eBusiness Weekly
FC Barcelona has been struggling financially. The Catalan club is more than US$1,5 billion in debt, and they lost over US$530 million last year alone. They were forced to let Lionel Messi depart to PSG for free and are now operating on a US$100 million salary cap this season — that’s about an eighth of the size of Real Madrid’s budget.
Joan Laporta decided to return last year for his second stint as club president. But more importantly, the club is finally fixing its balance sheet.
The world’s second-most popular club announced a four-year sponsorship deal with Spotify yesterday. The financial details weren’t released, but most reports put the total value at US$307 million — that’s about US$77 million annually.
Barcelona’s iconic Camp Nou—the largest stadium in Europe—will now be rebranded as “Spotify Camp Nou,” and the streaming giant will receive primary sponsorship inventory across Barcelona’s men’s, women’s, and training jerseys.
Here’s how Camp Nou will look for (at least) the next four years:
The other detail worth mentioning is that Spotify might have been initially willing to pay more than US$307 million. The streaming company reportedly requested data on Barcelona’s 350 million fans and determined that only 1 percent of them (3 million) were registered with the club — meaning they had consented to share their name, phone number, email, and other personal data.
That lack of fan data ended up bringing the total value of the deal down, according to Barca Universal.
“When Spotify initially approached Barcelona, they made enquiries about the club’s fan database. The soon-to-be sponsors wanted to know the number of ‘registered’ fans, i.e., the supporters who had given consent for the club to use their names, email, phone number and other personal information.
And the number is believed to have left them disappointed. Barcelona is a club with a massive fan following across the globe, with over 350 million followers supporting the Blaugrana. However, out of that, just 1 percent of the fans, approximately around 3 million, are ‘registered’.
This is believed to have affected the valuation of the deal with Spotify. The report states that in case the number of fans who had consented to the sharing of their personal data was higher, Barça would have stood to gain much more financially from the sponsorship deal.”
Now I think there are a few different ways to look at this.
Barcelona is attempting to dig itself out of a financial hole the size of which we have rarely seen in professional sports history. I doubt they wanted to give up naming rights to their iconic stadium. But when you’re a business that is US$1.5 billion in debt, you can’t afford to pass on US$300 million deals when they are presented.
The unfortunate part for Barcelona is that Spotify probably ended up getting the better end of the deal.
Barcelona previously worked with three different sponsors. Rakuten was paying US$55 million each year for the men’s shirt. Beko was paying US$19 million each year for the men’s sleeve & training shirt, and Stanley was paying US$3.5 million each year for the women’s shirt — that’s a total of US$77,5 million in annual income.
But now, Spotify is paying a similar US$77 million annual fee for the same inventory, yet they will also receive naming rights to the iconic stadium. And when you compare Barcelona to other iconic sports organizations globally, it doesn’t look much better.
For example, Teamviewer is paying Manchester United US$60 million annually. Emirates is paying Real Madrid US$75 million annually, and Oracle just signed a deal with Red Bull’s F1 team that costs US$100 million annually.
Sure, not all of these deals are the same, but even the NBA’s Los Angeles Lakers see about US$55 million in annual income for a small 2.5 square inch patch on their jersey and naming rights to their arena.
The point is that it’s a big deal, but many expected it to be even bigger. — Huddle UP Newsletter
