Spanish football club FC Barcelona has won many championships with star players like Lionel Messi—but that hasn’t been enough to avoid financial troubles.
The club hopes to fix its money problems with four magic words: special purpose acquisition company, or a SPAC.
On Friday, the 2023 LaLiga winner announced plans to list its content creation unit Barca Media on Nasdaq via a SPAC merger that would value that business at $1 billion.
The club’s goal is to get funding to create more sources of income, and Barca Media could become an “important source of revenue in the coming years,” FC Barcelona said in a statement.
“The Business incorporates substantially all of the digital content the Club has produced over the past 20 years, targeting fans of all ages around the globe,” it said in a press release Friday.
The SPAC that will take Barca Media public is Swiss private equity fund Mountain Partners. Existing Barca Media shareholders will hold a 80% stake in the company, according to the club.
A spokesperson from the club declined to comment.
Barca’s financial tightrope
FC Barcelona’s planned SPAC comes at a time when the club continues to face the consequences of a financial meltdown due to mounting debt and poor management. In 2021, it recorded a loss of €481 million ($527 million) and its debt continued to grow, ultimately trickling down to the players, some of whom accepted pay cuts to help the club afford to hire new team members.
The pandemic exacerbated the club’s troubles by depressing revenue due to fewer games. The club decided not to renew the contract of its star player Messi in August 2021 after 17 seasons due to “financial and structural obstacles,” FC Barcelona said at the time. It could no longer afford to pay Messi, who was among the sport’s highest earners, and considered to be one of its greatest of all time.
The club underwent a management change in March 2021 when former president Joan Laporta returned as its leader. Among his major duties in his second stint was to get the club’s finances back on track. To do so, he engineered a series of unprecedented deals that involved mortgaging future income in exchange for immediate influxes of cash. He sold a 25% stake in future media rights deals to Sixth Street Capital for at least $317 million in June 2022 and then, a month later, sold two 24.5% stakes of the club’s content division, Barca Studios, to blockchain company socios.com and Orpheus Media, a company run by Catalan media impresario Juanme Roures, for $103 million (100 million euros) each.
FC Barcelona wasn’t always walking a financial tightrope—in the 2018-19 season, it had over $1 billion in revenue, creating history as the first sports team to reach that milestone. But over the years, its costs grew as its income began to stagnate, and then plummeted to virtually zero during the pandemic.
The club is banking that a $1.6 billion stadium renovation, complete with an American-style panoply of adjacent shopping and entertainment options, will yield enough new revenue to restore the club to its former status as a financial juggernaut. The new stadium is expected to generate $219 million in additional revenue for the club through events, tickets and more, Reuters reported.
A change of minority owners to go along with the SPAC
Several years ago, SPACs shifted from being outliers on Wall Street—often for companies of dubious quality—to a buzzy alternative to traditional initial public offerings. Many tech and finance businesses like online betting company DraftKings, office landlord WeWork, and electric truck maker Nikola took this route because it was a quicker way to go public. But when stocks took a beating amid a market downturn in 2022, many SPACs started to collapse.
FC Barcelona’s intended media unit SPAC isn’t the first such announcement in the football world. In January, owners of French team Olympique Lyonnais announced that it was considering a U.S. SPAC listing, but it hasn’t pulled the trigger.
Alongside the SPAC deal with Mountain & Co., Barca also announced a change of ownership for certain portions of Barca Visions, one of the club’s divisions that will make up the newly formed Barca Media.
German investment firm Libero football finance and a group of unnamed private investors will purchase a 29.5% share of Barca Media from Orpheus and socios.com for $132 million, according to the press release announcing the deal. A separate press release on Libero’s website detailed that the German firm would purchase 9.8% of Barca Vision, presumably the remainder would go to the private investors mentioned. It’s not known whether Orpheus and socios.com sold equal amounts of their stakes and Barca’s representatives declined to comment. The sale comes after Spanish press reports that an unnamed German fund was interested in acquiring a portion of socios.com and Orpheus’ shares in Barca’s media arm. Again, the club declined to comment whether Libero was the unnamed fund referenced in previous reports.
This new infusion of capital allows Barcelona to close a €60 million ($66 million) shortfall in its budget. Ever since Barcelona’s financial crisis, the Spanish league has forced Barcelona to adhere to strict financial guidelines requiring the club to have a minimum amount of income, only a limited portion of which can be spent on salaries for new players. Without these funds, Barcelona would not have been able to register players who signed new contracts with the league office. As of now, those players are in a sort of limbo in which they have a contract with Barcelona but are ineligible to compete in the Spanish league. As of now, Barcelona only has 12 players registered, The Athletic reports. The new funds come just two days before its season opener on Sunday.
