It’s a syndicated five years loan of 155 million led by La Caixa and Banco Santander -25% each-arrangers beside eight financial institutions providing the rest (50%). The Interest is 2.5 while the guarantees could be renegotiated by the banks three years from now.
What will be done with these 155 million?
- 79 M will be used to refinance bank debts.
- 15 M –translation didn’t help- but I can make a guess that it will go to close debts toward other clubs from previous transfers.
- 61 M well serve as financial funding’s to pay salaries and other pending commitments delayed since June 30.
Then he explains why there was a delay in receiving the loan and insured the strong financial background of the club regardless of the managerial chaos of the previous board (his words).
How do these 155 million will be returned?
The club –based on the agreement with the banks- will have to pay 31 M per year for the following 5 years. The club objective is to generate 50 M annual profit, 31 M for the loan and the rest for remodeling the Nou camp.
Afterward the 50 M will be the budget saved for transfers. For this season, the purchase of David Villa and sales of Chygrynskiy and Touré balance each other and the club can still spend 50 million euros.
First impression:
There is still time to figure some more details but I can share the following remarks at the moment:
Getting this loan at this period of economic crises is a positive sign that the club is still well trusted. It’s normal for the loan to be a syndicated kind as its suicidal for one bank to take all the risk of loaning 155 M to one business.
My primary concern in this matter is the impact of austerity procedures that will be applied to meet the reqiurments of this loan. How will it affect the club on the long term? What are the main operation costs that will be chopped? If it’s all about transfers budget I am all for it. Will this situation leave an impact on the sports that generate no profit (usually financed from the football revenues)? Will this affect the spending on the youth academies? Scouting? Etc…
Secondly, the renegotiating of the bank guarantees three years from now is unclear. Not saying it is bad or good, it depends on what ideas were negotiated behind closed doors. But it’s a bit strange not to set all the conditions at once, unless if there are already stated conditional actions to activate depending on what happens in the first three years.
The 79 M that will finance the debts need more explanation. Will they close debts due, debts with bad interest or they will pay interest of existing debts with the debt kept untouched. If it is a combination of all then how will they distribute this cash on each sector?
The 15 M for previous transfers is no brainer. The new financial fair play regulations dictate that debts between clubs are not allowed.
The 61 M for current commitments –taking good intentions- is also a must.
Regarding transfer budget, he mentioned that there will be 50 M later on for transfers. But through Google transfer it wasn’t clear if he meant 5 years from now. I think the team is strong enough for the following 3 years, but still some changes will be needed and certainly we will not be outside the transfer market for the following 5 years. As for the 50 M budget afterward, it’s just a number, not a value. With the current inflation rate in players’ prices the 50 M will not be enough to strengthen Barca B. With the new regulations, who know? Generally speaking I don’t get worried about transfer budgets, and I don’t think you should.
It’s a good thing that the new board received this amount of cash in hand, it should be enough to start the reengineering process the way the planned it. There is no way to make any evaluations now, let’s wait and see. But one thing for sure is that, there are no severe concerns.
Stephan Said,
The squad is pretty complete (besides a replacement for Toure and Marquez - if Marquez leaves that is). Not much money should be spent on transfers. Perhaps none if a youth player (probably Fontas) makes the Busquets/Pedro like jump and suddenly becomes a great player. In the next 3 years, players like Muniesa, Oriol Romeu, Montoya/Dalmau, Rochina, Thiago, and JDS, will all be ready, so again: there shouldn't be too much money spent on transfers. Most of the money should go to clearing certain debts.
Posted on July 15, 2010 at 8:26 AM
Ramzi Said,
Test test test
Posted on July 15, 2010 at 10:34 AM