FC Barcelona Players To Forego 70% of Salaries During Hiatus, ERTE Leaves Them Little Choice
FC Barcelona players (includes all teams/sports, not just the men’s first team) have agreed to reduce their salaries by 70% during the sports hiatus. In a statement first published by Messi, the players insisted the wage cut was something that was done voluntarily to help the club during a “exceptional situation” and not a decision forced upon them by the board of directors. First-team players will make additional financial contributions (2% of annual salaries, equates to +/- $11 million) so that the club's non-sporting personnel can continue to receive 100% of their salaries while Spain remains in a ‘state of emergency’.
Howie Long-Short: To understand why Barca players feel the need to serve as financial stewards of the club, one must recognize the team’s ownership structure is different than the one fans in the U.S. are accustomed to. No one person (or investment group) controls FC Barcelona; in fact, there is no outside investment in the club at all. The team is fully controlled by its members (and the elected board). As a result, there is no billionaire owner in place to backstop costs while the games are halted.
One must also realize the existential threat that the Coronavirus shutdown poses to some of Europe's clubs. Bundlesliga CEO Christian Seifert said that a cancellation of the season and the subsequent forfeiture of related prize money and/or broadcast revenues would cost teams in the top two tiers of the German league more than $820 million and could result in more than half of the 36 clubs having to fold up shop. One big four team owner said that the “[European soccer] players are motivated by the immediacy of the facts and circumstances (see: possible bankruptcies). It's not that they are more moral people than the U.S. athletes.”
While the letter from the Barca players indicates the reduction in pay is “something that we were always clear we wanted to do”, it certainly doesn’t appear as though they had much of a choice. As the players negotiated with club hierarchy, the board of directors announced that it would be invoking Spanish labor legislation (known as ERTE) that grants businesses the right to unilaterally reduce pay on and/or temporarily suspend employment contracts during a crisis. The players eagerness to forego 70% of salaries certainly appears to be a far less noble endeavor when one considers they were legally entitled to $0. It's worth noting that several of La Liga’s other clubs (see: Atletico Madrid, Espanyol, Alaves) will exercise their rights to slash player wages during the Coronavirus pandemic.
The decision by Barca players to make additional financial contributions, so that non-playing personnel can continue to earn their full salaries deserves to be recognized. While one could argue that American athletes aren’t doing enough to help during a crisis (it’s a separate debate whether they should be considering U.S. teams are owned by billionaires), it’s important to remember that the European soccer leagues are at the tail end of their seasons (meaning the players have already earned a large portion of their annual income). By comparison, MLB and NFL players haven’t been paid since the end of last season (aside from some spring training per-diems). Our ownership source said “the timeline means something. The [MLB and NFL] players would be in a much better financial position, from a cash flow basis, to help if the league was shut down in October.” Of course, NBA and NHL players across the country have been pledging money to help arena workers during the hiatus.
Considering the circumstances, the deal the Barca players negotiated is certainly a strong one; they’ll receive 30% of their remaining salaries regardless of whether or not the games are played. By comparison, MLB players will see just $170 million of contracted salaries if the 2020 season is cancelled (the money will be advanced to cover games missed in April and May). Like the Barca players, the MLBPA was fighting an uphill battle; there is a national emergency clause in the CBA does not entitle the players to any compensation if games are not played.
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