I made an absolute howler in the original headline of this piece with a grammatical error the size of Real Mad’s overdraft. It has been pointed out in correspondence, quite rightly. Normally I don’t go back and change a site once published, but this error was so bad I just couldn’t live with it. I blame having to write 3 press releases in one morning. What sort of life is that for a grown man?
The Spanish League is the best in the world. The clubs are owned by the fans, the football is wonderful, the stadia are exquisite – and full, and this is the model for how football in England should be run. The top two teams on the annual rich list are Spanish. Life is good.
Well, up to a point (which in case you have not read Evelyn Waugh’s most brilliant tale of journalism “Scoop” means, “like hell it is”.)
Reporting on football off the field from foreign parts can be difficult because although people say things one never quite knows if the person is a serious commentator of a Harry Redknapp. So, I might well be shot down on some of this, but here’s a couple of quotes that the Guardian ran recently.
José María Gay, apparently a leading expert on football finance in Spain and an adviser to Uefa said, “La Liga is dying.”
The Osasuna president, Patxi Izco, said: “I fear a financial meltdown.”
The point is that Spain, like England, spends loads of dosh that the clubs don’t have on transfers, and then defends what is going on by saying “we’re a big organisation, so we spend big money.” Which is a bit like saying, “I have a big house, so of course I have a big mortgage.”
The one has nothing to do with the other. The issue in both cases is, “when are you going to pay off your debts?”
The answer is, silence.
Last year, as you may recall, Barcelona won all the big trophies they went in for. Barca have debts of €350m. So you might think a year of utter triumph might result in paying off some of the debt. I mean, if you can’t pay the debts down when you have won everything, when do you?
Unfortunately despite winning everything they only made a profit last year of €8m. Which is good but not that good when you have done everything right, and can’t do any more. If it is 8 million in your best possible year, what do you do when the other guys win?
And Barca, remember, are the good guys. Real Mad, are, well, Real Mad. They signed players to the value of over €250m last year and justified some of it with the most insane comment in the history of football finance. They would, their president said, pay for it in shirt sales.
What President Pérez didn’t add was that what he actually did was to take out another €150m worth of debt. And they are running at a loss. And (according to the Guardian) they are selling fewer shirts than Liverpool and Chelsea. The crowds are down 7%, and the debt although not on the Man U scale, is up there with the loonies. It is €683m.
In the 1990s, Spain passed a law making clubs become plcs, except Real Mad, Barcelona, Athletic Bilbao and Osasuna. The idea was to wipe out the insane debts that were destroying football in Spain because the top men in each club would now be risking the company’s money, and mismanagement could bring the company down. It seems to have had little effect.
Just as with Arsenal, as everywhere else, many fans are not patient, and do not value profit. All they want, is to win stuff, no matter what the cost.
Valencia’s debt is over €600m and an unfinished new stadium where building work has stopped, and have just set up a new share issue of 95m to try and help themselves through.
Real Mad sold their training ground for €450m to wipe out their debts. Now they have more debts. Atlético Madrid have debts of over €300m. Deportivo La Coruña have debts of over €120m. Mallorca are on the edge of administration. Villareal have not paid their players. Celta Vigo and Real Sociedad have gone into administration – but there’s no 9 point penalty for this in Spain. Instead they have had the Beckham Law which means foreigners pay less tax than locals. (Although there are plans to cut that law).
Overall Spanish football’s debt is reported by the Guardian to be €3.5bn. The Spanish federation owe the players’ union €6.8m and the union says that clubs owe €100m in unpaid wages. Atlético owe Revenue and Customs in Spain €15m.
Platini says there are five or six top-flight Spanish clubs in danger, but they are finding interesting ways of hanging on. In England we are used to local councils treating their football clubs with contempt – none of us can forget what the local council did to Wimbledon when they were in the first division, and although Everton have been singularly inept in their dealings with the local authority (questioning the right of democratically elected councillors to make decisions about planning applications is not a clever way to curry favour) they still hope and wait and wait and hope to get planning permission. Getting the council to pay for the stadium is well, not on. (Unless you are Man City).
In Spain it is not like that. When Sporting Gijón went into administration, the local council bought their “brand image” to enable to club to keep going.
But ultimately the problem in Spain is that they have seen Scottish football, and instead of seeing it as a warning, they have seen it as a blueprint. “Let’s have two big clubs that always win all the time,” they said, “and let everyone else sink into the quicksand. That’s a great idea.”
Just as in Scotland the system is there, and you are stuck with it. Short of a multi-billionaire investing in a small club (and why on earth should they?) the system goes on. The same two clubs make the news, get the coverage, earn the cash, build up the debts.
The big two do their own TV deals and keep the money and… get into more debt. Everyone else gets only a fraction of the big two’s money (10% at most) and…. get into more debt.
There is talk of wage limits just as there is in England. But the chance of implementing it, and then being able to police it, is zero. The chance of reform is zero. And the two giants (which utterly dominate every aspect of football in Spain) are as insanely in debt as every other club.
Welcome to the madhouse.
Index of other articles
The day that changed the future of Arsenal
- Why is it becoming so difficult to find a sponsor for new football stadium?
- Corruption flares up again in Italy, as Premier League figures don’t look too clever
- How much does a club have to spend on transfers to get a trophy?
- Does the team that is top after 14 games usually go on to win the league?
- How the Taliban infiltrated the World Cup and used it to maintain its war on women