La Liga in Trouble?

Pain in Spain: La Liga in financial turmoil

TV companies are pulling the plug and players are heading for foreign fields
Pete Jenson

Madrid

Saturday 20 July 2013



Real Madrid face Bournemouth tomorrow in a pre-season friendly that pits a club likely to generate €500m next season against one likely to generate £5m. It is a financial mismatch of surreal proportions but it is nothing Real Madrid are not used to in La Liga.

While they and Barcelona come first and third either side of Manchester United in Forbes’ latest football rich list the rest of Spain is weighed down by a now completely unsustainable debt of €4,100m (£3,532m) and a talent drain that makes the new Manchester City striker Alvaro Negredo the 24th player to leave La Liga this summer.

Twelve of those 24 departing players have moved to the Premier League and there are now 34 Spaniards playing in England. Back in Spain, the national team coach Vicente del Bosque’s hometown club Salamanca has already gone bust and Andres Iniesta paid €240,000 to save his former club Albacete from a similar fate.

The two television companies who share the rights to show La Liga matches are both losing subscribers at an alarming rate and one is pushing for the first clasico of the season to kick off at midday as they try to get a better foothold in the Asian market.

Mid- and lower-table Premier League clubs are receiving a sizeable share of the new three-year £5.5bn TV rights deal and many have decided to buy Spanish but in Spain only the four clubs who have qualified for the Champions League have not had to cut their budgets drastically, with an overall decrease of 14 per cent on last season. Eight of the 10 sides who trailed the top two in last season’s final table have already had to sell their best player.

Atletico Madrid finished third but have a debt of around €180m. They sold Radamel Falcao to Monaco for €60m but will see a fraction of the money because they only part-owned him and have had to reduce their tax bill first before spending.

They had looked at the option of buying Negredo with the help of sports investment company the Doyen Group but as soon as Manchester City entered the race they had to look elsewhere, signing David Villa – a quality alternative but four years older.

Investment group participation, banned outside of Spain, is being encouraged because it is seen as one of the only viable ways of meeting the Secretary of State for Sport Miguel Cardenal’s demand for €1,000m to be wiped off the top two division’s debt over the next three years.

Finishing fifth last season were Valencia, who owe in excess of €300m – around the same as Real Madrid and Barcelona but with well below half their income. They wanted to sign Iago Aspas this summer but had no chance as soon as Liverpool stepped in.

Sixth-placed Malaga are in the hands of Sheikh Abdullah al-Thani. He spent €40m on new signings when he arrived in 2011, promising to build a new training complex. But the grass grows high on the proposed site, Malaga are banned from European football and the best players are sold off while others seek legal advice over unpaid wages.

Of the 24 clubs who have entered administration in the top two divisions in recent seasons, seventh-placed Betis are one of those now out. But they are still restricted to signings such as Cedric Mabwati from second division Numancia, whom they bought for the price of a cup of coffee – the 21-year-old from Congo had his buyout clause set at a symbolic €1.20.

Sevilla, having sold stars Negredo and Jesus Navas, will join Betis in the Europa League next season but only because Rayo Vallecano, who finished above them, were not permitted a Uefa licence because of their finances.

Further down the league, relegated Deportivo owe €156m and face the threat of extinction, as do 100-year-old Racing Santander, who fell victim to Ali Syed, the businessman who was blocked from buying Blackburn Rovers in 2010.

Amid all the chaos Barcelona and Madrid still take 50 per cent of the television money at around €140m a year but the two pay-per-view television channels which share broadcasting rights are losing subscribers to the point where there is little hope that national television revenues will jump to bumper Premier League levels any time soon.

Digital+ admits it has lost 15 per cent of subscribers in the last year and Mediapro, which has just closed down one of its spin-off channels, Marca TV, is 25 per cent down in the last two years. Cardenal wants television revenue negotiated jointly by all clubs from 2014 and paid through a League/Government body with the power to ensure state creditors are paid first –football’s current tax debt is €663m.

With domestic demand deflated, the new League president Javier Tebas, who has at least managed to sign a three-year sponsorship deal for the League with the bank BBVA worth €70m, wants to concentrate on promoting La Liga to Asia and the US, and a lunchtime kick-off for that first clasico of the season would help the cause. According to Deloitte, the Premier League made €2,900m in the 2011-12 season while La Liga made just €1,800m.

The league’s big two players have also seen their privileges reduced in the new economic climate. As reported by The Independent in April, the European Commission is investigating how Real Madrid received a piece of land worth €421,000 in 1998 from the city council as part of a land swap deal, and then used that same piece of land in 2011 in another land swap, with it revalued at €22.7m – a 5,400 per cent price increase that potentially constitutes illegal state aid.

The Beckham Law that once helped attract foreign stars as it put them in a lower tax bracket has gone, and banks no longer lend clubs money – Madrid were lent €150m in 2008 when they spent €250m on new players. These are changes that have made the purchase of Gareth Bale beyond the club’s reach this summer.

The financial crisis has its benefits for the national side, with so many players getting experience in other leagues. Only one player in Spain’s recent Confederations Cup squad – Roberto Soldado – does not either play for one of the country’s big two teams or for a side outside of Spain and Chelsea’s Cesar Azpilicueta admits: “We go abroad and learn new things and, as a consequence, there is really strong diversity in the squad.”

Neither is the exodus affecting the number of Spanish players in La Liga. While last season the Premier League’s top four clubs used only 29 English players, in Spain the number stood at 60 and the percentage of national players in La Liga has stayed at over 60.

Departing players’ places are often taken by young Spaniards produced by poorer clubs with no alternative but to develop their own talent – Sevilla signed 19-year-old winger Jairo Samperio from Racing Santander after selling Navas.

All of which is good news for Del Bosque. Until he remembers that his hometown team Salamanca – a club about the size of Bournemouth – went out of business this summer, and that without massive cutbacks throughout the league for the foreseeable future others will follow.

Dnmac4 wrote:In Germany Bayern can buy anyone they want (see the Gotze and Lewandowski Fiasco) and these rules apply to all of Europe as well.  They only players these teams can't buy are on one of the other super rich teams or a team will wait till the last year in there players contract to offload them.

rwo power wrote:

Dnmac4 wrote:In Germany Bayern can buy anyone they want (see the Gotze and Lewandowski Fiasco) and these rules apply to all of Europe as well.  They only players these teams can't buy are on one of the other super rich teams or a team will wait till the last year in there players contract to offload them.

Last I checked, Lewandowski is still playing for Dortmund. And Götze - well, if Dortmund agree to put in a release clause in his contract, then they do get quite a lot of money for him - and as you might have noticed, they didn't exactly buy shrubs themselves either.

rwo power wrote:Well, on the other hand, Nuri Sahin is back at Dortmund now, and interestingly Shinji Kagawa ist talking about wanting to return, too. So the scales are probably shifting somewhat. ^^

Dnmac4 wrote:Unfortunately you know how the story goes.  If you keep repeating this cycle you get further and further away from a league title and the CL title.  There actually is a big similarity between the two clubs.

juventus101 wrote:I didn't read the article, but basing my opinion on the title alone I would say yes they are in trouble. Barcelona are nowhere close to what they were a few years back and Neymar I doubt will change that. Real Madrid could be stronger than last year but two years ago was really their best chance theyll have for a while and they blew it. I also think Atletico will have a noticeable drop. Meanwhile, Milan is strengthening back into a powerhouse, Juve is already a powerhouse and is only getting stronger, and Napoli and Fiorentina are also getting stronger. Bayern is the best team in the world and has only gotten stronger since last season, and Dortmund seem to still be on the same level they were last season, with a legitimate argument for being the 2nd best in the world. Then Schalke has also strengthened. United and Arsenal have stayed the same personell-wise pretty much but are already very strong, and only time will tell but Chelsea and City have also seemed to have strengthened. Basically, all the top teams in the world have pretty much improved on last season except Barcelona and Real Madrid. Maybe its just me but that's what I think.

rwo power wrote:@dnmac4

Well, I think it is a fallacity to equal buying expensive big names with an instant strengthening of a team. Let's take a look at Schalke - they got some players that are not big international household names or multimillion Euro commodities, but I think they have still strengthened their team considerably when compared with last season.

If you buy big stars, it is not said they will yield the desired effects, or how would you look at ManCity's European runs compared to the money they put in? This is especially fascinating when you compare that with Dortmund who are the opposite blueprint. Yes, Dortmund failed in the EL in 2010/11 and the CL in 2011/12, but they won the BL against the BL juggernaut and in 2012/13 they were both BL and CL runners up with a fraction of the investment of clubs like ManCity or the like.

rwo power wrote:Actually you underestimate that BL fans prefer homegrown players quite a bit. If you look at the German forums, you'd see that quite a lot of people are very critical about the Thiago signing as this might mean that one or the other German player could get ousted. It is understandable that foreigners who support some team wouldn't care about that, but the German teams usually have quite a huge local support, and these would rather see some local boy in their team than more foreigners. For that you have also to take into account that the BL clubs are mostly fan-owned.

For German teams it is usually very important to have a big local face for the team - that's why the Schalke fans are still not over Manuel Neuer defecting to Bayern or the Dortmund fans about Mario Götze for the same transgression.

As for 1 star player vs 3 good players - well, IMO this is a risky trade. If the star player gets injured and there is no depth, then this can very well be a shot in your own knee.

juventus101 wrote:Barca bought Neymar and Real Madrid bought Iago and Illaramendi. Illaramendi was a good buy for Real Madrid but is not really gonna improve the squad much if at all. Neymar and Iago are awesome buys but completely unneeded. Were talking about two teams that break goalscoring records season by season. They don't have problems creating or scoring chances. Madrid in my opinion need a change of system and some players to fit that system which is why I said Illaramendi was a good buy even if quality wise he wont improve the team from what they had before. Barcelona need a top class centerback and a fullback and an eventual Xavi replacement. All of which were not addressed. Neymars not gonna stop top class attacks from scoring on Barca, and when they come up against other top teams such as Bayern and Madrid recently, its not as simple as scoring more than the other team. You need a defense.

And no of course I did not say Schalke and Milan for example are as good as Barca or Madrid, that would be ridiculous. I also didn't mean that Santana to Schalke for example was bigger than Neymar to Barca. That again would be ridiculous. But they addressed their needs better than Madrid and especially Barca has.

And about Atletico, Villa hasn't been the lone striker relied on for goals up front since the 2010 World Cup. That was 3 years ago, before (I believe multiple) surgery, and even then he had players like Iniesta, Silva, Xavi, etc supporting him. Here he wont have that. Not saying he needs that because he showed back on his days at Valencia that he can carry a team (even he had Silva and Mata there too but Villa was among the best players in the world back then), but hes not what he was, which is normal for when players get older. To think at his age and condition he could carry a team like a prime Falcao (who is also better suited to Atleticos style) is a bit farfetched.

Dnmac4 wrote:It doesn't matter what the fans prefer as obviously Bayern could care less.  They went out and spent big money on big name players and were rewarded for it.  Plain and simple.  People can be critical about the Thiago signing all they want, if he turns out to be world class they will shut there mouths pretty quickly.  I don't hear fans booing Neuer anymore.

Dnmac4 wrote:The fact is of course Bayern want German players, they produce some of the best talent in the world, BUT they want to have the best team in the world so they go out and have spent a massive amount of money on players from all over the world.  They really don't care where they buy there players as they know they will always get whatever German player they want no matter what is going on in the league (see Gotze, Neuer, Lewandowski).  People get mad at Madrid and Barca for pillaging the rest of the league for the best players, Bayern has been doing it for just as long.

Dnmac4 wrote:And Spanish teams have just as many local players in there teams as German teams.  That isn't something special or important only in the German league.

Hell Barca can field a team of all youth products and beat most teams in La Liga.  Bilbao only takes players from there region on there team.  Lower level Spanish teams are almost all Spanish.  So I mean I don't know why you think that Germans wanting German players is any more relevant then Spanish people wanting Spanish players.  

Dnmac4 wrote:And as far as trading 1 world class player for 3 good players, if you run your team and make moves thinking every player is going to get hurt you will never have the guts to make the moves needed to be great.  Sure Neymar can get hurt, but so could all 3 other players.

Dnmac4 wrote:If you keep trading world class players for a couple decent to good players that is pretty much the best way to take your team from the cusp of greatness to just being glad to qualify for the champions league.

Dnmac4 wrote:There is a reason Barca, Madrid and Bayern have all won there leagues in the past 3 years and have all been in the final 4 of the champions league for the past 3 years in a row.  They have the most world class players.  It's not a conspiracy or something that's difficult to figure out.  They don't settle for a couple decent players they go out and get the best players.