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Moneyball

30 May 2014 By Fiona Maharg-Bravo

Spanish football needs a financial bootcamp. Spain enter next month’s World Cup as defending titleholders and Real Madrid just beat their cross-town rivals Atletico to become European champions. Yet the domestic game is far less robust.

Real Madrid and Barcelona are Europe’s top-selling sides, each making annual revenue of more than 480 million euros, according to Deloitte. Meanwhile, the rest of La Liga is drowning in debt racked up during the boom times, when clubs borrowed against stadiums and training grounds. League-wide borrowings are more than 3.2 billion euros, reckons Jose Maria Gay, a professor at the University of Barcelona. Some teams have gone bust.

The clubs owe nearly 600 million euros in back taxes. So the government is finally taking a grip. Quarterly budget controls mean clubs can’t spend more than they earn buying players. Clubs must now pay player income taxes on time. Weaker clubs have cut wages and sold players.

Revenue needs to increase too. A new law would ensure broadcasting deals are negotiated collectively, as happens elsewhere in Europe. The aim is to increase overseas income. A more even distribution would also help. Real Madrid and Barca now take nearly half of all TV revenue, leaving the other 18 clubs to split the rest.

Fresh capital would also be useful. Fans might pitch in, as they did in Real Oviedo. But money is tight, with national unemployment at 26 percent. So clubs should work to attract foreign investment. There are encouraging signs. Peter Lim, a Singapore tycoon, is moving to take control of Valencia. Latin American investors, a Spanish-speaking and football-loving bunch, would be natural buyers too.

Despite the financial gap, the truism that Spanish football is a boring duopoly is not quite true. Several sides make it to European contests. And league winner Atletico has emerged as a third force despite fragile finances. In fact, competition within La Liga is no more unequal than in other big European leagues, according to an analysis by Kiko Llaneras, an academic and writer. Still, a more disputed Liga would boost attendance and merchandise figures. That’s a goal worth chasing.

 

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