BARCELONA FINANCES FULL
This is a long-running dispute, but, interestingly, Deloittes did not require a full provision in last year’s accounts.
BARCELONA FINANCES TV
The largest is a €38 million provision for a legal dispute with TV company Sogecable, which the new board has decided to fully cover, even though they believe that they have a strong legal case. There are three categories of adjustment to the accounts, which relate to television (€56 million), player transfers (€12 million), and land (€21 million). Most companies do not do this, as there are invariably numerous discussions with the auditors before the final figures are agreed.īy the way, Deloittes are not new to the club, but have been auditing the accounts for many years, so there’s nothing too sensational about their role in the restatement. In fact, it’s a great achievement for the club to release draft accounts just a few days after the books closed. In fairness to the previous board, their results were unaudited. As an analogy, if you believe that it’s going to rain, you might take an umbrella with you when you go out, but you probably wouldn’t refuse to leave the house just in case you get wet. On the other hand, you can be too careful. One of the fundamental accounting conventions is prudence and it does look like Laporta had a tendency to count his chickens before they hatched.
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Even Faus admitted that the old accounts were not “fixed”, but the new board had simply taken a far more conservative approach, “We opted for caution.” There is a considerable degree of judgment applied over which revenue and costs should be recognised in the accounts. The first point to make is that even in an age where we have International Financial Reporting Standards (IFRS), accounting is not quite as black-and-white as people might imagine. How can this be? What on earth is happening with Barcelona’s finances? This is mes que un loss by anyone’s standards. The auditors’ proposed changes reduced revenue from €446 million to a still impressive €409 million, while increasing costs from €429 million to an unprecedented €478 million.
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BARCELONA FINANCES SERIES
The new vice-president for economic affairs, Javier Faus, said that an audit had revealed a series of adjustments that turned the €9 million profit declared by the former treasurer, Xavier Sala I Martin, into a massive loss of €80 million-a huge €89 million difference. Worse still, he claimed that the money was needed “to pay the important commitments such as the salaries of the players, coaching staff and employees.” Failing to pay the players is serious stuff, which was highlighted when the club sold defender Dmytro Chygrynskiy back to Shakhtar Donetsk for €15 million, which was €10 million less than they had paid for him only a year earlier, with Rosell confirming that the sale was motivated by financial requirements as well as sporting considerations.Īs if that were not bad enough, the club then shocked the sporting community when they announced a major restatement to the accounts previously published at the AGM for the year up to 30 June 2010. Rosell blamed the former regime for this sad state of affairs, “We have taken over a club in debt and with liquidity problems, but we are resolving them.”
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Incoming president Sandro Rosell was quick to explain that the credit request had initially been made by the previous Barcelona board under Joan Laporta’s presidency, “knowing that there were insufficient resources.” Early in the month came the surprising news that the club had been forced to seek a sizable bank loan of €150 million in order to overcome short-term problems with their cash flow. However, July was not so kind to the Catalan club-at least from the financial perspective.