Barcelona are in deep financial turmoil with £720m of debt... but administration talk is premature

It was extraordinary to hear Barcelona's interim president Carles Tusquets asked about the possibility of the club going into administration last week. His answer will have sent a certain shiver down the club's collective spine too: 'Right now, no,' he said. So does this mean: at some point in the future yes? Isn't this the club that made a song and dance about being the first to go through the €1billion mark for their budget last season? Sportsmail assesses how deep in the mire the club finds itself.

Barca in administration? We know these are stormy financial times but surely as one of the biggest clubs in the world it is unsinkable.

Like the Titanic you mean? As Tusquets said himself last week: 'The wage bill is the highest in Europe. It is 70 per cent of the budget. That's an awful lot.' There have already been some adjustments but more are needed.

What's the problem?

Barcelona were already treading a fine line. Players wages were at 61 per cent of that £943m (€1.04bn) budgeted income for last season. And that £943m figure included an estimate in how much they would make from players sales last January and in the summer. Sales which didn't really come off. Then the pandemic shut down football and that created a huge problem.

But football was soon back on, and back on the telly. So surely they were still getting money from the huge TV deal?

Yes, but Barcelona rely massively on football tourism. The empty stadium, and no fans flocking to the club shop and museum made a huge dent in income. This year projected income is closer to £746m (€828m) and if salaries had stayed at the same level they would have swallowed up 80 per cent of that. It's not sustainable.

So cut players' wages. Why the need to go into administration?

As Tusquets said, right now there is no need to go into administration. A company called Muro Cortina Modular Renting (MCM) has filed a claim to the Commercial Court in Barcelona for an outstanding bill of £3m (€3.5m) for work carried out on the front of the new Masia building at the club's training ground.

And part of that demand is that an administrator, instead of the caretaker board, take over and get some of the smaller creditors, each with their own financial problems caused by the economic effects of the pandemic, paid up.

The wrangle between Barcelona and MCM goes back several years and there are counter claims from Barcelona over bills to repairs on the work carried out. But the mention of 'administration' echoed through football like a siren and as the temporary Barcelona board continues to negotiate with players over wages it has been conveniently left hanging as a possibility if agreements are not reached.

How are salary talks going?

Wednesday was productive and they are ongoing through Thursday. November 5 was meant to be the deadline but if there is willingness on all sides for progress and time runs out on Thursday, then an extension could be agreed. It's complicated.

Player's contracts don't allow for random reductions in salary. The key strategy in these extraordinary times seems to have been to extend deals – meaning players get the same money but over a longer period of time.

That was the basis of the contract extensions given to Clement Lenglet, Frenkie de Jong, Gerard Pique and Marc-Andre ter Stegen. There is even suggestion that some players could be offered ambassadorial work for the club once they stop playing for it as a way of making sure they get all the money they are contracted to receive but over a longer period of time.

What is the likely short-term outcome?

That agreement is reached with the players and then with the remaining employees. There are around 540 non-playing staff whose salaries account for around 3 per cent of the budget.

Then the club crosses its fingers and hopes that supporters can be allowed back into stadia by next February so they can reopen not just the Nou Camp stands but also the club shop and museum. They have budgeted for that eventuality and if it doesn't happen then further cuts would be needed. But there is a longer-term outcome.

Which is?

Whoever becomes Barcelona president in elections now likely to be held in January they will do so on a ticket of making the club financially healthier. No more extravagant billion budget boasts.

Former president Joan Laporta dubbed the last board the Three Billion Boys earlier this year because they had income at €1bn, costs at €1bn and debt creeping up to €1bn too.

The club has to apply the handbrake, skid 180 degrees and start trundling back to more responsible accounting. The debt is not quite €1bn, it's closer to €800m, but it must come down and so must spending for at least as long as the hugely lucrative football tourism industry remains indefinitely closed.