La Liga is one of the football’s most exciting domestic leagues. So it is easy to see how the news of the indebtedness of the league in which footballing giants like Real Madrid and Barcelona play would make a football fan cringe.
According to a study carried out by Professor Jose Maria Gay of the University of Barcelona, it was revealed that La Liga’s debts have grown and at are at an all time high of €3.53 billion (£3.03 billion) this year.
The study also revealed that of the 20 clubs that play in La Liga, the top two clubs in terms of exposure and income – Real Madrid and Barcelona – and the relegated Numacia made an operating profit.
The reason for this imbalance it seems are player wages, which are said to have made up 85% of the total operating cost of the clubs. In many clubs like Valencia, Sevilla and Atlético Madrid the outgoings on wages were way higher than the income.
The issue of player wages driving clubs into debt becomes increasingly disturbing when you hear about Barcelona latest purchase of David Villa for £34.2 million and the anticipated signing of Cesc Fabregas for a similar amount, showing that the top clubs have no intention of curbing their spending.
Another fact adding to the imbalance is probably the fact that unlike English Premier League clubs who have a collective television deal with the broadcast income being divided equally among the 20 clubs depending on the number of appearances and final league position, the Spanish clubs negotiate their own media deals. This once again means that top two – Barcelona and Real Madrid get the best deals. They were able to rake in Barcelona half of their incomes from media rights.
With more income coming in from media deals and exposure, the top two have much more spending power than the rest of the league. This in turn makes it possible for them to pay whatever it takes to bring the player they want to their club, raising the wage-rate higher for the entire league and thus pushing the others further into debt. It also makes the league lopsided, as was seen this season with Barcelona beating Real Madrid to La Liga title by three points, and Valencia finishing a distant third, 28 points behind the champions.
La Liga’s problems are further highlighted by the fact that Real Mallorca, a club which only narrowly missed out on qualifying for the Champions League on the final day of the season and finished 5th in La Liga had to file for voluntary administration after failing to find buyer to take on their €85m debt.
Jose Gay who feels the current model is unsustainable warns that the league would be in “death throes”. “Barça and Madrid will have to make an effort, sacrificing today so the league can flourish”, he added.
It looks like it is time Barcelona and Real Madrid sat down and watched Spiderman, the movie… ” with great power, comes great responsibility.”
Article first published as Spanish Game in Crisis as La Liga Debts Soar on Technorati.