All you need to know about Barcelona's economic lever and the consequences of the 'desperate move' on the future of the club

A desperate move to maintain the excitement but for a consequence severe enough to cost the club it's status as they continue to accumulate loses.

A quiet summer was predicted for the Spotify Camp Nou landlords but reverse has been the case weeks into the transfer window.

Cash has been injected and new players have come in while the club struggle to get some others off the books. It is a summer Barcelona fans thought they would only live in their dreams.

The activation of the economic lever has helped the club raise money to fund transfers this summer and Barcelona has seized the opportunity to get big name and talented players.

What is an economic lever and how does it work ?

This is a condition which results from using borrowed money as a funding source when investing to expand the club’s asset base and generate returns on risk capital.

In the case of Barcelona, the Catalan giants had agreed to sell 10 per cent of her future TV-rights income to the American investment company, Sixth Street when they activated a first “lever” earlier in the summer.

For the second “lever”, the club sold another 15 per cent of their TV-rights to the same company, meaning Sixth Street will now be eligible for 25 per cent of Barcelona's earning from TV in the La Liga for the next 25 years.

Barcelona will receive £268m in total from the agreement. The club has raised up around €522million through TV rights sales.

What has made Barcelona done this ?

To remain relevant and be competitive, it is inevitable that Barcelona activate this lever as the financial crisis is really having it's toll on their activities.

Despite a good member of the first team players agreeing to pay cut, the club is still has unpaid players like Frenkie De Jong, and are even ready to sell the player if he would not accept a 40 per cent pay cut.

Moreso, the La Liga sets wage limits for every of its clubs, which are subject to the revenues those clubs reported in the previous five seasons. Registering larger revenues maximises the money that can be spent on player salaries and the agreement with Sixth Street is also beneficial in this way.

Previously, Barcelona were under a rule which demanded that they will only spend €1 million for every €3 million earned. However, it has now changed to €1 million for €1 million.

The economic lever activated will now allow Barcelona register new signings like Franck Kessie, Andreas Christensen, Pablo Torre, Raphinha, Robert Lewandowski and will also help them in their quest to sign Jules Kounde from Sevilla.

Albeit it will not be enough, they will still have to get some of the current players off the book which they are not finding too easy to do at the moment.

Dutch duo, Memphis Depay and Frenkie De Jong are top of the list of players expected to leave the club even as the club remains adamant that it does not want to part with De Jong, it continuously put him in a condition where he will have to leave anyways.

Frenkie De Jong has been heavily linked with Manchester United all summer and news even broke that agreement was reached with Barcelona but Frenkie is not interested in a move away from the club.

The arrival of Robert Lewandowski has ultimately ended any chance of Depay getting minutes at the club and it has now been communicated to the former Manchester United player to look for a new club ahead of the new season.

After only one season with the club following his move as a free agent last summer, Depay was top scorer for the club in the league last season with 12 goals but obviously he has fall down the pecking order having Robert Lewandowski and Pierre-Emerick Aubameyang to battle with for spot.

Samuel Umtiti was bound for Rennes on loan but a deal could not happen due to a reported failed medical but the club continues to look for options for the French defender.

Neto, Oscar Mingueza, Riqui Puig and Martin Braithwaite were omitted from the squad for the US tour and have been told to look for new clubs as they look to offload players surplus to requirements.

Barcelona have also set sights on Chelsea defender, Cesar Azpilicueta and along with Kounde are the only players expected to maybe still move to the club this summer.

The consequence of the activated economic lever

Barcelona will be able to spend and sign players amidst their financial crisis but at the risk of more accumulated troubles in the future. Reports in Spain has it that the sale of the 25 per cent portion of their TV rights could mean a €40million negative impact on the balance next season.

The only hope the club has is that being competitive enough makes them well placed to secure major honours but this is a huge gamble, given the level of investments incurred by English clubs, who look to dominate in European competitions.

There's also Real Madrid in the league as well as Europe to reckon with. Clubs like Bayern Munich and even PSG will also see themselves as favourite in European competition.

Barcelona might have gotten better in the summer by improving the squad but it is a huge risk they have undertaken, one severe enough to get the club into administration if Xavi fails.

Failure in this context does not only mean without success, but it will be expected that Barcelona claims the major honours and consistently. Do they have the best squad in Europe to make this feasible ? Only time will tell.

Author: Kehinde Hassan Afolabi