Morningstar DBRS Changes the Trend on FC Barcelona to Positive From Stable

DBRS Ratings GmbH (Morningstar DBRS) changed the trend on FC Barcelona 's (FCB or the Club) credit ratings to Positive from Stable. and confirmed the Club's Issuer Rating and the credit rating on its Senior Secured Notes (the Notes) at BBB.

The credit rating on the Notes applies to the following Private Place Numbers: E5444# AD6, E5444# AE4, E5444# AF1, E5444# AG9, E5444# AH7, and E5444# AJ3.

KEY CREDIT RATING CONSIDERATIONS
The change in trend to Positive from Stable is supported by FCB's improved financial performance over the last two seasons along with the expectation of further improvement thanks to higher revenues because of the Club's return to the Spotify Camp Nou (the Stadium) as well as effective cost controls carried by the Club and supported by the Union of European Football Associations (UEFA) and LaLiga sustainability frameworks. Morningstar DBRS expects the Club to deliver positive free cash flow and show deleveraging capacity.

Morningstar DBRS notes that in 2023, the Club issued approximately EUR 1.5 billion in debt through a combination of notes and construction loans for the renovation of its Stadium via Espai Barça, Fondo de Titulizació (EB; an orphan/ring-fenced regulated securitisation fund with legal separation from the Club). Morningstar DBRS understands the renovation project is well underway and construction risk is limited, with the Club expected to return to the Stadium in August 2025 (although at a reduced capacity of 62,000). Accordingly, Morningstar DBRS has deconsolidated EB from the Club's financials.

CREDIT RATING DRIVERS
-- A credit rating upgrade could occur if the Club's financial performance continues improving, resulting in projected debt-to-EBITDA (excluding gains from player transfers) below 4.5 times (x).
-- Morningstar DBRS could return the trend to Stable in the case of more aggressive financial management or unexpected issues at EB that result in lower cash flows to the Club, and/or debt-to-EBITDA consistently above 7x.

EARNINGS OUTLOOK
The Club reported revenues of EUR 761 million in F2024, 3% lower than the F2023 figure because of the temporary move to Montjuic stadium. In terms of operating costs, the main contributor is salaries at around 70% of ordinary revenues over the last three seasons. The Club reduced the squad costs and as a result managed to turn positive EBITDA, excluding gains from player transfers, for the first time in the last four seasons. Morningstar DBRS forecasts revenues to reach EUR 1.1 billion in F2027 supported by the Club's return to the renovated Stadium and assuming FCB will finish in second place in the domestic championship every year and reach the quarter finals of the UEFA Champions League every season.

Morningstar DBRS forecasts the squad cost ratio (defined per UEFA guidelines as the sum of sporting personnel costs and amortization of player rights, as a percentage of the sum of revenue and gains/losses on player transfers) to be around 55% from F2025 to F2029. As a result, Morningstar DBRS expects EBITDA, excluding gains on player transfers, to be around EUR 90 million in F2025 and around EUR 100 million over the medium term, after EB's debt service and assuming the Club maintains a stable cost structure.

FINANCIAL OUTLOOK
Morningstar DBRS expects leverage to improve thanks to higher EBITDA and repayment of non-Stadium-related debt. Morningstar DBRS includes the Notes and approximately EUR 100 million of revolving credit facilities at the Club. Morningstar DBRS expects debt-to-EBITDA to be around 5.8x and improve steadily thereafter, thanks to growth in EBITDA as well as the principal amortization of the Notes.

CREDIT RATING RATIONALE
The credit ratings are based on the Club's popularity and brand strength, the supportive and loyal fanbase, its high degree of contractually obligated income, and UEFA's sustainability frameworks. The credit ratings also consider relegation risk, although quite unlikely; the competition for fans, ticket sales, and sponsorships from other football clubs; and the need to balance player costs and sporting performance to maintain stable cash flows and brand value.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (16 May 2025), https://dbrs.morningstar.com/research/454196.

BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)
(A) Weighting of BRA Factors
In the analysis of FCB, the relative weighting of the BRA factors listed in the Sports Franchise section of the Global Methodology for Rating Sports Franchises, Leagues, and Stadium and Sports Media Rights Financings (the Methodology) was approximately equal.

(B) Weighting of FRA Factors
In the analysis of FCB, the relative weighting of the FRA factors listed in the Sports Franchise section of the Methodology was approximately equal.

(C) Weighting of the BRA and the FRA
In the analysis of FCB, the BRA carries greater weight than the FRA.

Notes:
All figures are in euros unless otherwise noted.

Morningstar DBRS applied the following principal methodology:
-- Global Methodology for Rating Sports Franchises, Leagues, and Stadium and Sports Media Rights Financings (6 February 2025),
https://dbrs.morningstar.com/research/447472.

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (3 February 2025; https://dbrs.morningstar.com/research/447186), which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodology has also been applied:
-- Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (16 May 2025), https://dbrs.morningstar.com/research/454196

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyses corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

The primary sources of information used for these credit ratings include annual reports and financial statements, investor presentations, management projections and budgets and management meetings. Morningstar DBRS considers the information available to it for the purposes of providing these credit ratings to be of satisfactory quality.

Morningstar DBRS does not audit the information it receives in connection with the credit rating process, and it does not and cannot independently verify that information in every instance.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

The sensitivity analysis of the relevant key credit rating assumptions can be found at: https://dbrs.morningstar.com/research/456175.

These credit ratings are endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Gaurav Purohit, Vice President, European Corporate Ratings, Asset Finance
Rating Committee Chair: Michael Goldberg, Senior Vice President, Credit Practices
Initial Rating Date: 10 August 2022
Last Rating Date: 18 June 2024

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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