On-field success masks financial crisis in Spain

Spain may be world beaters on the football pitch but this weekend’s strike shutdown is a further indication of the financial malaise which is affecting its clubs.

All had been set for the new season to kick off on schedule, but a dispute between the players’ union (AFE) and the Spanish league (LFP), principally over increasing a fund to act as insurance if clubs fail to meet players’ wages, has led the AFE to call a strike for the first two weeks of the season.

The AFE would be happy if the fund was raised by 2.5m euros each year from the 40m euros being offered up to the 2014-15 season, but this has been opposed by clubs, particularly those who feel the problem has been caused by the poor financing of their rivals.

The present football structure in Spain is close to bankruptcy with an estimated total debt of 3.5 billion euros, although only 1.5 per cent of this is in players’ wages.

Simply, the amount that clubs are spending is more than their income and there has been no independent regulatory body to prevent this from getting out of control.

While Spain may be world and European champions as well as boasting two of the richest clubs in Barcelona and Real Madrid they are now paying the price for financial mismanagement.

Newly promoted Real Betis owe the most in unpaid salaries with 20m euros, and while most clubs continue to train this weekend, the Seville club’s players are refusing to train from Friday through to next Tuesday.

Next come Zaragoza and Racing Santander, who owe 13m euros and 8m euros respectively.

In April, Spain’s clubs called a strike in a row over a law which says that one top-flight game has to be broadcast on free-to-air television every weekend, but this time the problem is a different one entirely, and the battle is now on to find a compromise that will enable the second round of games to go ahead.

It is a poor image to send around the world and with football such a big industry its affects are far reaching.

While discussions are also underway to fix a new date for this weekend’s round of games, a crowded calendar in a season which will end at Euro 2012 makes it possible that they may not go ahead at all.

“Some are saying that this is a strike and that these matches will not take place which would have a big impact on the league as three points, which could be vital, would be lost,” Jose Maria Gay, football finance specialist at Barcelona University, told AFP.

“It is a crisis and if there are no games then those involved directly and indirectly like ticket sellers, people arranging transport, bars and restaurants, stall sellers etc., will all lose out.

“If the league generates 1.6 billion euros a season then it will lose proportionately around 44m euros by not having this weekend of football.”

A great percentage of this money comes from television contracts and in Spain it will be Canal+ who will be most affected as they would have offered nine of the ten matches this weekend in the Primera Liga.

While there is general support for the players from fans and the media, Gay believes that the strike could have implications outside of football.

“What does this say about Spain economically as a whole if in football the World Cup winners in South Africa are in so much debt. The bank BBVA also will not be happy at their image either as league sponsors,” he said.