In the debate whether FC Barcelona is a club or a business,
analyzing the cash flows and financing the club receives is imperative.
Moreover, it is important to look at how the club officials decide to use or
reinvest these funds.
In January of 2014, Barcelona’s board of directors released
plans for a remodeling of the current stadium, Camp Nou. This plan will require
about 500 Million pounds, converting to about $720 million USD. As the
officials of Barcelona like to broadcast their “mes que un club” slogan and
their “home-made” mentality, they decided to choose to remodel over building a
brand new stadium. In fact, the members were the ones who ended up voting on
and accepting the plan to remodel the stadium in April 2014. Giving the members
the voting power does convince one to perceive Barcelona as a club rather than
a business. They are also constructing an indoor basketball arena, and many
other installations to make the stadium more of a club place.
Although the board of directors are doing all they can to
make the new stadium seem like a club effort, there are many aspects of the
plan that seem like usual business transactions. For example, they plan to take
out a bank loan of 165 Million Pounds ($270 Million USD), which is far more
debt that any club would be willing to take. Moreover, they plan to finance 83
Million Pounds ($134 Million USD) by selling naming rights. This is also an
amount that only a commercial association would be able to receive for naming
rights. Lastly, the new project includes many restaurants and ‘super boxes’
with VIP services. These two amenities are going to be added just to increase
revenues, and both have very little effect on the quality of experience the
club members receive.
When looking at FC Barcelona from a financial standpoint,
all signs point to Barca being considered a business rather than a club.
I agree with most of your points about Barcelona- they, like every other European football club, are driven by making money. If these clubs didn't make money, then they wouldn't exist. However, I do think that part of the decision to renovate the Camp Nou is genuinely based on improving the fans experience on match day. The stadium currently features some very antiquated technology from a fan's perspective including the scoreboard, structural design of the stadium which fails to keep sound in the stadium, and the lack of luxury boxes. Don't get me wrong, Barcelona has a large enough following that if they were to leave the stadium as is, they would still sell out nearly every game. However, here is where the business aspect that you have mentioned comes into play. They need to improve the fan experience to remain competitive with other European clubs that are facing similar decisions, otherwise the club will lose money from corporate sponsors.
ReplyDeleteAustin,
DeleteI definitely agree with your point. I think the renovation of the stadium will lead to a far better fan and member experience. However, I believe they are renovating the stadium to attract tourists from around the world to come visit the New Camp Nou. Going to the Camp Nou is almost like an activity you can check off your bucket-list. This is not only because of how skilled the team is, but combining the atmosphere with how spectacular of a sight it is to see 100,000 people cheer on one team so passionately. Now that there will be a new Camp Nou, it almost adds another bucket-list activity to those who love sports. Therefore, I think they are simply renovating the stadium to up the attendance and to bring international fans back to enjoy the Camp Nou experience.
Also, I think a good portrayal of Barcelona's intentions with the new stadium will be the new ticket prices. Of course prices have to rise, but I am predicting that the % markup might be a little unsettling when they are finally released.
It’s smart that they are investing to remodel rather than build a whole new stadium. First, there may not be a better location in the city of Barcelona that has the space for the stadium. Also, the fact that its towards the outskirts of the city allows for more mobility and fluidity. Remodeling a stadium rather than building a whole new stadium allows the club to also spend money on other investments for the club. A similar idea of was Real Madrid is doing, but less about building commercial properties than don’t involve the club. I do agree with you that using naming rights adds to them being more of a business, however, in order for power house clubs like FC Barcelona to compete with other big name clubs, they need to be able to accommodate for amenities to provide for their loyal fans. This is because FC Barcelona is dedicated to put their loyal fans first and making their experience more enjoyable than most clubs.
ReplyDeleteAlex,
DeleteI agree with your point about how they are not adding commercial properties like Real Madrid and this gives the Barcelona renovations a "club" feel. However, Camp Nou is already the most accommodating stadium in Europe with an attendance just shy of 100,000. I understand the concessions and lack of score board reduces the fan-experience, but I still think they could keep their original infrastructure and still attract a full stadium for each game.
I think that choosing to stay with the old stadium and remodel it rather than build a new one is something that I would prefer if I was an avid Barca fan. Their is something about going to a game at a venue that has so much history, to me it enhances the experience. I compare it similarly to going to the old Yankee stadium before they demolished it, as it was cool to think of all the greats that have played at the stadium over the years. However, economically the club is thinking from business perspective. They are trying to enhance the stadium so that it will add more to the stadium experience, which will allow games to become more desirable than the high demand of which they already have. This could give Barcelona a chance to raise ticket sales, because of this increase in demand and the need to help pay off the loan that they will be taking on to pay for the renovations.
ReplyDeleteBennett,
DeleteThanks for the comment. I definitely agree about your point on remodeling vs re-constructing. I am a Red Sox fan, and I love going to Fenway Park not only to watch the Red Sox play but to be apart of the rich history that is contained inside that stadium.
I made a point above under Austin's comment about ticket prices. I think we all might be shocked with how much the new tickets are priced at.
It's true that if you look at the financials, and the strategic business decisions of Barca than of course its going to look like a business more than a club, but in order for the club to survive they have to be allowed to play football and by remodeling their stadium Barca will be able to offset some of their debt and therefore will still be under the rules of financial fair play. Also if remodeling their stadium were truly a business decision only, they would tear down the stadium and start from scratch.
ReplyDeleteCara,
DeleteAlthough through the rules of FIFA Barcelona can offset their money against their debt in their financial statements, they still have to take out loans and will have those debts regardless. So if they were to build a completely new stadium, they would be up to their noses in debt. Yes you might not be able to see this debt when looking at end of years financials, but that doesnt mean that they don't have to pay it off at some point.
Like everybody else, while I do agree that the camp Nou would help to increase, revenue, I also see it as a way of advancing the team into the future, benefiting the team, players and fans all in one way. I see it as a cultural aspect of Barcelona that creates a mass tourist attraction and really shows the culture and spirit of the Catalan Culture. The new plans will be able to house other events, which help the club financially, but it also increases the fans satisfaction of a game experience. I think its really important to evolve with the fan's demands and to keep them happy. While yes it is a good move financially, because they can also offset their debt, it is also culturally a good move.
ReplyDelete