Top flight Spanish football clubs are plagued with debt problems. Barcelona and Real Madrid account for €1.2bn of the €3.5bn debt, although they also ttake in half of the €600m annual television revenue. After the top two, Valencia and Atletico Madrid are the the clubs with the most debt.
Top flight Spanish football clubs are plagued with debt problems. Barcelona and Real Madrid account for €1.2bn of the €3.5bn debt, although they also ttake in half of the €600m annual television revenue. After the top two, Valencia and Atletico Madrid are the the clubs with the most debt.
Of the teams promoted to La Liga this season, Real Betis, Rayo Vallencano and Granada are all in administration. Real Mallorca went into administration last season and were banned from playing in the Europe League. Real Zaragoza applied for voluntary administration last month, whilst Racing Santander are struggling to pay off their debts.
There is a lot of talk about Premier League debts, but this is a much more serious overall situation, particularly when one considers the state of the Spanish economy. Admittedly the public debt is a smaller proportion of GDP than in other Southern European countries such as Greece, Italy and Portugal.
However, regional banks have been in trouble and the country’s construction bubble burst leaving unsold and half completed apartments and many construction workers adding to already high structural employment. Spain could be hit hard by any contagion effect from a Greek default and already indebted football clubs could be flattened by the financial tsunami.
Against this background, La Liga has said that it will create a commission to monitor and control club finances. Of course, it is one thing to set up such a body and another thing for it actually to take any effective action. La Liga says that it will dock points or even withdraw licenses from clubs that do not fulfil its criteria, but as the English saying goes, the proof of the pudding is in the eating. Kicking a team out of La Liga would create a storm in a country which has strong regional identities.
According to the latest Deloitte football finance report, La Liga’s revenues grew by 8 per cent to €1.622m in 2009-10, the highest relative and absolute growth of any of the ‘big five’ leagues. However, much of the growth was driven by Real Madrid and Barcelona whose collective revenues increased by €69m.