Why are agents still pushing their players into Spain? Why are British clubs still selling players to Spain when they must know (even if it is via prickles in the back of the neck) that there is every chance of several Spanish clubs going into administration or liquidation this year. And that as a result of which (either directly or through a knock on effect) they won’t be paid the money owed.
Think of it this way. Real Madrid buys Hardly Anyone, for a world record fee. They have to do so, because if they should ever fail in a bid like this, they will lose their position as the people who can buy anyone. So they claim that they can afford this through the utterly ridiculous comment that they will sell shirts.
Although this statement is insane, Untold actually went to the trouble of considering how much the sale of shirts could bring in with a big transfer. It was a tiny percentage of the transfer fee and didn’t even begin to contemplate the salary.
So what does Real Mad do to pay for it? It borrows money from a bank that always says yes, and does funny things like the land deals with the local council. Unfortunately the bank that like to say yes is on the brink of coming to pieces, while the council in Madrid is under investigation from the EU for its Real Mad land deal.
But Real Mad is Real Mad so they carry on, maybe selling some players for crazy prices to help balance the books. Higuain went to Napoli after Edinson Cavani went from Napoli to PSG leaving Napoli with a potful of money. Napoli had debts of around €70 million, when the club was declared bankrupt in August 2004 but having written all those debts off they are now seemingly ok.
But they have just got involved in a situation similar to that involving Andy Carroll and Liverpool on 31 January 2011.
Liverpool paid £35 million for him, which had to be way above his valuation, but was paid out because they had lost Torres to Chelsea for £50 million. By August 2012, Liverpool agreed a £2 million loan deal for Carroll to go away for a year to WHU and eventually sold him in 2013 for £15.5m. Loss – around £17m.
The problem with these deals in which money from one player is splashed on the next is that while Chelsea and PSG can splash out anything on anyone, and if he’s no good, move on, Liverpool and Napoli can’t. If Napoli like Liverpool have paid way over the odds for their man to keep the fans happy after a forced sale, they have just made matters far far worse in the long run.
But the point isn’t simply football, although if it were, we would be on the edge of the precipice with clubs like Napoli. The other half of the picture relates to the Spanish banking system and when (not if) it will enter the final phase of its collapse.
Spain’s exposure to Portuguese debt and unrealized losses on house and land loans are two reasons why the collapse has to come soon. True, the Spanish banking system was given an all clear last year but that “OK” did not even look at sovereign government bonds.
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Greece and Cyprus went to the edge and fell over, and with Cyprus we saw Greek bonds (which were fundamental to the southern – that is Greek) Cypriot banking system. With Spain the link, as I have suggested, is Portugal.
Spanish bank exposure to Portugal today is greater than French bank exposure to Greece was in 2010 as France used the ECB rescue programme to get rid of Greek bonds. You can’t do that any more and the simple fact is that there is a whacking great hole in Spanish banking. And Spain’s football clubs rely totally on Spanish banking.
If Portugal restructures its debt it will destroy the Spanish banking system. Worse, delaying a Portuguese restructuring will also do nothing to help Spain.
Meanwhile the eurozone has lent Spain over €41 billion to help its banks survive but that is not enough. Worse again, that loan allows the eurozone to tell how Spanish banks how to run things. Worse still, the football clubs are still not getting it.
So, Real Mad owes money to everyone under the sun. Napoli owes money to Real Mad and quite a few others, and no one has the money to cover the deal. Thus they go to the bank, and just as the bank is about to say “of course dear boy, you are an asset to the city”, suddenly the economy goes into meltdown and there are no more loans. No one can pay anyone.
Meanwhile everyone says, “there is no way Real Mad can go bust”. Just as they say, “there is no way our banks are going bust.” Or “Scottish football cannot afford to allow Rangers to be relegated”.
And suppose the bank does prop up Real Mad, but Napoli goes down again (or anyone else who owes Real Mad money). There will still be big hole in its accounts. And no one around to fill it up.
Want a football bargain? Start picking them up from Spain. Oh, come to think of it, Arsenal did with Santi Cazorla and with Monreal.
But to answer the opening question – why are agents pushing their players into Spain? Answer, because they don’t read the financial press. And by and large they are not that interested in the long term.
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