a single one of them who was successful during their time there.
So with all that red in the accounts,and a negative salary cap-and given that they couldn’t even offer Messi a new contract last year because of this-it really shouldn’t surprise me that they are signing players like Rudiger-admittedly for free,but think of the signing on fees and wages,etc-and even chasing Raphinho from Leeds and Lewandowski from Bayern at jointly over £100m,with signing on fees and wages still to come. It really is like the magic money tree,but that Modern Monetary Theory I mentioned only works if a country has a sovereign currency,one which is known as a reserve currency. Like the euro,pound,dollar,yen and Swiss franc.Try printing your own notes,Joan,and see how far you get.
Speaking of Leeds,about twenty years ago it became clear that it too was a basket case,due to overspending. The best example being £6m on Seth Johnson from Derby,then TELLING him that the club wage structure demanded that he be paid more than twice even his agent’s wildest dreams. The club soon had to sell its better players at fire sale prices-they only got £3m of a reported £5m for Harry Kewell,for example. They had turned down £20m for Viduka months earlier,and were forced to sell him to Middlesborough for £6m. Robbie Keane was about the same to Spurs,and yet none of these sales was enough to keep the company from going into administration after their second relegation a few years later. They spent years in the wilderness,rebuilding the club and its finances before returning to the EPL two years ago. I’d say that they are now a very well run club,stable and moderately successful.
Rangers took the opposite approach,a similar one to that which Barca are following at the moment. Stuck their fingers in their ears,went LA-LA-LA,I can’t hear you. All the way to the oblivion of liquidation. They even refused to sell players,and worse,attempted to sign some while in administration! Murray,famously,DID actually print his own notes,after a fashion. He got the Bank of Scotland to print them for him,then lend them to him. Didn’t do him much good really,though a stronger creditor than Lloyds would have cleaned him out for their debts,rather than allow him to cherrypick the better parts of his liquidated companies.
Barca,then,are treading a very dangerous path. And the latest version of EUFA FFP regulations is likely to prove that-if they are applied! And I doubt that the Spanish FA will be looking too kindly on their summer spending spree either. But what has all this to do with Celtic,I hear you ask? Well,a lot of us are fed up to the back teeth of being drawn against them in the Champions League. I know I am,even if THAT night ten years ago was magical! As was the Marshall/Kennedy Show in 2004. So,if we draw them again,we should point out that their squad has been illegally assembled. Let’s see if their lawyers are as good as the ones at Manchester City. And let’s also see if these regulations are worth the paper they are written on.
Above article by BMCUWP