The first impression is that things have improved a lot in the city club, not only as we commented at the level of Ebitda but there is also a clear improvement at the level of debt.
As we already indicated in the case of Real Madrid, we distinguish between current or operating debt that in theory is renewed every year and corresponds to normal activity and non-current debt, which is what would determine the level of real debt or debt which must be paid or covered theoretically in the future with the cash flows generated by the club. In other words, the first time the club continues its activity does not have to consume the cash flow that is generated and the second if it corresponds to past financial holes or investment financing.
The so-called net non-current debt
In the case of FC Barcelona, the so-called net non-current debt, also known with the term net financial debt, amounted to about 55 million euros at June 2013. A debt reduction of almost 60 million euros in one year, leaving even below the 96 million euros of net financial debt of Real Madrid.
However, in the case of FC Barcelona, this reduction in financial debt may have some trick. Look at the evolution of net current debt, from 184 to 229 million euros. Almost 35 million euros more, when the level of activity, that is, the income of FC Barcelona has remained almost flat.
As we indicated in the comments of the post
The Real Madrid debt, to really consider whether the current debt is or is not really debt, we would have to determine that this debt is fully current debt, that is, it corresponds to normal activity and has not been Stretched the debt by delaying the payment to suppliers above what is normal or for example anticipating more than normal income from advertising contracts or similar (accruals).
Obviously trying to define this is almost impossible only with the information in the annual accounts. It requires a deep job, analyzing the average cash balance of the year and making a forecast that it will be collected and that it will be paid in the coming months and if it will be required to have part of the current treasury to face payments future or else these will be covered with future income.
Current debt is increased and the level of income
However, as long as current debt is increased and the level of income remains constant we can suspect that part of that current debt is not as current as it seems and should therefore be considered financial debt. In what amount? Complicated to know without further analysis.
Also comment that we have not taken into account as debt the 16 million euros that FC Barcelona has as a provision in its Balance Sheet. We would have to be clear that part of these provisions will lead to a future cash outflow and that part will not.