Economic Program Elections to the presidency of FC Barcelona 2021 Joan Laporta

Economic Program
Elections to the
presidency of
FC Barcelona 2021
Joan Laporta

We will give absolute priority to the project, model, culture and sports
philosophy of the club: to have the best professional team, considering
the abilities of the people, to bring Barça to the top of the world again.

Barça is more than a club, but this motto only makes sense if it is
accompanied by its application in actions on four main axes:
commitment to society and constructive values; commitment to
universality; commitment to democracy and commitment to the country.

Barça is a sports club, but there is another reality: Barça is an
institution. We are an institution that links certain values of civility,
country and citizenship with sport. These are values that have been
able to coexist with the demands of elite sport and high competition,
while not showing any symptoms of incompatibility with professional
and mass sport.

Economic Program

The main goal is to ensure economic sustainability and maintain a unique
ownership model in the world.

Context
The economic management that we will do
Main income generation initiatives

Context
The first thing we will do will be an internal audit to establish the real debt of the
entity (nature, terms and maturities), the situation of the treasury and the forecast
for the closing of the income statement for the 2020-21 season.

The Club presented an income budget for the 2020-21 season of € 791 million,
which was based on the premise of a gradual return of spectators from December
2020 and a 100% capacity from February 2021. However, the League has
anticipated that the stadiums will probably open in the last days of the league
(April-May 2021). The closure of the stadiums has an impact on the commercial
area of the Club, which already predicted a drop in revenue; this area includes the
shops (closed or running with the heat turned down) and the megastore of the
Camp Nou, which has seen sales fall due to the fall in visitors and spectators to
the museum and the Camp Nou. We estimate that the negative impact of these
elements can reduce the club's income by up to 15% for this season, limiting
income to about € 650 million, and therefore we must anticipate that this year will
close with losses, not be that some extraordinary income occurs.

In this sense, we look forward to knowing the details of the Barça Corporate
project which, as recently published, could represent the opportunity for investors
to enter 4 lines of business: Barça Innovation Hub, Barça Studios, Barça
Academies and Barça Licensing & Merchandising (BLM). There is talk of a
significant initial contribution, around € 100 million for the Club in exchange for
divesting 49% of these businesses, plus another € 100 million that would be
invested in the businesses themselves to provide them with more resources and
structure. In order to be able to value this opportunity, we need to understand the
details, always based on the premise that the Club cannot lose control of these
important assets for its future; we will make decisions with long-term benefits
in mind and not mis-sell club assets to save in the short term.

We will immediately prepare the budget for the 2021-22 season. We must
anticipate a favorable evolution of the pandemic that will allow the reopening of
facilities and shops from the summer or autumn of 2021, so that revenue from the
stadium is achieved around the 65% of pre-pandemic predictions. However, we
must be prepared for a season full of challenges in the economic field, as we will
receive the negative impact of the downward renegotiations that have been made

with some sponsors and the extra cost arising from the negotiation for the
postponement of part of the wage bill.

New avenues of revenue must be sought that go through the digital world and
redirect the club to an entertainment business. Barça must be able to be the main
provider of leisure for its fans, be it sports, entertainment or cultural content,
through alliances.

The economic management that we will do
• We will implement a new organizational model that should allow us to be more
careful with spending and more ambitious in generating new revenue. We will
carry out economic management based on the diversification of income, profits,
financial discipline, excessive wage moderation and debt reduction.

We do not intend to wind down everything, but we will improve what already
works and introduce new ideas that we believe can make a difference in the
medium and long term.

Being the best club in the world also implies and demands to have the best
executive team, to apply the best practices and initiatives of the business world,
adapted to the sensitivity and particularity of the world of elite professional sport.
We need to have an efficient executive structure, with shared goals, that
encourages and enhances the professional development of its members. The
club needs agility in decision making and to be much less bureaucratic.

1. Income yes, benefits too

The club's business growth in recent years has been largely due to the revaluation
of the rights marketed by third parties, such as La Liga and the Champions
League television broadcasts, which together represent between € 270 million
and € 300 million a year, equivalent to one-third of the club's income. These
agreements contribute 40% of the revenue growth experienced between the
2014-15 and 2018-19 seasons.

The current management board had set itself the goal of being the first club in the
world to exceed € 1 billion in turnover, an ambition that has forced a highly
questionable decision-making to inflate the volume of revenue, even if it was not
the better in terms of economic profitability. But as revenue has grown, so has
the net profit of the Club.

Alliances are a key way to boost the club's revenue growth. Reaching
agreements with third parties with much more know-how and economies of scale
can maximize the impact and benefits of a new initiative, ensuring in any case
that the club retains the necessary control mechanisms to ensure the preservation
of its image, reputation and values.

• Once we have reversed the economic situation of the club, we will set a goal to
achieve a minimum annual profit of 6% -7% of the regular budget, which will
become a working capital to invest in infrastructure and strategic assets for the
entity. One of the main deficits in recent years is to have gone from a net annual
profit equivalent to 7% -10% of ordinary income (ie excluding transfers) to 0.5%
in the 2018-19 season.

2. Financial discipline

The economic-sports policy of the last five years is not sustainable if we want to
maintain the current model of ownership and guarantee financial independence.
They have strained the club’s treasury, causing a high financial cost.

It has been institutionalized to include in the club’s budget an inflated item of
transfer revenue (€ 150-175 million) to balance the budget, taking advantage of
the fact that La Liga allows for an income equivalent to the average of the three
previous years for this concept. The Neymar effect is perpetuated, forcing
last-minute operations.

The economic policy of the entity cannot continue to be completely subordinated
to sports policy. It is necessary to recover a business management of the Club.

• We will avoid the accounting tricks that have occurred in recent seasons of
player exchanges to balance the last-minute profit and loss accounts, deferring
the cost of the signings in question to the budget for the following years. This
practice has been installed in the club as a recurring resource. In the summer of
2019, Cillessen will be exchanged for Neto at the end of the year for € 35 million,
a key to making a profit. In the summer of 2020, Arthur is replaced by Pjanic in a
€ 72 million operation that dries up a hole that has finally been € 97 million. These
are covert refinancing of the payroll that deviate from any criteria of financial
prudence. At the same time, in order to save or mask the closing of each financial
year, a high level of amortization for signings is perpetuated.

• We will re-plan the workforce as we have always done, with sporting, economic
and long-term vision. We can't continue to rely on winter market windows to
plug holes. This only leads to the devaluation caused by negotiating against the
clock with clubs that do not have this urgency.

3. Moderation of the weight of the wage bill

• We will reduce the annual expenditure on the sports staff in relation to the
revenue budget, to the point below the limits recommended by UEFA. We will do
this based on a more careful transfer policy and better management of the roster.

UEFA recommends never exceeding 70% of the wage bill over ordinary business
(excluding transfer revenue) to be in financial health, but Barça has been above
80% in recent years.

• We will once again put institutional leadership and the ability to convince the big
stars back with a sports project, rather than basing it all on money. The current
payroll is 25% to 35% higher than other major European clubs.

We need to introduce new mechanisms in the contracts of the players for whom a
part of their financial remuneration is more linked to the sporting success and the
overall success of the entity.

4. Debt reduction plan

The statutes approved in 2013 imposed certain financial ratios to ensure good
management. The most important is that of net debt, which, if the criterion given
for good is applied in that statutory reform, has gone from € 271 million to almost
€ 800 million. The financial health ratios that were being pursued are being
severely breached, so the calculation criteria were changed to adopt the one from
La Liga, which is more beneficial. It is not discussed to use a standard criterion with
the rest of the League, but the real evolution of the indebtedness with clubs and
banks has been hidden, which is almost equivalent to the ordinary turnover and
multiplies by four the EBITDA.

• We will prioritize seeking refinancing or defining a cash generation plan to
assume repayment.

Unlike other European clubs that accelerated the reduction of debt before signing
their biggest debt to take over the works of their stadiums, Barça has continued to
increase its commitments to third parties.

Main income generation initiatives
The most powerful brands in the world are no longer content to sell products, but
seek to sell unique experiences, memories and establish an emotional connection
with their followers. They don’t just want customers, if not fans of the brand.
Barça has more than 120 years of history, and its emotional and sentimental
connection with the fans already exists, it is not necessary to create it. We already
have the hardest part, what all the big organizations are chasing. Now it's time to
put much more value on the emotional connection and on the Barça brand to offer
quality products with which generate more income.

Barça must become a leading company in the world of entertainment. We
compete for people’s leisure, far beyond match days; any entertainment offer
(concerts, sports, museums, cinema, theater, etc.) competes in our environment,
and therefore we must make Barça an active manager in the world of
entertainment, in all its formats. Only in this way can we compete much better for
the free time of Barça fans, beyond the day of the match.

• We will promote the generation of ordinary income, taking advantage of the
growth margin in the commercial and digital field.

1. Sponsors & Sponsorships

We need to radically change the relationship model with sponsorships, we cannot
afford to lose world-renowned partners, as we have lost in recent years. The loss
of these sponsorships has been a hole, not only at the economic level, but also at
the level of sponsorship categories to be covered. We need to regain trust with
brands. The change of direction requires much more involvement and proactivity
on the part of the Club and its assets in its dissemination and promotion.

We have a well-worked and defined Action Plan that is based on 3 axes:

• We will change the club's sponsorship pyramid and the relationship model we
will have with our sponsors and sponships.

We’ve looked at the sponsorship model of major European football clubs, as well
as some of the leading sports clubs and institutions in other disciplines, such as
the NBA, Formula 1 or PGA Golf. We will implement a more consistent
sponsorship pyramid where on the one hand there is greater equity between

what the different sponsors pay within each category, and on the other hand
there is also much greater consistency in what the club offers them in return.

We will recover the 4-level pyramid that the club has had in the past and that the
vast majority of clubs in Europe have: Main Partners, Premium Partners, Global
Partners, Regional Partners.

• We will increase the number of categories and sponsors, and we will get more
out of them.

We will increase the number of sponsors, from the current 29 to 49. Man City
(leader with 43), Juventus (38) and Man United (36) lead the European ranking by
number of sponsors. All of them, however, are mono-sports clubs (football) unlike
Barça. We have identified and analyzed 59 categories / sectors likely to have a
sponsor in the club. Of these, the club currently has 25 covers, so we have the
potential to grow into 34 categories. The ones we consider most suitable to be
the most representative, synergistic with the club and with greater presence in
the world of sports are: airlines, personal care, cybersecurity,
connectivity-telecommunications, fan engagement, gaming devices, mobility,
payment platforms, payment platforms customer relationship management,
tourism and tires, among others.

• We will increase the expected revenue for the 2021-22 season by 50% in 3
years (15-20% over pre-pandemic level).

We understand that the set of sponsorships and sponsors of the club generate
around € 200 million in the 2020-201 financial year. With the renegotiation of
Rakuten and Beko, this figure is expected to fall to around € 150 million in the
2021-22 season. Our goal is to reach € 250 million in the 2023-24 season (an
increase of 50% -60% over the forecast for the 2021-22 season).

On the other hand, the club has the opportunity to become its own agency for the
generation and execution of ideas and activation initiatives by its sponsors, who
currently subcontract it generally to third parties. We have a huge opportunity
to generate new revenue for the club by proving to sponsors that there is no
better option than the club itself to generate activations that ensure a viable
and optimal execution with the assets they have under contract. We estimate
that this initiative can represent an income of approximately € 50 million per year
with a maturation period of 2-3 years. This would raise the total revenue of
sponsors and sponsorship to € 300 million per year in the 2023-24 season.

2. A more accessible, international and global Barça

In a world marked by the exponential acceleration of digitalization, and in an
increasingly competitive environment where other major clubs are committed to
internationalization, we can not lose sight of the fact that the club must continue to
accompany its fans throughout the world, and do so in the closest and most
accessible way.

• We will turn Barça's 55 schools around the world and the club's global offices
(currently located in New York and Hong Kong) into two fundamental tools for
promoting the Barça brand and its values, to stimulate the proximity of fans with
the club and to promote the consumption of the Barça product.

2.1. Barça Experiential Centers

We want to approach and connect the club with its fans around the world, fans
who in turn will be able to connect with each other. A stronger global presence will
allow the club to establish relationships of trust and proximity with the
maininstitutions, companies and sources of capital in the regions in question,
multiplying the club’s revenue-generating capacity.

We will promote a development plan for Barça Experiential Centers in the main
capitals of the world (London, Istanbul, Dubai, Tokyo, Shanghai, Miami, Rio de
Janeiro, Mexico City, etc.) with a worldwide presence. These will be spaces of
about 3,000-4,000 m2 in which socialization, contact with the Club and
entertainment are its main elements.

These Experiential Centers will assume various functions and areas, such as acting
as the corporate headquarters of the Club, selling merchandising of the Club and of
the sponsors, establishing exhibition areas, having entertainment areas with virtual
reality games and Artificial Intelligence, and have socialization areas through
viewing matches, conferences, co-working areas, meet & greets with club legends,
etc. All this in a first-class digital and technological environment.

We estimate that the investment per center would not exceed € 5 million, which
can be self-financed through local sponsors and partners.

2.2. Barça Academy

We want to be the first sports institution with a true global penetration. This true
global presence should not be limited to football and can be replicated in other
sports. This initiative should contribute to more potential sponsorship revenue for
the sections. We will reduce the economic constraints to open the Barça model to
the world. These are residual incomes in the context of the club’s budget, and in
return we want to get closer to the fans in the most disadvantaged countries.

• We will universalize Barça schools (Barça Academy) in the world by reducing
the economic cost of accessing them, which currently makes their implementation
unfeasible in many developing countries.

Barça Academy (as are eSports and Experiential Centers) is one of the three
elements to generate new Barça fans around the world. And new followers is, in
the medium term, more emotional bonding and more income.

3. Barça Innovation Hub

The objectives of generating and sharing knowledge, as well as developing and
launching new products&services that add value to the club (athletes, members,
fans) and to society as a whole, must remain one of the pillars of the club. Due to
the current financial situation of the club, currently only those proposals and
initiatives that address existing needs in the short / medium term are currently
being addressed. Providing ourselves with the human, economic and structural
means to give a new impetus to long-term thinking will remain a priority.

• We will promote the club’s large research and innovation laboratory in health,
wellness, nutrition, sports and the digital environment.

This is one of the distinguishing features of the organization, fostering
connectivity between different ecosystems in the world of sport, universities,
start-ups, research centers and sports organizations.

4. Barça Tech Fund

We have proposals from leading international investors in Venture Capital to
create an investment fund with the club, which will work in synergy with the
Barça Innovation Hub. The initiative will allow the club to leverage its brand to
generate additional revenue. This opportunity opens the door for us to participate
in the digital revolution that is taking place in the world.

• We will create an information vehicle (‘Venture Fund’) and a portfolio of
investment in start-ups around the world. The objective sectors of the investment
will be those intrinsically related to Barça and that we want to promote, such as
Sport Tech, Lifestyle, Fitness, Health & Wellness, E-games, E-commerce, FinTech,
eTail and E-travel, among others.

Barça’s contribution to the fund will not be economic, if not by giving input to its
members as sponsors of the club, and by contributing to the vehicle its
institutional, brand and marketing relations. In addition to the economic impact of
the project, this initiative is absolutely synergistic with the Barça Innovation Hub
and will put the club at the forefront of start-ups and the technological world
applied to the world of sport, health and well-being, etc.

5. Digital Contents

We need to lead the world of entertainment. The pandemic has accelerated the
pace of digitalization of entertainment, and it is more clear than ever that Barça
must become a powerful producer of digital content. It is certainly the club's
greatest growth potential.

• We will create and promote a digital content producer

There are many digital channels and platforms to make the Barça product
accessible to the whole world and interact with fans, but we will be much more
proactive in creating content. This area will include three strategic projects /
areas:

     • Barça Digital Lab

     • Barça Studios

     • eGames

5.1. Barça Digital Lab

Barça is one of the most powerful brands in the world with more than 600 million
fans and nearly 400 million followers on social media. We are the leading football
club in Youtube views and interactions on the main social networks, in both cases
between 35% and 50% more than the main English clubs (Man United and
Liverpool).

• We will promote the content platform available for television and multi-device
(OTT) with all the Barça on-demand content, which will integrate Barça TV and
Barça TV Plus. We will do this with two defined business models: Freemium
(which will be remunerated with advertising, one third of the revenue) and
Premium (paid, two thirds of the revenue). With 400 million followers worldwide,
the potential is huge.

It will take some time to gradually recover certain audiovisual broadcasting rights,
currently in the hands of third parties, which largely condition the ability to
generate business in the short term. The qualitative leap will really come based on
the evolution and pace of creating quality content through Barça Studios.

• The OTT gives us the opportunity to also become a Marketplace where, taking
advantage of the power and international reach, companies that share the values
and philosophy of the club, and especially those of areas and sectors more
synergistic with the club, can offer their products and services through the club
platform. This initiative can become a good tool to raise awareness of companies in
our territory in the world.

5.2. Barça Studios

In September 2019 the club inaugurated the Barça Studios project, based in Sant
Just Desvern. The aim is to centralize the creation, production and marketing of
audiovisual content, and includes the management of Barça TV. TV documentaries
like Matchday (broadcast by Netflix) have already been made, and others are in
production.

• We will promote Barça Studios. This is possibly the area of the club with the
most potential and, at the same time, one of the big ‘unknowns’. Today, it
generates around € 10-15 million in annual revenue based mainly on sports
documentaries. We need to make the leap into the world of fiction, where the
ability to generate content multiplies exponentially. We want to thoroughly analyze
the club's business plan which would involve earning € 1 billion with an EBITDA of
15% -20% over a period of 8 years.

In the case of giving input to an investor, as proposed in the Barça Corporate
project, it will be essential that we do not rush and sell this club asset with the
simple aim of covering a short-term economic gap. In any business of the club
where the entry of an investor can be considered, we are in favor of partnering

with highly specialized investors who provide know-how, ability to grow the
business exponentially and long-term vision. In addition, we will ensure that the
club never loses control of any business area.

5.3. eSports

As a leading entertainment company, FCB must understand that it competes for
the leisure of its fans. Any leisure alternative represents a competition. eSports are
a growing entertainment alternative for a growing group of people, not just
younger people.

     • We will promote the creation of eMasia, which will be set up as a Center for
     Research, Training and High Performance in eSports. The main goal will be to
     train and educate our athletes following the same philosophy and values of La
     Masia. We will exponentially enhance the club's participation and leadership
     in this area, while ensuring that we encourage the good habits and lifestyles
     that have always characterized our club.

     Its backbones will be:

     • The Market Intelligence Area of the eMasia will identify eSports ecosystem
     business opportunities (players, teams, investors, partners, sponsorships,
     competitions, events, etc.).

     • Its training program will include physical training and nutrition, in addition to
     all the disciplines intrinsic to the practice of e-games (strategy, simulation,
     etc.), and will welcome boys and girls from 16 years.

     • In the teaching and academic field, eMasia will promote courses and
     modules on the architecture, design and programming of video games, with
     the collaboration of universities and training centers.

     • It will act as an incubator and startup accelerator in the field of e-games, in
     collaboration with the Barça Innovation Hub.

     • It will produce digital content related to all its academic and sporting activity

     • It will strengthen the club’s participation in e-sports competitions, which are
     still very incipient today (2 teams with 8 players in total). We look at both the
     own path (as Liverpool or Man Utd have done) and the alliance with existing
     teams (examples of PSG, Man City or At Madrid).

• In order to have a stronger impact and financial return, the club must also
enter to the world of eGames beyond eSports, but always keeping us out of
games that do not fit the values of the club. eSports are just a small part of
the cake. Alliances must be forged with the dominators of this industry, the
big corporations that create and own video games. We understand that the
club is moving in this direction, albeit timidly and slowly. There are two ways
to generate income: participating in video game competitions, and reaching
agreements with its creators to be part of the game itself (this second way is
the one with the highest revenue potential for the club).

We are committed to having a presence in the Asian market, with the help of
teams and corporations with a strong presence there. Asia is where most
audiences and revenue move in this world, with virtually 75% of revenue
coming from sponsorships and sponsors. Nike and Konami, two of the club’s
sponsors, have a strong bond in this industry and we need to maximize that.

• We will make sure that the Nou Camp Nou and the Nou Palau Blaugrana
are designed with the necessary technology to be able to host eSports events
and competitions in the future, thus diversifying and maximizing the use of
the club’s facilities.

• We will create a technological ecosystem around eSports that we can
monetize via sponsorships, broadcasting, merchandising, virtual reality-based
entertainment and artificial intelligence, and more.

• eSports have the potential to become a section with its own entity within
the club, and being profitable on its own. In addition, it will help broaden the
base and profile of the club's fans.