Music Business
Hey,
Around this time last year, I wrote a newsletter about how soccer team FC Barcelona were running out of money after years of mismanagement and the pandemic caught up with them simultaneously. The newsletter was aptly titled “FC Barcelona are Broke” and can be found here. Well, a surprising new development has arisen so I felt the need to provide the update that FC Barcelona is finally not broke.
According to Forbes last year, FC Barcelona still had the second-largest brand value for any soccer team on planet Earth behind archnemesis Real Madrid FC. Despite them actually not having cash on hand to handle standard operating practices such as paying their employees’ salaries, the club was able to leverage the brand value into securing a $300M sponsorship deal with music streaming service Spotify. The agreement includes renaming Barcelona’s famous stadium to the Spotify Camp Nou and using Spotify’s logo as the main jersey sponsor for the next four seasons.
This deal is significant for two main reasons. The first reason is that despite Barcelona having negative cash flow and the inability to replenish the squad or sign key players recently, this deal should restore them back to being one of the powerhouses of the soccer community and allow them to sign the big names that we’ve grown accustomed to. It’s no surprise that as soon as this deal was announced, rumors began to appear about them signing Robert Lewandowski, arguably one of the best soccer players in the world today. The rest of the world had a two-year respite when Barcelona wasn’t able to spend like a top dog, but those days are over thanks to Spotify.
The second reason is that despite artists and musicians making pennies from their music being on Spotify, the streaming service is clearly flush with cash to the point where they are able to initiate a sponsorship deal of this magnitude. Spotify has always stated that their deals with the labels are above board and they are simply abiding by the agreements that they have with the labels that own the music, but that hasn’t curbed criticism that Spotify has faced from the music industry. Between the labels and Spotify itself, there doesn’t seem to be much money left over to share with the artists who make this music, but that doesn’t seem to bother anyone other than myself. And for the next four years at least, it doesn’t seem like artists should be expecting a larger share of the pie.
The rich get richer.
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