Goldman Sachs to help Barça sail through



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Camp Nou stadium update May 2021 - Goldman Sachs Image: FC Barcelona

The LaLiga club FC Barcelona has agreed and is all set to seal the deal as regards 500 million euro loan from the American multinational investment bank Goldman Sachs.

‘RAC1’ stated that this credit from the American investment fund will allow the club to refinance part of its debt and steer through the economic crisis it is in (due to the COVID clobber) in the short term.

The Goldman Sachs Group, Inc., is an American multinational investment bank and financial services company headquartered in New York City (US). It offers services in investment management, securities, asset management, prime brokerage, and securities underwriting.

Futbol Club Barcelona, commonly referred to as Barcelona and colloquially known as Barça, is a Spanish professional football club based in Barcelona, which competes in LaLiga, the top flight of Spanish football.

The 99,354-capacity Camp Nou is a football stadium in Barcelona, Spain. It opened in 1957 and has been the home stadium of FC Barcelona since its completion.

In fact, Goldman Sachs will immediately advance 100 million so that Barça can meet its contractual obligations before the end of the season on June 30th.

According to the latest financial report, the club’s gross debt is 1,173 million euros , 730 of which are short-term. In addition, 266 million were supposed to be returned to banks. Club sources stated that there are other funding sources, but pointed out that Goldman Sachs was the most trusted and reliable financial source especially keeping in mind the Espai Barça project.

The Espai Barça development plan goes well beyond modernization and reconstruction of FC Barcelona’s home venue Camp Nou. In addition to increasing the capacity of the current stadium to 105,000 from circa 99,000 and completely revamping the current structure of the Camp Nou, the Espai Barça project entails building a new Palau Blaugrana with a capacity of 15,000, an additional court with a capacity of 2,000, an ice rink, a new social area, a new commercial area, revamped club offices, La Masía (read FC Barcelona’s youth academy), and an additional 5,000 parking spots. This ambitious initiative has been in work for several years and is scheduled to be ready for the 2024-2025 seasons. In April 2014, Espai Barça was approved by the club’s members with a budget of $700 million.

The ‘RAC1’ further stated that the former FC Barcelona President Josep Maria Bartomeu and his board already knew that the initial 600 million euros were not enough to give a concrete shape to Espai Barça, but they still submitted this figure in the 2014 referendum and it was greenlighted with 72 percent votes in favor of the same.

Even the latest figure of 815 million agreed with Goldman Sachs, and presented in October last year by the former Economic Vice-President of the FC Barcelona Board, Jordi Moix – pending approval by partners – is an estimate that also falls short.

People working on the Espai Barça project – both in the technical and economic fields – say that in order to carry out a work of this nature purse strings will have to be loosened more – more than 1 billion euros must be allocated for the same. The development getting shrouded in uncertainty has resulted in the current President of FC Barcelona, Joan Laporta, firing the present Director of Espai Barça, Bill Mannarelli. The new board feels that the project has become obsolete and a fresh look needs to be taken on the same to make it viable.
 

Pecuniary problems

Bill Mannarelli and his team faced huge fiscal issues. He and Jordi Moix were asked to revisit the economic part of the project, but they preferred to sit over it. The economic angle is one of the major reasons why the Palau Blaugrana project, one of the most underdeveloped parts, got stuck and did not move even at a snail’s pace. As far as the Palace is concerned, its construction would almost triple the cost initially announced: From 90 million euros to about 250 million.

In the case of Camp Nou, with a starting budget of around 400 million euros which now stands short, the load of contingencies that the operators found should be added as regards the minimum work on the project which has started. For example, in the goal area, the structure is so dilapidated that at several places deep cracks have surfaced leading to an alarm and looking for solutions on the fly.

The above scenario translates into the fact that the cost will rise and how safe it is to continue carrying out work while there are visitors in the venue. Hence, the idea has been floated that the Barça team should play at the 55,926-capacity Lluís Companys Olympic Stadium in Barcelona while Camp Nou work is on.
 

Sticking to Goldman Sachs

Laporta and his team intend to lean on to Goldman Sachs for funding because it believes in carrying forward the work which Bartomeu started as he was on the right track. The forecast is that the group will recover the investment (currently set at 815 million) during the 25 years following the construction of the Espai Barça through the revenue that will be generated in the future at Camp Nou. It is estimated to be at around 150 million annually, 50 of which would go to Goldman’s pocket. That is, 1.25 billion in total.

In fact, a condition laid down by Goldman Sachs is that work should first start on Camp Nou – rather than on Palau Blaugrana – because the investment company feels that a refurbished Camp Nou will help it to recover the investment made faster.

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