FC Barcelona LaLiga Spain | España

A look at cost-cutting at Barcelona, Espanyol and Atlético Madrid

MIAMI, Fla. (24 April 2020) —

FC Barcelona News

The Catalán sports daily El Mundo Deportivo recently featured Barcelona’s announcement concerning unilaterally cutting the salaries of the 1,800 people who work for them, players included. According to the club, it is an economic necessity.

The same morning front page also talked about the club’s intentions in the transfer market. Of course, no one knows right now when the next transfer window will open, and many speculate that it will be a dead market given the amount of money already lost during the shutdown of the footballing world. That the two stories would appear on the page paint two very different pictures of the state of football at present: the presesnt crisis and the hoped for return to regular business.

Inside the above-referenced paper, a story explained that pursuant to the plan, every athlete at the club will have 70% of his salary taken, with the club applying for an ERTE during the current “estado de alarma” in Spain in a effort to survive.

Lionel Messi even took to social media to clarify the will of the Barcelona players: 

“We want to clarify that our desire has always been for a reduction to be applied to our salaries because we understand that this is an exceptional situation and we are the first that have always helped the club with what they have asked of us”.

Barcelona president, Joan Bartomeu, noted that the cuts “had been achieved as I wanted and the players were committed from day one.”

Barcelona stated the obvious in an official external commu ication, also claiming that the measure was to seek “a reduction in salary relative to the reduction in the number of hours,” given that players (and staff) are not playing or training together daily.

Transfer Market

That story on salary cuts and ERTE was followed by two others: one, Barcelona’s big priority in the summer being to sign Lautaro Martínez. And two, Rivaldo, whose opinions are wheeled out weekly by a betting company, saying Neymar should be their target. “Barcelona,” he says, “should make an effort.” Estimated cost of each man: €150 million.

Barça looks for a heir of Luis Suárez... Pay attention to Lautaro ...
Argentine striker Lautaro Martínez currently plays for Internazionale.

The coronavirus has created an unforeseen financial crisis that will outlast the pandemic. Resorting to measures like ERTE and pay cuts might stop the leak in the short term, but it may be a drop in the bucket if play is suspended until summer or worse, not resumed until next season.

Related: Cost Cutting at Espanyol

Cross-city rivals Real Club Deportivo Espanyol also announced similar cuts. In their case, Espanyol announced they would apply cuts but said that the proposed reduction affects players and coaching staff from the men’s and women’s first teams, Espanyol B and youth teams, and was made “unilaterally for reasons of urgency.”

“Due to the temporary suspension of the season and the current extraordinary situation, Espanyol have presented a plan of partial unemployment,” the club said in an external communication.

According to the statement, the players were advised and they “understand and respect” the measure, conscious of “how delicate the situation is.” They are prepared, the club said, “to each an amicable agreement with the club without having to take more drastic measures.”

It’s no surprise that FC Barcelona was the first to cut salaries, and why Atlético de Madrid quickly did the same: Atletico’s net debt is €522 million; Barcelona’s is €217million.

Atlético de Madrid announce pay cuts

Atlético Madrid followed LaLiga rivals Barcelona and Real Madrid, announcing on March 27, their intention to cut player wages by 70 percent. The reductions apply to not only the senior men’s squad, but also Atlético B team and the women’s team. The reductions will allow 430 non-playing staff to continue to receive their salaries. Additionally, all first-team players have signed an internal agreement that maps out two different scenarios depending on how the 2019-20 season concludes.

Atlético majority shareholder and CEO, Miguel-Angel Gil Marín, wrote a letter that outlined the posistion of the Board of Directors. In it, he said these measures had “a single objective: to guarantee the survival of the club” and that they would be limited to what is “strictly necessary in order for things to work as they did before when the competition returns.”

Gil Marín en la WFS: publicó hoy una carta a los socios.
Miguel-Angel Gil Marín

“Never in the recent history of our country have we faced a crisis of such magnitude,” he said. The future is plagued with doubt because nobody can guarantee when it will end. The CEO says he has never experienced such a delicate situation during his time at the club.

“In a few days we have experienced the joy against Liverpool to home confinement,” he continued. “We don’t know when competitions will start again and under what conditions. We are working on every possible scenario.”

Gil Marin went on to announce the cuts. “In a situation as grave as this, we have to make difficult decisions for the good of the club. I want to thank everyone for the work they do for the club during these difficult times. Unfortunately, and with the objective being the survival of the club, we have to put in place an ERTE (pay cuts and lay-offs) for the professionals who can’t do their job because of the state of alarm at the club,” he said.

We are working to minimise the impact so that we can return to the way things were before,” he said. “They are, as I said, difficult decisions but the responsibility and safeguarding of the future of Atlético Madrid oblige us to make them.”

“I hope that we can return and I can go back to giving you better news,” he said. “We continue fighting this situation like all of the Atléticos do… with courage and heart.”

Related Content: The mechanism clubs will be using during the shutdown, an ERTE, poses a lot of questions, a lot of problems, and certainly some moral dilemmas. A closer look at the ERTE in Spain was the subject of a recent post in Russo Soccer, and a closer look at the process using the Barcelona situation as an example is found on the following page:

Estadio Wanda Metropolitano

Marín might feel Atletico’s actions are “strictly necessary in order for things to work as they did before when the competition returns.” But what if that doesn’t turn out to be true? Then the impact would be even greater, and these measures might feel largely irrelevant and certainly insufficient.

A far bigger issue than cutting some staff or resorting to temporary layoffs is the potential loss of broadcast revenue should the season be abandoned. This is an eventuality that LaLiga president Javier Tebas is more concerned about and trying to avoid like, excuse the pun, the plague. Loss of broadcast money could be devastating, although the degree of the loss is yet to be determined.

Will proposed wage cut work?

Thinking about the Barcelona wage cuts and similar ones being taken at other football clubs, while they solve the immediate problem of lowering expenses, a question arises as to whether they do more harm than good to the image of a club. A seventy percent pay cut may be acceptable to some players, but for a multi-sport club like Barcelona, it would have a devastating impact on the women’s team, as well as other sports where the salaries are far lower than the men’s team. Moreover, when the transfer market finally opens, what harm might be done to the team’s image if they go out into the market and pay 100 million euros for a player like Neymar Jr? There is a real possibility that the wage cuts will in the end be a bad decision for the club.

Atléitco Madrid’s Marín said “We want to get back to how we were before.” But the question remains: can anything be truly like it was before? Has football reached the end of a spectacular period of growth where each year there has been more money pumped in and more at stake?

By Ken Russo

While my background is in the legal industry, the skills acquired and fine-tuned in law practice are now applied to focus on the sport of football. Russo Soccer aims to inform, educate and engage on news and relevant issues in the game.

Um advogado por formação, concentro meu trabalho nos negócios, comunicações e operações de equipes no futebol mundial. | Abogado con fundación avanzada en comunicaciones, enfocado en los negocios del fútbol y las comunicaciones. | Je suis un avocat experimenté dans les affaires de football.