The Delegate Commission of LaLiga approved a slate of new economic control rules that will come into force during the next winter market.
These are new measures with which they seek to control expenses in the long term, aiming to limit clubs’ excessive spending. The new rule will enable clubs to go from 25 percent of what they save (the 1/4 rule) to spending 40 percent of what they save.
One of the points that most directly affects Barcelona and its ‘levers’ is that which concerns the transfer of future income only counts towards the staff limit up to 5pc of the club’s turnover.
In other words, if a club sells an asset and assigns future rights for, say, 10 years, LaLiga calculates the sum of all such sales or assignments and that sum cannot exceed 5pc of turnover. The club can exceed that 5pc by selling assets, but for salary cap purposes it will only count up to that 5pc. If the club exceeds this figure with the sales, it may use it for other operations such as debt, or stadium renovations.
How does this affect Barcelona?
So far, all the levers are within that 5pc maximum, but very much at the limit. Barcelona will no longer be able to activate more. If it sells BLM, as it had been weighing in recent months, it will not count for salary cap purposes.
The fifth lever, as Javier Tebas said last Tuesday, is to reduce the wage bill of the squad by about 200 million euros. The retirement of Gerard Pique and the likely departure of Sergio Busquets will help, but there is still some way to go.
Barcelona, moreover, will once again be overstretched during the upcoming summer market. The four levers activated a few months ago got them out of that situation and allowed them to return to the 1/1 rule, but the accounts dictated that they had to go far in the Champions League and the premature elimination in Europe’s top competition will cause them to be in the surplus again.
Something that Laporta commented and that Tebas himself confirmed at an event for the magazine Ejecutivos.
“Barcelona has been able to make great additions this season because it has activated those famous levers of 700 million euros, but in the summer it will be in the situation of 40pc, because they are no longer useful,” Laporta stated.
A second measure
These words lead us to the second new economic control measure. Until now, clubs with surpluses had to take the 1/4 measure, that is, they could spend 25pc of what they had previously saved. Now they will be able to spend up to 40pc, and up to 50pc in some cases.
Another important new measure has to do with long-term economic control. LaLiga is going to ask clubs for a treasury plan for the following two seasons when the club presents exceptional operations. For example, if a club sells a player for 200 million, LaLiga will ask for a treasury plan for the following two seasons in order to be able to calculate it, so that this upward distorting factor prevents you from having problems in the following seasons.
Another of the points approved by the Delegate Commission points out that the sale of an asset without which you cannot carry out your activity does not compute for the purposes of the Sports Personnel Cost Limit (LCPD). For example, the sale of a stadium, because that club would have to buy another one to be able to play its matches. The club can carry out this operation, but for salary limit purposes it would not count. LaLiga intends to curb possible fraud with this measure.
In addition, the maximum year-on-year variation in players’ salaries for clubs in the second tier and those in the top tier will be reduced from 30pc to 25pc. Until now, these clubs could not raise the salary of a player from one year to another more than 30pc, now it decreases to 25pc. The aim is to avoid the ‘trap’ of signing a player for a salary of two million in the first year in order to make room for him and pay him 12 million in the second year. LaLiga wants to control this situation even more.
Another new measure is that the repurchase of assets or rights that have counted towards the salary cap will lead to a reduction of the salary cap. In other words, a club sold its audiovisual unit last year that generated an income and it has been computed for salary limit purposes. If that club buys it back this year, LaLiga will reduce it again from the salary cap.
The last point has to do with the amortization of players when there is a sale or a contract termination. Let’s say a club signs a player for 40 million and signs him for five years, at 8m euros per year. If the club wants to sell him in the second season, they would have 32m left. If they sell him for 15m because that is the offer he has on the market, the club would be ‘losing’ 17m.
LaLiga, in order not to discourage a club from selling a player they want to sell because he does not perform or for any reason, will ‘only’ compute the loss of that year (8m in this case). In the balance sheet, the remainder of the 17m will be a transfer loss in the results of the following season, not in the current season.