Spanish football offside as excesses cast shadow on new season; Spain’s economic crisis hits debt-fuelled clubs hard

August 23, 2013 2:14 pm

Spanish football offside as excesses cast shadow on new season

By Tobias Buck in Madrid

When FC Barcelona travel to Málaga on Sunday for their second match of the Spanish football season, fans are likely to witness a profoundly uneven contest.

Barcelona are the reigning champions ofSpain and hailed as one of the best sides to have ever played the game. The team includes Lionel Messi, the four-time European footballer of the year, as well as Neymar, a Brazilian forward who joined Barca for an eye-popping €57m this summer.Málaga, in contrast, have come to symbolise the excesses of Spanish club football like few others. At one point last season, the cash-strapped club was unable to pay players’ salaries. The European football association found Málaga’s finances were in such disarray that it banned the club from European competitions this year.

Málaga lost their highly regarded coach along with much of their finest talent on the pitch. The team’s best player, 21-year-old Isco, was snapped up by Real Madrid for €30m, while team mates departed for France, Italy, Portugal and Greece.

The club’s fall from grace is mirrored in football grounds up and down the country. Spain’s economic crisis has taken a heavy toll on La Liga, the famous top division, as it struggles to emerge from a debt-fuelled boom-and-bust cycle that gripped Spanish football just like it gripped the country.

Weighed down by debts that stand at almost €4bn for the clubs in the first and second league, teams have been forced to sell players, mothball plans for new arenas and slash spending. Despite their recent efforts, 18 top teams have gone into administration over the past four years, including famous names such as Deportivo La Coruña and Real Betis Sevilla.

Javier Tebas, president of the Spanish football league, likens recent events to Spain’s notorious housing boom: “The sector became inflated. It grew through debts. Then the crisis brought an end to all this money – and strangled us economically.”

Mr Tebas was elected to office only this year, with a mandate to put La Liga on a sounder economic footing. Under a tough new regime, clubs are being forced to reduce their debt load, pay off the hundreds of millions in unpaid taxes and refrain from overspending for star players. The results have been striking, but painful for supporters: Atlético de Madrid had to sell a star striker, Radamel Falcao, to Monaco for €60m; Valencia CF sold Roberto Soldado to Tottenham Hotspur for €30m; while Sevilla FC lost two leading players, Jesús Navas and Álvaro Negredo, to Manchester City for a total of €45m.

El País, the Spanish daily newspaper, lamented the “league of the exodus” in a special feature this week, pointing out that at least 30 players left the country’s top league this summer, a record. For Mr Tebas, however, the departures are a sign that the changes are working. Excluding data for Real Madrid and FC Barcelona, who play in a different financial league altogether, Spanish top teams have lowered their overall annual losses from €200m in the 2011-12 season to less than €40m this year. The next season, says Mr Tebas, will see collective losses fall to just €10m.

The clubs’ debts, meanwhile, are now €200m lower than last year and the league hopes they will fall to a manageable level by 2017. “In the short term, this means we will lose strength in sporting terms. In the medium term, however, we will gain,” says Mr Tebas, pointing out that Spanish clubs pay €120m in interest on their debts every year – money, he says, that one day will be used once again to fund players.

Miguel Cardenal, secretary of state for sport, says the league is undergoing both “shock therapy” and a “drastic change in culture”. He agrees that the sharp spending cuts enforced on weaker teams will cement the towering dominance of Real Madrid and Barcelona, but sees no option: “Three years from now, when their debt is reduced, they will be able to compete again. But now they have to take their medicine and it is bitter medicine.”

According to Austin Houlihan, a consultant in Deloitte’s sport business group, Real Madrid and Barcelona account for almost 60 per cent of revenues generated by the 20 first league clubs – a far higher share than in other divisions in Europe. “Finances are highly polarised in Spain and that polarisation is exacerbated by the fact that broadcasting rights are sold by individual teams rather than by the league as a whole,” he says.

The league is hoping to strike a collective broadcasting deal – like in Britain, Germany, France and Italy – in the next few years. But Mr Tebas cautions that even a more equitable distribution of television money is unlikely to dent the dominance of Real and Barca.

The irony, of course, is that the league’s financial woes follow a period of dominance on the pitch: Spain are the world champions and won the last two European Championships, an unrivalled feat. Barcelona, meanwhile, have won no fewer than three Champions League titles over the past decade. Recent triumphs, says Mr Cardenal, have raised the profile of Spain internationally and have taught Spaniards that “we can do things that we never thought we were able to do”.

For the moment, however, his diagnosis of the crisis facing league football can be extended to describe the state of a nation that has yet to emerge from the economic traumas of the past five years. “There was a bubble,” he says, “and now we have to find a new formula.”