Did Sandro Rosell unintentionally signal the hidden fear in Spanish football?
Cesc is leaving. Or Cesc isn’t leaving. Barcelona say they can only pay £30m for Captain Fabulous. Arsenal are said to be demanding £80m. Cesc and Arsene have sat down and discussed his potential transfer to Barcelona. Or they haven’t sat down because Le Boss was actually away on holiday.
Barcelona are skint. Or Barcelona are flush. Barcelona are carrying some £420m of debt. Or Barcelona have debt similar in scope to Arsenal and are servicing it easily. Even a thorough examination of Barca’s accounts leads to the conclusion that all 4 presumptions are in some way accurate.
Somewhere amongst all this chaff are kernels of truth. While I lay no claim to insider knowledge on whether or not Cesc will actually leave or what Barca’s current debt level is, I can say with some certainty that Spain, as a national economy, are staring down the same double barrelled shotgun that Greece are facing. And Sandro Rosell may just have let the most important footballing cat out of the bag without realizing it.
Labelling his club’s debt level “Stratospheric” , Sandro Rosell put a rather emphatic damper on Barcelona’s financial ability to acquire the services of Cesc Fabregas. While we’re all used to hearing unimaginable numbers concerning footballing debt, what we’re not used to hearing is a candidate for the Presidency of one of the largest football clubs in the world stating so clearly just how much of a threat that debt is to the club.
An interesting tactic for the candidate, no? Hey voters of Barcelona – my platform for the Presidency is this: “We Can’t Afford Cesc!” Vote for me!
My suspicion though, is that the warning sounded by Rosell has less to do with the current silly season shenanigans in Barcelona than it does with a much broader fear. The salad days of easy lines of credit and notes that never get called in at more-than-willing Spanish banks are about to come to a screeching halt.
They’re called PIGS. Portugal, Italy, Greece & Spain. The four countries that could bring down the Euro. Literally. Greece is already suffering from civil unrest at the looming prospect of either an IMF or EU intervention. And if you think the Eurozone is having problems over Greek debt, just wait til the EU or IMF have to step in and bail out a Spanish economy that is several orders of magnitude larger than Greece’s.
Here’s a newsflash: Neither the IMF nor the EU give one toss about football. Not as it concerns national economies, and definitely not when it concerns their money. If you’ve never been to a country that is under IMF austerity measures and the full blown horrors of Keynesian economics, let me give you a little preview:
Whatever the unemployment rate was before the IMF stepped in, expect it to increase significantly after they arrive. Expect taxes to increase across the board. Expect social and public services to be cut to the absolute minimum. Expect inflation and interest rate increases. Expect a large portion of the GDP to leave the country in question as it struggles to meet IMF repayment covenants.
Expect both a great restriction in available credit and humourless IMF debt collectors to start paying visits to deadbeat bill payers. If you thought the Glazers or Hicks & Gillett were good at asset stripping, you’ve never seen the IMF strip out a country that owes them money.
The IMF and EU are not sugar daddies and they will definitely want their money back. With interest. Germany and France are not willingly going to fund an EU bailout tranche, hand over billions of Euros to the Spanish government and allow that money to be lent to football teams so they can buy new players.
And while England is resisting any such involvement in a proposed EU bailout fund, eventually they’ll be swung ’round to chipping in. And where does this EU money come from to bail out Spain? It comes from you, dear reader, through taxes. Do Gooners want to fund, personally, the purchase of Cesc Fabregas by Barcelona? How about United supporters chipping in to that fund only to have a Spanish bank lend to Real Madrid so they can buy Wayne Rooney? Thought so. Not gonna happen.
So what does this mean for Spanish football? Well, Sandro Rosell knows what’s coming. Spanish football lives on bank funding to buy new players. Real Madrid and Barcelona make a few phone calls and – viola! – they have an extra £45m to buy that shiny new midfielder who will help them win trophies. The threat to this, however, is not the current amount of debt that Spanish teams may be carrying, but that continued borrowing to afford new players will soon come to an end. And shortly after that end comes, so will the bill collectors, with their higher interest rates, on whatever notes are outstanding at those oh-so-eager Spanish banks.
The next European domino to fall will be Spain. Sandro Rosell may not win the Presidency of Barcelona, but in the future should be looked on as an unintended prophet for sounding the alarm bell on the “borrowed-with-interest” financial might of Spanish football.
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