Barcelona get whopping €500 MILLION loan to settle outstanding wages and squad rebuild

Barcelona president Joan Laporta is reportedly looking to make a 'statement signing' this summer after striking a deal for a bank loan to help clear some of the club's debts. The Catalan has reportedly secured a €500 million credit line with an American investment bank and will use €100 million to pay off outstanding wages to the first-team squad. The COVID-19 crisis accelerated Barcelona's financial problems and allowed the club's gross debt to rise to almost €1.2 billion.

Barcelona transfer news: LaLiga giants get massive financial backing through €500 million loan

According to reports from L'Esportiu, Barcelona obtained the €500 million loan on Tuesday morning from American investment bank Goldman Sachs, with the money likely going towards refinancing part of the debt, easing the short-term pressure on the club hierarchy. A source close to the club said, "This credit will give air and stability to the club and Barcelona can be calm this season and next season. The club have looked at what could be the worst-case scenario, that fans don't enter the stadium throughout next season. Even then, they can be calm after this operation."

It is believed that Barcelona are set to use €100 million from the grant to pay wages to their players, another €100 million will go towards payment of various transfer clauses while €265 million will be paid to various banks in Spain. According to the club's most recent annual report, their debt stands at €1,173 million, of which €730 million is due to be serviced in the short term. Earlier this year, it was reported that the Catalan giants must repay €420 million in debt in 2021 or face insolvency. 

Barcelona debt: How are the LaLiga giants in such massive debt?

Since the start of the pandemic, the Barcelona players agreed to various measures to help, including a three-month pay cut last March and a payment deferral scheme earlier this season. However, the club have still struggled to keep up with payments. Barcelona's annual report budgeted for a reported €230 million to be paid in salaries to the first-team squad for the 2020-21 season.

According to reports from ESPN, there was a genuine fear that if the club could not make up around 40% of the wage bill that is owed in backdated payments, the issue could have been taken to the Spanish Footballers' Association (AFE). That could have led to potential sanctions for the Camp Nou outfit, with one source highlighting, therefore, the importance of the loan obtained by Laporta.

Earlier this year, there was another leaked report which highlighted Lionel Messi's massive €555 million contract at the club.  While Barcelona will still have to work on further reducing the wage bill and selling player contracts this summer, Laporta is continuing to explore ways to make a statement signing ahead of next season to improve the team's chances in La Liga and the Champions League.

The European Super League was supposed to be a salvation for Barcelona with an immediate €350 million cash injection promised for the club as they agreed to join the breakaway league. However, the plans of the ESL fell through after backlash from supporters.

Barcelona currently have no chance of winning the Spanish league title this season as they are third on the LaLiga table, seven behind leaders Atletico and five behind Real Madrid, with just one matchday remaining. It also remains to be seen whether captain Lionel Messi will sign a new deal with the club as his current contract expires in the summer. 

 

 

Image Credits - Joan Laporta Instagram