What is the 1:1 rule of financial fair play and why is Laporta waiting for it with fire?

BarcelonaBarça is close to regaining the 1:1 salary cap after five years of serious problems registering new players in La Liga. The burden of fair play financial caused Leo Messi's unexpected farewell, the reluctant departure of İlkay Gündoğan and the suffering of Dani Olmo, Iñigo Martínez, and Jules Kounde trying to register, among other headaches. Now Joan Laporta is celebrating that the club he presides over is about to return to "normal" trading. In this piece, we explain what that joy, which is being transmitted from the noble offices of Camp Nou, means. But first, some context.

What is financial fair play?

He fair play The term "financial" was invented in 2012, when La Liga was threatened by the Spanish government, then headed by José Luis Rodríguez Zapatero. The real estate bubble had burst, and many clubs that directly depended on companies linked to construction were caught short. Thus, non-payments to players and Social Security began. The debt was so huge that the government moved to intervene in the football business. To protect themselves, clubs created the salary cap, a rule that has been refined over the years and that, broadly speaking, aims to ensure that no one stretches their arm further than their sleeve.

UEFA and the various European leagues also have the fair playBut the distinguishing feature of La Liga is that this salary cap is preventive. In other words, it's not enough to balance the numbers on the last day: you have to prove at the start of the season that there will be enough money to cover expenses. At first, there was no talk of it in Barcelona. In fact, when the salary cap for all the teams was published, it was seen as a sort of competition between Barça and Real Madrid to see who was the richest.

Why has Barça suffered so much with financial fair play?

The crisis stemming from COVID-19 made everyone open their eyes, and, first due to the reckless management of the previous board and then due to an unfortunate decision by Laporta (devaluing assets and charging losses to the past), Barça has been approaching the market with a calculator in hand since 2020, making low-cost signings and precautionary sales.

This summer should be different. Or so the Barça leadership assumes. Officially, the objective is set. Barça sources clarify that the club has done the calculations and, adding the 100 million for the seats, VIP Pending auditor approval, Crowe, along with other smaller transactions, has managed to comply with the regulations. But spokespersons clarify that the accounts have not yet been finalized or audited, a key requirement for the League to grant the green seal. In other words, the Cava cannot be opened until the employers' association reviews the paperwork.

What is the 1:1 financial fair play rule that Laporta so desires?

To understand the 1:1 ratio, you need to think of a credit card. Not complying with the rule means having exhausted the credit limit. Being there means having a margin. Which one? This depends on the financial situation of each club. And in the case of Barça, despite being back at 1:1, they still need to do more to be able to sign and register players like the already announced Joan Garcia or the coveted Nico Williams. In other words, carry out transactions that add money to the card.

If a club isn't having financial problems, the salary cap is very easy to calculate. Simply take the season's budget and subtract all management expenses (non-sporting staff, facility maintenance, services, travel, etc.). The result, based on 70% of the budget, is the money that can be allocated to sports salaries, a concept that encompasses the players' salaries plus amortization, which is the cost of transfers divided by the number of years on their contract. The problems arise with clubs like Barça, which have suffered losses, defaults, or other penalties. All of this is subtracted, reducing the percentage, which was initially 70%, to a much lower figure.

What's the problem? When this subtraction is made, the resulting amount is usually less than the already committed salary. In other words, the club has signed contracts with players that are above the limit calculated by La Liga. When this happens, a club is "oversubscribed," a concept that has recently been used to refer to, among other teams, Barcelona.

The rule states that a club that is oversubscribed cannot register anyone, unless it gets rid of a player: then it can only use a percentage of the cost—salary and amortization—that is left free. That's why Barça has had so much trouble registering players in recent years. This season, if it's confirmed that the Camp Nou will return to the 1:1 rule, Laporta will no longer have to think in percentages. However, he still can't work because he has no margin. Therefore, he needs to offload more players to bring in new ones.

The money he obtains (whether actively, because he receives a transfer fee, or passively, because he saves a salary) can be used entirely to sign one or more replacements. This difference, from a percentage to the total, is the big difference between being overbooked and returning to 1:1. The advance, considering the years of previous misery, is considerable. But there's still a lot of homework to be done. That's why big-name signings like Ter Stegen, Araujo, and Christensen are on the way out, and astonishing sales can't be ruled out. The summer will be long again.