By Tony Attwood
It is a story that has appeared on Untold so many times that I can imagine that everyone is bored stiff with it.
It is a story that has had many people saying “it will never happen” because “Real Madrid and Barcelona” are far too powerful to face investigation from something as irrelevant to football as the European Commission.
But lo and behold. Some two years after we first featured the story, and four years after the first Untold Tale about the utter financial disaster area that is Spanish football, we are getting there.
Seven Spanish clubs are to be investigated by the Commission over alleged illegal state aid. These clubs are: Osasuna, Athletic Bilbao, Valencia, Elche, Hercules, Real Madrid and Barcelona.
Ok you know who that lot are. But what of the European Commission? The BBC helps us out here with its definition. It is “the executive body of the European Union responsible for proposing legislation, implementing decisions, upholding the Union’s treaties and day-to-day running of the EU.”
So now you know.
Supporters Direct are taking an active interest too. As they have recently reminded us, until the last decade of the 20th century, clubs in Spain were largely member owned.
Now this is not to be confused with member ownership in Germany which is a GOOD THING. Member ownership in Spain is BAD THING. For in Spain the member ownership model took a different turn and led to the clubs being totally in debt – rather like the country’s banks and businesses in the 21st century.
The League failed to do anything or regulate anything – and so eventually the clubs were converted into Sporting Limited Companies, except for Real Madrid, Barcelona, Osasuna and Athletic Bilbao who were left free to take on even bigger debts.
One of the big problems was that local authorities have tended to help their clubs, because of the link between the club and the area – the failure of the club would be seen as a failure of the region or city, and so local pride would not allow that.
But that kind of support by a regional authority of a loss making enterprise is most certainly not on, under EU rules.
I think a lot of people generally agree that football in Spain is utterly unsustainable because of what happened in the 1990s. But of course not everyone welcomes change. As foreign minister Jose Manuel Garcia Margallo said, “The government will fight to defend Spanish clubs because they’re also part of the Spanish brand.” Well, yes, it would, wouldn’t it.
Not quite clear about the Spanish brand though.
Barcelona, Real Madrid, Osasuna and Athletic Bilbao are accused of contravening European Union rules because they are still owned by their members and had benefited from favourable tax treatment. Real Madrid are also under investigation for their infamous land deal in which they swapped land with the local council.
Valencia, Elche and Hercules are being investigated because of help from the regional government in terms of loans and bank guarantees.
Excluded from the list is Málaga who got so muddled last year that they were selling players at discount prices to try and escape from the fact that they couldn’t pay salaries. But they are now also excluded from European competition.
Meanwhile the Financial Times recently estimated that the debts of Spain’s clubs total almost €4bn. And as a result of this 18 of the top teams have gone into administration in the last four years.
The clubs are now being forced to pay the taxes they have avoided for years, and pay off debts, and stop future overspending. Which is why Atlético Madrid sold Falcao, to Monaco, Soldado to the Tiny Totts, and Sevilla sold Navas and Negredo, to Manchester City.
All of which sounds sensible, until you look under the covers. As the Independent reported yesterday, Atletico Madrid have a debt of around €180m. Although they sold Falcao €60m they will see only a fraction of the money because they only part-owned him and anything they do get will go to paying unpaid tax bills.
Just to show what it is really getting to be like in Spain, Betis have cleared much of their debt. So they are now free to buy again. And they bought Cedric Mabwati from second division Numancia, for what it says in his buy out clause: €1.20. (And yes, that full stop is in the right place. The price of a cup of coffee).
Excluding Real Mad and Barcelona, Spanish first division teams have now cut their losses from €200m in 2011/12 to under €40m for 2012/13. The top two clubs seem immune, but of course they can’t be. We saw the cracks at Barce while Henry was there, and the players didn’t get paid one month. When the links between Real Mad and the local authority, and Real Mad and their bank, are unraveled, all hell will break lose.
So the double attack on Real Mad in terms of its dealing with the local authority, and the investigation into state aid, and the inclusion of Barcelona in the state aid issue (vis a vis aid from the municipal government) threatens the giants for the first time.
It could get quite interesting. (Oh yes, and even if you didn’t read it here first, you did read it here quite a long time ago).