F.C. Barcelona, the world’s eighth-most valuable sports franchise and one of Spain’s biggest soccer juggernauts, announced Wednesday that it was setting aside plans to build a new stadium to replace Camp Nou, the soccer fortress it has called home since 1957. Citing the financial irresponsibility of such a project, Barça announced instead that it will renovate Camp Nou, adding several thousand seats to make it one of the world’s 10 largest stadiums.
Barça, like many American teams, says it needs the upgraded stadium to boost revenues so it can keep up with its biggest rivals: Real Madrid in the Spanish league and European foes from across the continent. Unlike American teams, though, Barça will finance the project in a manner that will shock most American sports fans and appall most American sports owners: the entire €600 million (about $813 million) project will be covered by private finances.
According to totalbarca.com, Barça will take €200 million in private debt to help finance the project, another €200 million will come from its cash reserves, hotel and event space the club owns will generate another €50 million, and the final €150 million will come from the selling of naming rights on the renovated Camp Nou.
This doesn’t guarantee the renovation project, scheduled for completion in 2021, won’t go over its budget or cause financial headaches for the club or its members, and former club director Joan Castells has already called the project “risky.” But unlike stadium projects in America, where taxpayers are footing a $4 billion federal bill and far more in total contributions, it will be the club, not the public, that is on the hook for any financing problems that may arise. That, as Field of Schemes’ Neil deMause put it, is “eminently logical,” and it’s the case across many of Europe’s top leagues, where soccer clubs normally finance their own stadium projects (top English club Arsenal moved into its new Emirates Stadium in 2006; it’s completely privately financed).
That doesn’t mean public financing is non-existent in Europe. English club Manchester City received more than $170 million in public funds for its Etihad Stadium, where it moved in 2002, because the grounds were built to host the Commonwealth Games. Tottenham Hotspur, another English club, will reportedly receive some sort of public aid, whether through tax breaks or other forms of relief, to build a new version of its White Hart Lane. West Ham is moving into London’s Olympic stadium, also built with public funds, though the club will pay a small amount of the conversion costs and will also pay annual rent (in two of these instances, you’ll notice, the stadiums were built for other events and are being utilized by clubs, which isn’t altogether a bad thing). And in Spain, Barça, Real Madrid, the world’s second most valuable franchise, and other clubs are under a European Union investigation for receiving improper tax breaks. Though it’s more of a competitive balance issue than one centered on stadiums, it’s still off-putting to think of two clubs worth collectively more than $3 billion receiving tax relief.
There are reasons why European clubs have to rely on private financing more than American teams do. The relegation/division structure means there are teams, even small ones, in every city and town, sometimes more than one. Because of that, many teams are tied closely to their cities, towns, and even their neighborhoods and can’t fall back on every American owner’s favorite threat: to pack up his team and move to another city. Still, it’s interesting that in European soccer, the idea of a privately financed stadium — and private investors taking on the risks of building stadiums — hasn’t gone the way of the dinosaur. That Barça can finance a renovation that costs about as much as a new stadium on its own should be proof to American owners, politicians, and sports fans that private financing isn’t just “eminently logical” — it’s also possible.