FC Barcelona debt levels....

[RANGERRAB 3,731]

6 hours ago, craig said:

It is more than that mate.  Rumour is that Liverpool have tendered it to a factoring company.

Excuse my ignorance but what does ‘tendered it to a factoring company’ mean ? ?

[Bill 13,717]

4 minutes ago, RANGERRAB said:

Excuse my ignorance but what does ‘tendered it to a factoring company’ mean ? ?

Debt recovery mafia 

[craig 5,199]

3 hours ago, RANGERRAB said:

Excuse my ignorance but what does ‘tendered it to a factoring company’ mean ? ?

As Bill says, though in some cases minus the mafia, lol.

 

Debt factoring is effectivey selling the money people owe you to someone else for a discount, but the risk is shifted to the factoring company.  And it certainly can have the tendency to feel like it is racketeering.

 

Example - say Barcelona owe Liverpool £30 million or Coutinho.  Liverpool fear that they may not receive that cash from Barcelona.  Instead of losing the money they might factor it (effectively sell it) to a debt recovery company for 80% of the debt owing.  So the debt recovery company pay Liverpool £24 million (80% of the £30 million).  Liverpool lose £6 million from what they were owed but they get £24 million, potentially £24 million more than they would had they waited for Barcelona.  the debt recovery company now have to try to collect that debt from Barcelona - they may negotiate with Barcelona for, say, £27 million - they then receive £27 million from Barcelona, minus the £24 million they paid to Liverpool, and have made £3 million profit.

 

I havent seen much factoring on my accountancy travels but there are some specific rules around accounting for them.  They can be above board but also, just looking at the above would also have you fear this type of business would attract less than desirables.

 

Factoring companies can take massive cuts from the amounts due - 30%+ wouldnt be unsurprising.

[Uilleam 5,959]

7 hours ago, craig said:

As Bill says, though in some cases minus the mafia, lol.

 

Debt factoring is effectivey selling the money people owe you to someone else for a discount, but the risk is shifted to the factoring company.  And it certainly can have the tendency to feel like it is racketeering.

 

Example - say Barcelona owe Liverpool £30 million or Coutinho.  Liverpool fear that they may not receive that cash from Barcelona.  Instead of losing the money they might factor it (effectively sell it) to a debt recovery company for 80% of the debt owing.  So the debt recovery company pay Liverpool £24 million (80% of the £30 million).  Liverpool lose £6 million from what they were owed but they get £24 million, potentially £24 million more than they would had they waited for Barcelona.  the debt recovery company now have to try to collect that debt from Barcelona - they may negotiate with Barcelona for, say, £27 million - they then receive £27 million from Barcelona, minus the £24 million they paid to Liverpool, and have made £3 million profit.

 

I havent seen much factoring on my accountancy travels but there are some specific rules around accounting for them.  They can be above board but also, just looking at the above would also have you fear this type of business would attract less than desirables.

 

Factoring companies can take massive cuts from the amounts due - 30%+ wouldnt be unsurprising.

Are the debt factors from South Boston, then? 

[Bill 13,717]

Recourse to factoring is often a sign you have failed to manage your debtors properly ... or have been slack with your commercial terms in the first place. There are so many options, admittedly at a cost, that can be applied to recover stalled debt without selling the debt to factoring at a huge discount. Any time you offer credit terms to a customer, which is precisely what Liverpool offered to Barcelona, you should only do so on the basis of properly assessed risk. It's not a business I pretend to understand well but football clubs appear to take enormous risks during transfers, assuming that ultimately FIFA, UEFA or whoever will enforce payment.

[compo 7,185]

1 hour ago, Bill said:

Recourse to factoring is often a sign you have failed to manage your debtors properly ... or have been slack with your commercial terms in the first place. There are so many options, admittedly at a cost, that can be applied to recover stalled debt without selling the debt to factoring at a huge discount. Any time you offer credit terms to a customer, which is precisely what Liverpool offered to Barcelona, you should only do so on the basis of properly assessed risk. It's not a business I pretend to understand well but football clubs appear to take enormous risks during transfers, assuming that ultimately FIFA, UEFA or whoever will enforce payment.

when you owe 1.1 billion euros you dont panic you just take your creditors to a good lunch and talk it over find an agreement that keeps all sides happy there is no way Barcelona will suffer like we did 

[the gunslinger 3,366]

11 hours ago, craig said:

As Bill says, though in some cases minus the mafia, lol.

 

Debt factoring is effectivey selling the money people owe you to someone else for a discount, but the risk is shifted to the factoring company.  And it certainly can have the tendency to feel like it is racketeering.

 

Example - say Barcelona owe Liverpool £30 million or Coutinho.  Liverpool fear that they may not receive that cash from Barcelona.  Instead of losing the money they might factor it (effectively sell it) to a debt recovery company for 80% of the debt owing.  So the debt recovery company pay Liverpool £24 million (80% of the £30 million).  Liverpool lose £6 million from what they were owed but they get £24 million, potentially £24 million more than they would had they waited for Barcelona.  the debt recovery company now have to try to collect that debt from Barcelona - they may negotiate with Barcelona for, say, £27 million - they then receive £27 million from Barcelona, minus the £24 million they paid to Liverpool, and have made £3 million profit.

 

I havent seen much factoring on my accountancy travels but there are some specific rules around accounting for them.  They can be above board but also, just looking at the above would also have you fear this type of business would attract less than desirables.

 

Factoring companies can take massive cuts from the amounts due - 30%+ wouldnt be unsurprising.

You forgot they will charge Barca 30 quid every time they send a letter about the recovery. 

[the gunslinger 3,366]

2 hours ago, compo said:

when you owe 1.1 billion euros you dont panic you just take your creditors to a good lunch and talk it over find an agreement that keeps all sides happy there is no way Barcelona will suffer like we did 

when you owe the bank 100 quid that is your problem when you owe them 100 million it is their problem. 

[craig 5,199]

40 minutes ago, the gunslinger said:

when you owe the bank 100 quid that is your problem when you owe them 100 million it is their problem. 

Once had a client who was reasonably high profile in Scottish circles.... shall remain nameless.  He banked with RBS.  They had written off hundreds of thousands of pounds on the business overdraft.... he proceeded to simply clock up hundreds of thousands more of an overdraft - his business clearly was faltering... they wrote off hundreds of thousands more again.  He was basically bankrupt and just used the bank as a funding mechanism.  The bank got so deep into his business by writing off all this money that they essentially backed themselves into a corner and had to keep funding him.

 

Crazy, crazy stuff

[Uilleam 5,959]

Barcelona, apparently, just like the 'more than a club like no other', with whom it shares -along with a 'speshull relationship', which, amusingly, it does not, itself, acknowledge- a clinging reek of unctuous humbug, has suffered more than most football teams from the Covid-19 pandemic. 

Personally, I think that the pandemic, and concomitant restrictions on trading,etc. have merely amplified its cavalier unwillingness to manage its financial affairs properly, if it can be said to manage, or to have managed them, at all.

You may assume that I have little sympathy for its predicament. 

Perhaps it should offer Messi to Liverpool, in lieu of the £25M outstanding on the transfer of Coutinho, although I imagine the Yanqui owners might reasonably baulk at the over the hill Argentinian's salary (an eye watering £62M+ pa).

 

Why Wijnaldum wants to swap Liverpool for this sink hole surpasses understanding.

 

From today's Sunday Times:

 

Why the numbers stopped adding up for Barcelona

Huge debts set to grow as Nou Camp remains empty and sales of merchandise slump.

To cap it all, club are paying Suárez to keep Atletico top of La Liga

Ian Hawkey

Sunday January 31 2021, 12.01am, The Sunday Times

 

https://www.thetimes.co.uk/article/why-the-numbers-stopped-adding-up-for-barcelona-6wr7s3nmb

 

Luis Suárez keeps scoring the goals that put Barcelona farther from the top of La Liga. That would be embarrassing enough on its own, but his old club are in effect still paying him too.

 

If Barcelona had a pedigree centre half, they might look better equipped to chase Suárez’s soaring Atletico Madrid. One is available, in Eríc Garcia, who would do the job without wages until after June. Yet dysfunctional Barcelona still give the impression that they can barely stump up a plane fare for the Manchester City defender.

These are desperate economic times for the club that, a year ago, had been generating more income than any other, the club that three Januarys ago had been agreeing to pay £140 million to Liverpool to acquire Philippe Coutinho.

With 48 hours left of the present transfer window, Barcelona are struggling to release 1 per cent of that sum to buy a fine cheap eager 20-year-old Spain international.

The saga of Garcia’s transfer to Barcelona took another surreal turn late on Friday when a meeting of three would-be Barça presidents over how to proceed was called and then cancelled. As Sport, the local daily newspaper put it yesterday, Barça are becoming “more like a Marx brothers movie than a serious club”.

Still, this is the club that a bewildered Garcia, who is out of contract at City in June, has made it plain he wants to rejoin. Being a Catalan, being a graduate of Barça’s La Masia academy, and believing that a strong run of games over the next five months could secure him a place in the Spain squad for the European championship, he had envisaged that everything, including City’s understanding of his personal motivations, had fallen into place.

Instead Garcia finds himself the emblem of a crippling inertia at Barcelona, a case study for the sport’s coming recession, albeit that the club he wants to join is bitten harder by the financial crisis than most so-called superclubs. Last week Barcelona’s accounts were published, revealing debts had climbed to £1.06 billion. This weekend they were scrabbling around trying to agree that a mere £221,000 can be committed to guarantee a loan for the modest fee — Barcelona reckon on as little as £1.5 million — City would accept for Garcia this month rather than see him walk out for nothing in the summer. Garcia has said he would postpone his first Barcelona paycheque for six months.

Part of the issue is a vacuum of authority, a glitch in the democratic system that governs Barça. The club have no executive empowered to push through even a smooth, low-cost transfer because there is no elected president. The most recent one, Josep Maria Bartomeu, stood down in October, his position untenable because of the rising debts and toxic internal tensions, notably with the captain Lionel Messi.

The next president, meanwhile, waits. To wander through the city is to be confronted with poster after poster advertising the three candidates, Joan Laporta, Victor Font and Toni Freixa. But the election, in which the club’s members — the season-ticket holders — vote, has been delayed because of public health concerns. It was to have taken place last Sunday, and has been put off until March 7, when it is hoped that Covid-19 infections in Catalonia will have fallen enough that the idea of tens of thousands of barcelonistas lining up at polling stations is not deemed a risk.

Early March will mark a year since those members actually attended a match at a stadium that can accommodate almost 100,000. The spectator ban has hit Barcelona’s treasury especially hard, given the size of the Nou Camp and the proportion of the club’s income that comes through match-day turnstiles. The plummet in tourism also hurts. The club’s museum is among the city’s most popular sites for visitors.

 

Footfall is down dramatically, which means merchandising revenue slumps. Barcelona could be down more than £440 million over the 15 months of spectator-free football if the ban on crowds extends to the end of this season.

Whoever of Laporta, Font or Freixa triumphs in the postponed election, their biggest issue will be the debt. The immediate task, though, will be establishing how diminished are the chances that Messi chooses to stay beyond the end of his contract, which expires in June. If Messi shows willing, the new president will be obliged to tell him how much of a pay cut he needs to take. The captain costs his employers more than £62 million a year.

Suárez was costing much less when, in one of his last acts as president, Bartomeu made it clear to the Uruguayan, Messi’s favourite striking partner, that he should find a new club to ease the overall wage bill. Barcelona would, depending on where Suárez went, pay some of the remaining year on his contract. Bartomeu’s board gave Suarez a list of potential rivals they would not bless him joining. They forgot to put Atletico Madrid on it.

Fast forward five months and Atletico look down on the rest of La Liga, ten points ahead of Barcelona with a match in hand. Suárez is their leading scorer with 12 goals or, if you care to audit those goals, six Atletico goals paid for by Atletico, and another six that Barcelona have subsidised with their share of his salary.

Then again, Barcelona are used to payrolling their own humiliation. In August, Coutinho, loaned to Bayern Munich to claw back some of the vast cost of his unfulfilling transfer from Liverpool, scored goals seven and eight in Bayern’s 8-2 dismantling of his parent club in the Champions League.

Since then Barça have shipped three goals at home to Juventus. Next month they face Paris Saint-Germain in the Champions league. Garcia might count his blessings if he has to delay that unpaid internship he volunteered for in Barça’s back four.

Barcelona’s big red numbers
£1.06bn Barcelona’s mountainous debt
74% Of club’s income goes on player wages
£25 million Amount still owed to Liverpool for the 2018 transfer of Philippe Coutinho for £140m