This case was developed by Rafael Martínez-Frausto and Víctor Martínez de Albéniz solely as the basis for class discussion. July 2013. Last edited: Sep. 20 2013.

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The Handball section at FC Barcelona

The season had just finished. It was July 2013. Toni Gerona, head coach for young talent development of the FC Barcelona Handball section, reflected on the team’s achievements and the significance of those achievements for the club. The first team dominated the national tournament, winning their 20th championship title (Liga ASOBAL, the Spanish professional handball league). But it was unable to obtain the King’s Cup (Copa del Rey) with a defeat against Atlético de Madrid, and lost the European Champions League final in an epic match against HSV Hamburg by just one goal in overtime. In addition to the first team, the junior divisions managed by Toni achieved outstanding results during the 2012/2013 season. Toni felt that some talented players the club had developed from childhood could be an interesting option for the first team in their quest for the title triplet next year. But competition would be tough: a few weeks after the season ended, the club signed the handball superstars Kiryl Lazarov and Nicola Karabatic, to strengthen the team to help bring back the Champions League title to Barcelona. On the one hand, the hiring of these two players would greatly benefit the first team, but on the other hand, they would occupy important positions within the squad, preventing some junior players from advancing. Toni couldn´t help wondering if the balance was right between the long-term work that the club did to develop young talent, and the first team´s short-term objectives to achieve results. He knew that for a club whose main objective is always to be among the handball elite, good was sometimes not good enough. He was certain that some adjustments had to be made in order to be even more competitive next year. Some recent events had to be taken into account too: on July 9, Atlético de Madrid, FC Barcelona’s main contender in Spain, announced that it would withdraw from the league and close its handball section altogether.

Futbol Club Barcelona

FC Barcelona, also known as “Barça” for most of its fans, was founded in 1899 by a group of young foreigners living in Barcelona as a result of the increasing popularity of football and other British sports across Europe. These origins gave the club its intercultural identity, multi-sport focus and its deeply-rooted allegiance to Barcelona and Catalonia. The club played amateur football until 1910 in various regional competitions. In 1910, the club participated in their first of many European competitions, and has since amassed four Champions League trophies and eleven other European cups. In 1928, Barcelona co-founded “La Liga”, the top-tier Spanish football league, along with a collection of other clubs. Since then Barça has become one of the most symbolic football clubs in Spain and in the world, with a vast history of successes achieved by iconic superstars like László Kubala, Johan Cruyff and most recently Lionel Messi, among many others.

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FC Barcelona was founded under the slogan “més que un club” (‘more than a club’) which has different interpretations. It is perhaps this flexibility that makes the slogan so appropriate for defining the complexities of FC Barcelona’s identity: a club that competes in different sports on the field, but is also responsible for carrying its values into society. The club founder, Joan Gamper, included another dimension to the original purpose of the club as a sports association: to be a pro-Catalan organization. The club approached the most actively pro-Catalan political sectors and had no reservations in coming to the defense of the identity of Catalonia. To achieve these aims, the club diversified its structure and expanded the FC Barcelona brand from football into other sports. With the creation of 4 professional sections (basketball, handball, indoor football and roller hockey), where players had contracts and received salaries, 7 amateur sections (wheelchair basketball, athletics, rugby, volleyball, field hockey, ice hockey and ice skating) and 2 associated sections (women's volleyball and women's basketball), the club extended its slogan of “more than a club” into different competitive environments. The club has managed to have teams playing at the highest level in every professional league in Spain and Europe, all the while living their philosophy of providing entertainment and embodying the club´s values (Exhibit 1).

The Handball section

Early days

The handball section was officially founded on November 29, 1942, although there are references to friendly matches played by Barça in the thirties. The sport was originally played by eleven players on a full-size football field, and it was not until the fifties that the game was played as it is today, by teams of seven players on indoor courts (Exhibit 2). The rules were quite simple: each team had a goal to defend and would try to pass the ball between players and throw it in the opponent’s goal; the team with most goals scored after 60 minutes would win. The handball team soon found success in the 11-a-side original version of the game. They won the Catalan and Spanish Championships for three seasons in a row in the mid-forties, and again in 1949 and 1951. In the 1950s, Barça’s handball team would win one more Spanish and four more Catalan Championships.

Consolidation of the modern game

Barça switched to the indoor seven-a-side variant, but did not win any major trophy until the late sixties with a League and Cup double in 1969. The Palau Blaugrana (FC Barcelona’s indoor arena, hosting up to 7,500 people) was constructed shortly after, and provided the perfect home for Barça’s indoors sports teams, and also the consolidation that handball needed at the club. And although the seventies was a decade dominated by Granollers, Calpisa and Atlético Madrid, with Barça only winning two Cups and a League, the section was growing, and was on the verge of its most successful period ever.

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In the eighties, the golden age began with two League titles and one King’s Cup, which coincided with the arrival of Valero Rivera as head coach in 1984. Rivera would lead the team to more titles than ever before, as Barça collected trophies not only in Spain, but also in Europe for two amazing decades. FC Barcelona came to dominate Spanish handball, winning five consecutive League titles from 1987 to 1992, another five from 1995 to 2000 and five more between 2000 and 2013. Barça ruled supreme in Spain and that dominance spread into Europe. Led by Serrano and Sagalés, three consecutive European titles were won in the mid eighties. Then, Barça won its first European Champions Cup in 1991. But this was just the start. From 1996 to 2000, Valero Rivera’s team set an amazing record by winning no fewer than five European Cups in a row, something no team had ever done before, and no team is ever likely to do again. To top it all off, Barça also won four consecutive European Super Cups. This was the era of the “Dream Team”. In the 2003-2004 season, Valero Rivera stepped down as manager, along with Enric Masip, one of the most renowned players. When Iñaki Urdangarín, Rafael Guijosa, Antonio Carlos Ortega, Andrei Xepkin and Xavi O'Callaghan among others moved on too, the unrepeatable days of the Dream Team drew to a close. The vacancy left by Rivera was filled Xesco Espar, while Masip and O'Callaghan stayed at the club in administrative roles. But despite the Absolute changes, the success continued. Led by captain David Barrufet, the goal keeper, survivor of the Dream Team, and with new players of such exceptional ability as Nagy, Skrbic and Iker Romero, the team held its place among the elite of the sport, as shown by a seventh Champions League and the League title in 2006.

Objectives of the section

FC Barcelona was unlike any other club in the world. The club was a reference for millions of fans around the world, and this meant that the handball teams were a mirror of attitudes, values and norms that had to be present at all times. The section’s desire was to be the benchmark handball team, with an aggressive, dynamic, and spectacular style of play. This was achieved by hiring professionals and developing talent in-house that embodied their values of dedication, struggle, sacrifice, camaraderie, quality, professionalism and "fair play." The mission of the section was to give pride to the fans through their game, behavior and results, based on a culture of effort that gave priority to collective results over the individual, thus increasing the prestige of the club as well as its players.

The first team

The first team of the handball section at FC Barcelona was the face of the section. It participated in different competitions at the regional level (Lliga Catalana), at the national

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level (Liga ASOBAL, Copa ASOBAL and Copa del Rey) and at the European level in the Champions League against the best teams in the continent. Its current manager Xavi Pascual, “Pasqui”, explained the team´s objective: “As part of FC Barcelona, we have the highest level of expectations and many people think that we have to win every single tournament we play. But this cannot be a real objective. In sports there is always a component of unpredictability: the other team always tries to complicate your game in order to beat you. The objective has to be realistic, and that is that my team needs to work hard to reach a competitive level that allows us to be contenders to win every competition in which we participate. This is the real objective.” For each season, there were typically 20 available positions in the first team: usually 3 goal keepers, 6 wingers, 8 back/center players and 3 line players. In planning his team for every new season, Xavi Pascual had the option to maintain the current players, sign new players in the open market, or look in-house to the youth teams for talented youngsters that were ready for the challenge. As head coach of the first team, he had a close relationship with the youth teams in order to monitor players with potential for future first team membership. A regulation called the “expanded roster” allowed players from the B team, competing in the second division in Spain, to train regularly with the first team and to be part of the roster for professional competitions, and yet still play regularly with the B team. This was very important in the development process of a young player as they gained playing time at the highest level and invaluable experience. However, there was a restriction that only Spanish players could participate in the expanded roster and prevented the team from using their foreign players from the young talent program. Whenever Xavi Pascual sat with his assistant managers to put together the team for next season, they kept in mind their objective to be competitive and prepared to win every competition. This translated into the quest for the ideal players. The managers needed to find players who had the best technical skills for each position. They also had to have the right physical constitution to compete (usually players of over 1.90m height and near 100kg weight as handball was a contact sport). And above all, players had to be able to adjust to the club’s culture: to manage the pressure to achieve results, to provide entertainment with their game and to display team spirit. Even though the youth development program was a breeding ground for the best talent for every position, the first team´s primary objective was to win. The selection of players to form the squad thus focused on having the best talent available whether it was developed in-house or signed in the open market.

FC Barcelona Handball Development program “La Base”

La Base was the name of the FC Barcelona´s young talent development program. Its primary objective was to develop young players to support the first team in two ways: first, to provide fresh talent to reinforce the squad; and second, to help the first team train to achieve the highest level of performance.

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La Base had 4 levels, starting from Infantil division (under 14 years old, with one team), Cadet (under 16, with two teams, A and B), Juvenil (under 18, one team) and FC Barcelona B (no age restriction, one team, already professional), see Exhibit 3. The model that Barça followed was unique in the handball world. While other teams would start recruiting players at the Juvenil level and rely on handball academies for the development of younger players, FC Barcelona began training and shaping players as early as Infantil. For Barça, there was a strong rationale for investing in players at this early stage. The heavy workload that these children were exposed to was not comparable to that of any other handball academy in the world. Moreover, it was focused to help the “holistic development” of their players. This encompassed every physical, tactical and personal aspect in which a player could be trained since the program was modeled to encompass the values of FC Barcelona’s “more than a club”. As the players moved forward with the development process, they had the philosophy and values of a team with the highest expectations ingrained in them, which made them highly competitive. Within the young talent development program, there was an elite group of players from all categories that was known as “La Blume”, named after the Blume sports training center in Esplugues de Llobregat, near Barcelona. This select group was formed by players whose skills and capabilities were noticed by the coaches and were expected to become part of the first team and be future handball superstars for FC Barcelona. The children that became part of Blume were usually brought to “La Masia”, Barça’s high performance training facility, where they lived, attended school and trained on a daily basis. Most of the players, usually 17 per year, entered the process at the Infantil level and climbed from there to Cadet B and then to Cadet A. After the Infantil stage, only 2 or 3 new players joined the teams in subsequent levels of the process, to take the place of players that had left. Keeping in mind that not every player would make it to the first team, the club could only promise the players and their families the development of a rigorous work ethic, a strong sense of discipline and a robust and enduring set of personal values. The club was highly demanding of the players of La Base and had clearly delineated the priorities and expectations. First, the players must study and have good academic results and second, they must develop as handball players. Coaches evaluated both criteria to ensure that the children performed well in both school and training. When it came to move to the Juvenil level, the club filtered the players for the first time to choose those players who had the potential to reach the first team and to let go those who did not have a future in the club. Toni Gerona commented about this process: “We speak with the parents before letting the kids know that they will not continue. Typically we receive a positive response and they thank us for these years of looking after their children. They feel their children are better students and better people.” FC Barcelona followed a very practical approach to select the players that would move on to the Juvenil level and B team based on two criteria: those players that had the physical

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potential to reach the first team and those with the skill level to help in the development of those with potential. There were cases of very skillful players that dominated the game at an earlier age, but the club knew that they would not reach the physical attributes (height and weight) required to play at the highest level. On the contrary, others might not have developed yet all the tactical skills to master the game, but they would certainly reach the physical development required to become a professional player. With the players destined for the first team, the club followed a strong working plan to develop them physically and improve all the tactical aspects of their game. There were common training guidelines for all levels in the section. These guidelines were founded on Barça’s game philosophy and helped to style the game of the youth teams to be as similar as possible to that of the first team. In early stages, training focused more in developing individual capabilities of the players (physical development and educational) and as they moved forward with the process it involved more collective aspects like technical and tactical development of their game (Exhibit 4). Only players who reached the B team became professionals and signed a contract with FC Barcelona. Even though the team competed in the national second division and the demands were the same as with all other FC Barcelona teams, their main objective was to support the training of the first team. The B team was structured following the First team´s plans. If the First Team head coach needed certain players in different positions to train on a daily basis with his team, the B team had to adjust to cover these absences, sometimes calling players from Juvenil to fill in. The final step of the process came when the First Team head coach planned the next season and requested players from the B team to reinforce his squad. Two things could happen with players who were not chosen for a spot on the first team: the club could give them on loan to other clubs to gain playing time and to continue their development so as to bring them back in a few years. Or the club could transfer these players to other clubs without a return option. In any case, transfer signing fees were usually low in handball, so Barça followed all its “alumni” in case the club would like to get them back. As of today, the development process of La Base had delivered good results. Every team among the different levels was a contender to win their respective competitions and most of them were doing so (Exhibit 5). In addition, most of the players who had reached the final stages of the process were able to compete at the highest professional level and at the same time they obtained solid academic achievements (Exhibit 6). For these reasons, the club planned to maintain this talent development structure. It was also considering to improve it through the development of an international network of recruiters to help attract talent, and a better system to monitor player development metrics.

Management of the section

Within FC Barcelona, the football team and each of the sections were independently managed as individual cost centers. Each section had to plan and manage its own budget every year. The budget had to align the competitive strategy designed by the technical directors to achieve the best performance, while maintaining certain expenditure discipline. In contrast with some other clubs in Europe who tried to achieve success by increasing

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their expenditure and attract superstars, FC Barcelona always tried to be more pragmatic, paying to bring great players when needed, but primarily taking advantage of their unique program of young talent development instead of buying them in the market. For the 2012/2013 season, the handball section had a budget of around €8 million. As part of this budget, €2 million was for general overhead of the club allocated to the handball section such as security, IT, operation of the stadium, marketing, protocol and public relations. This left the section with around €6 million for the operating budget of both first team and the young development program. FC Barcelona had a substantially superior budget in comparison to the rest of ASOBAL teams. Although the budgets were not public, it seemed that Atlético de Madrid could have spent about €4.5 million for the 2012/2013 season and other contenders like Ademar León, Valladolid and Naturhouse Rioja between €1 to €1.5 million. The first team consumed most of the operating budget: €4 million was for payroll and €1 million for bonuses awarded to the players. Generally, these bonuses were tied to certain individual playing metrics and the collective achievements of the team in the different competitions. The other €1 million was allocated to general and administrative expenses of the section and the young development talent program. Every year, the management team also participated in any negotiation processes to sign new players from other teams. Even though the decision to bring a new player was taken by the technical managers, the management team negotiated the best possible conditions for the transfer. At the same time they had to make sure that the club had the financial ability to carry out these transactions based on the section’s current budget. This created one of the biggest challenges for the management team. The technical team had the pressure to win and therefore tried to buy the best players in the market, while the management team needed to balance both section goals and business constraints to make the section sustainable in the long term. The young talent development structure received around €250,000 for their yearly operations. The club´s aimed to develop young superstars who could grow up with the philosophy of the club. Financially, having one player reach the first team was quite profitable. On average, the salary of one player who came from the young development talent program was about 30% less than that of one brought from another team. In conjunction with the club’s unique mission and the focus on achievement in sports, this was another reason why the club placed a lot of emphasis on developing young players. (Exhibit 7) Regardless of the financial discipline that the club maintained, revenues were usually lower than desired. For the season 2012/2013 the section had revenues of €1.7 million leaving them with an operational loss of almost €6.3 million euros. Xavi O´Callaghan, Director of the Handball section, explained the factors that influenced the low-revenue scenario:

“As in most sports, handball is entertainment and people become emotionally attached. They love to come to the stadium to experience the thrill of the game and see the team win in the last minute. In recent years, the Spanish ASOBAL league has lost competitiveness

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due to the economic crisis. It was a highly developed league in the times where all the teams had high budgets, which usually came from local government grants. During these

wealthy years most of the clubs spent their excess budget in attracting superstars to play in ASOBAL and the league had one the best game levels among all the leagues in the world.

On the flip side, almost none of the clubs had a long-term vision or had invested in creating an administrative structure for the club (sales, marketing, promotion or public relations) that would support and promote the team and bring revenues directly from the club operations. When the crisis hit Spain and the local governments had to reduce expenditures, the grants they gave to the handball clubs disappeared and these had to reduce their budgets. This caused most of the superstars to emigrate to other leagues where they could get better salaries. With most of the good players gone, the level of play in the ASOBAL deteriorated and only a couple of teams, including FC Barcelona, which could still afford to maintain their budgets, were able to form competitive squads. This translated into an undisputable dominance of few teams in the league: entertainment was gone. People lost interest in going to their local arena to see a team win by 20 goals. They only went there when the strongest teams faced each other, because something fun might happen that day.” The transformation of Ciudad Real (Spanish and European champion in the 2000s) into Atlético de Madrid and its later disappearance would only make matters worse. In comparison to other leagues (Exhibit 8), O´Callaghan explained how teams in the German handball Bundesliga developed to achieve a sustainable business model: “Similar to Spain, in Germany handball is a sport that developed in small cities. Clubs managed to create an experience in towns where there were not many attractions and people reacted positively. Handball matches were the event of the week and the small arenas were completely full at every game. Step by step they created critical mass and started moving to bigger cities, filling bigger arenas and adding more features to the experience, like VIP areas, a place to enjoy food and drinks with friends before matches, and merchandising stores. This has allowed the clubs to have enough sources of revenues to maintain balanced budgets over time.”Challenges for the next season When planning for the 2013/2014 season, the club had very high expectations. They were certain that with the two new players (Lazarov and Karabatic) and some promising young players from the development program, the team was in a strong position to win any big tournament in which they participated, while making it attractive to their fans. On the one hand, Toni felt pleased that some of his players like Aitor Ariño, whom he had spent many years developing in Barça´s junior squads, were now ready to be an active part of the first team. But on the other hand, with the new players coming from abroad, the team needed to release some other players who would not find space in the first team. Toni reflected on the situation:

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“The most difficult thing about my job is to sit down with one of my kids who has worked hard for many years, who has been disciplined and trained every day to achieve his dream to become part of the FC Barcelona first team and tell him that there is no space for him in the squad and that we have to let him go. But this is part of the sport and in this club the only thing that we can promise them is hard work and that, as part of this family, they will be able to develop themselves as an integral person ready for life.” Another challenge for the section was to find the balance between the club’s ultimate goal, to have the most competitive team in all the sport, delivering results every season while pleasing the audience with their superb game, and the club´s finances. The club had historically bet on their young talent to become a crucial part of their performance, and at the same time being profitable from a financial perspective. But how sustainable was this strategy? Was the young talent development program really the answer? Or did they need to focus on the first team performance by chasing the best players out there in the market?

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Exhibit 5- Youth teams results at the Spanish level (position in National Championship Finals)

07/08 08/09 09/10 10/11 11/12 12/13INFANTIL ‐‐‐ 2nd 1st 1st 2nd 2ndCADET 1st 1st 1st 2nd 1st 2ndJUVENIL 5th 1st 5th 2nd 2nd 3rdBTEAM 3rd 2nd 1st 6th (DH B) 1st (DHB) 1rst(DHB)

Note 1: the results of the Infantil team cannot be considered as a success of the elite program, as there have never been youth players in the elite group “La Blume”. Note 2: the B team started playing in Division de Honor “Plata” (DH B) in the 2010/11 season, before it was playing in a lower division. Source: FC Barcelona

Exhibit 6- 2013 Elite GroupPLAYER POSITION PLAYED

WITH1stTEAM

SPANISHNATIONALTEAM

MAXIMUNLEVEL 13/14SEASONSITUATION

STUDIES

RubenAlarcon Pivot No Juvenil ASOBAL Notplaying Tech.EducationJoanManzanares Wing No No 1ªNacional 1ªNacional UniversitySergiSoler Wing No Juvenil 1ªNacional Notplaying UniversityJoelGiménez Pivot No Juvenil 1ªNACIONAL N/A Tech.educationIbrahimMoral Goalkeeper No Juvenil ASOBAL ASOBAL Tech.educationJuandeDiosLinares Back No Juvenil DH“PLATA” ASOBAL UniversityFerranGuedea Wing No Junior DH“PLATA” 1ªNacional UniversityMarcGarcíaM. Back No Junior DH“PLATA” DH“PLATA” UniversityAlbertoMiralles Wing Yes Junior ASOBAL DH“PLATA” UniversityJoanSaubich Wing Yes Junior ASOBAL ASOBAL UniversityCarlosMolina Back Yes Absolute ASOBAL ASOBAL UniversityDavidBalaguer Wing Yes Absolute ASOBAL ASOBAL UniversityAitorAriño Wing Yes Absolute ASOBAL ASOBAL UniversityRodrigoCorrales Goalkeeper Yes Junior ASOBAL ASOBAL UniversityGonzaloP.deVargas Goalkeeper Yes Absolute ASOBAL ASOBAL UniversityJoanAmigó Back No Junior DH“PLATA” DH“PLATA” UniversityJaviGarcíaRubio Pivot Yes Junior ASOBAL ASOBAL Tech.educationAlvaroRuíz Center Yes Junior ASOBAL ASOBAL University

Exhibit 7- Annual cost of the development program

Cost per player

- Number of players in the development program 85 - Program budget (annual) €250,000 - Cost per year / per player €2,941 - Years to reach the first team 5 - Cost per player (if all reach 1st team) €14,705 - Salary of a home made player 30% less than from outside

Source: FC Barcelona

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Exhibit 8- German and French league teams Budget German Handball Bundesliga budgets (m€)

TEAM 2012/2013 2013/2014 THW Kiel 9.5 9 HSV Hamburg 8.1 8.5 SG Flensburg-Handewitt 5.7 6 Rhein-Neckar Löwen 5.5* 5.5* Füchse Berlin 5.2* 4.8* Frisch Auf Göppingen 5 4.7 SC Magdeburg 4.2 4.3 VfL Gummersbach 3.8 3.8 MT Melsungen 3.5 3.5 TSV GWD Minden 3.2 3.2 TBV Lemgo 4.0* 3.2* TuS N-Lübbecke 3.4* 3.1* HSG Wetzlar 3 3 TSV Hannover-Burgdorf 2.3 2.6 HBW Balingen-Weilstetten 2.5* 2.4* Bergischer HC (Ascended) 2.2 ThSV Eisenach (Ascended) 1.5 TV Emsdetten (Ascended) 1.5 TOTAL 73.9

French Handball ligue budgets (m€) TEAM 2012/2013 2013/2014 Paris 9.2 13.5 Montpellier 7.4 6.6 Dunkerque 3.5 4.6 Chambéry 4.4 4.2 Nantes 3.2 3.8 Tremblay 2.6 3.4 Saint Raphaël 2.9 3.4 Aix 2.2 2.9 Ivry 2.4 2.8 Toulouse 2.7 2.7 Sélestat 1.9 2.2 Nîmes 0.0 2.2 Cesson 1.8 2.0 Dijon 3.5 1.9 TOTAL 47.8 56.2

Source: Handball Welt (http://www.handball-welt.de/o.red.c/news-1-1-1-50338.html) and Handball Planet (http://www.handball-planet.com/lnh-teams-budgets-20132014-psg-handball-worlds-richest-handball-team/)