Barça fans to vote on team funding own remodeling of Camp Nou, because Europe

European soccer remains generally outside the scope of this site, but I think I can make an exception for freakin’ F.C. Barcelona, which has announced it will conduct a major remodeling of its historic Camp Nou stadium rather than replacing it. The cost will be about $800 million, will run from 2017 through 2021 while the team still plays there, and will include added seating, new restaurants, and a new roof.

The cost will be covered entirely by Barça’s cash reserves, bank loans, and naming-rights fees, and as if that’s not enough to create culture shock for U.S. sports fans, check out this quote from team president Sandro Rosell:

“The option of building a new stadium on a new site has been rejected as the final cost could have saddled the club and its members with debt and tied the hands of future boards of directors,” added Rosell.

That’s eminently logical, and of course not at all the way we do things here, where fears of saddling teams with debt are typically used as a reason to demand public subsidies, not to scale back costs.

In other we’re-not-in-Kansas news, the Camp Nou remodeling will be voted on by Barcelona’s 222,000 members, since these fans are effectively shareholders in the team. I can’t even imagine what this system would look like if it were implemented here, since as we all know, voting on things is un-American.

9 comments on “Barça fans to vote on team funding own remodeling of Camp Nou, because Europe

  1. Fact is the only reason mlb and the nfl are so much more profitable than other league’s around the world is government welfare from top to bottom. And they’re the socialist.

  2. “The cost will be covered entirely by Barça’s cash reserves, bank loans, and naming-rights fees”

    Honestly, I’d say this is more un-American than the fact they’re voting on whether to go through with this project in the first place.

  3. A couple of nuances here… Barca and Madrid have partially been financed by essentially unlimited lines of credit from Spanish banks. So much so that during the Euro bailout some people in Germany started to publicly wonder to what extent they had been subsidizing Spanish soccer.

    Also, along with the San Siro, the Bernabeu, and Old Trafford, the Camp Nou is one of the most famous football stadia in the world. So it’s naming rights should fetch a ridiculous sum of money (“Hi, Qatar… we’d like another check”). And let’s be honest, with youth unemployment in Spain (or is it just in Catalonia) pushing 25%, it’s not like there is the greatest tax base to begin with. There’s no public money anyway.

    My guess is that they looked at Arsenal (in fact just about everyone is Europe wanting to build a stadium has) and saw what the impact on financing your own stadium would be on the competitiveness of your club. Juventus did a good job without hurting the quality of the team, but I think they build a relatively small and very cheap ground.

    Anyway, don’t get me wrong, happy to see Barca taking care of their own business from their own assets, but they still have some advantages that will help them pay for this without much problem.

  4. Biggest reason the Barca comparison doesn’t work is that there’s no move threat. Now you can argue that the US government should impose regulations on the NFL/NBA/MLB/NHL to open up the leagues, but as long as those leagues remain cartels you can’t make a fair stadium subsidy comparison.

  5. Monopoly is a big difference, and the fact that teams (even within that structure) really just don’t move very far or very often makes a difference.
    The biggest difference is that teams can and do regularly go broke due to cash flow problems, which is masked by selling players to other teams and by borrowing lots of money (Barcelona’s debt level is astonishing) using the stadium/stadium land as collateral. Since teams can move up and down divisions, they borrow money for a “big push” to buy players. Often, the stadium and land is the only thing a team really “owns.”

    In the long run, European competition rules are more likely to be an impediment to stadium building than expecting politicians to stop giving money away.

  6. “(Barcelona’s debt level is astonishing)”

    Not true. Relative to the top English clubs, Barca and Madrid are carrying relatively manageable levels of debt*. They are also the two highest revenue generating clubs in the world (or they were as of a year or two ago). Barca’s profitability (EBITDA) is even better than that of United’s. They just have fewer assets relative to English clubs.

    Total 2011 debt for Barca was €360M. Real Madrid was €170M. For United it was €459M. Arsenal was €136M.

    As a number without context, the two Spanish clubs’ debt levels look large, but relative to similarly sized football clubs (and their own revenues) their debts are not astonishing. And they are decreasing from peak levels a couple of years back.

    Now Atletico Madrid, that’s a club with debt problems because its revenue is a fraction of their crosstown neighbors’. In fact most every Spanish club not named Barca or Real Madrid is in some trouble. But that’s largely because TV contracts are negotiated on a club-by-club basis in Spain. And Getafe’s TV rights are worth a small fraction of Barca’s.

    But if you’re in charge of Barca or Madrid an injury to Messi or Cristiano Ronaldo is a way bigger concern then your current debt levels.

    (*Just Arsenal and Manchester United as Chelsea and Man City are basically playthings for mega-rich folks who don’t really care about balanced books (save for any FFP implications)).

  7. In states that hold referendums, Americans love to vote to ban gay marriage, etc. Just not in sports.

  8. Its probably fair to say that the accounting of top-league soccer teams in Europe is creative, as fans have learned in several cases already.

    For the purpose of this site, the point is that teams are incentivized to own their own stadium and improve it because it represents collateral for borrowing money. The threat of bankruptcy (as remote as it would be for Barcelona) and hence of recovery of funds, gives the fig leaf of respectability for banks to shove money at teams as a “civic duty”. Teams in the US are far more cash-rich, and have figured out how to get the benefit of stadium ownership without owning the stadium.

    As you note, teams like Barcelona are outliers, financially speaking.

  9. Not sure I agree with that. Barca and Madrid don’t own their stadia because they can be used as collateral (or that they are incentivized to do so). They own them because European government don’t hand out stadia the way we do (more or less—e.g. Man City and West Ham play (or will play) in grounds that were built for the Commonwealth Games and Olympics respectively)

    Madrid has a special relationship with the banks that goes back to when they were the team of Franco. And I think there was a minor scandal/uproar around the time Madrid bought both Kaka and Ronaldo in that the deals were financed with loans from either Caja or Santander that were secured with unnamed collateral. In other words: none.