As Spain’s government grapples with its own yawning budget deficit, the finances of the country’s top soccer clubs are continuing to spiral out of control, a study showed on Tuesday.
The 20 La Liga clubs had combined debts of 3.53 billion euros (US$4.4 billion) in 2008-2009, up from 3.49 billion euros the previous season, according to the new study by University of Barcelona professor Jose Maria Gay.
Revenue growth more than halved to a tepid 4 percent, from 10 percent in the 2007-2008 campaign, and operating costs rose to 1.7 billion euros, outstripping income of 1.46 billion euros by 249 million, the study showed.
Only La Liga giants Real Madrid and Barcelona, the world’s two richest clubs, and lowly Numancia, who were relegated, made an operating profit.
Labor costs accounted for a whopping 85 percent of operating income.
“Let’s not kid ourselves, Spanish football is in a very difficult situation, like our economy ... You can’t spend more than you earn. This is the fundamental rule for economic survival,” Gay wrote.
Wealthy Real and Barca dominate La Liga because they negotiate their own television deals, raking in half of their 560 million euro income from audiovisual rights last season.
Gay suggested this would have to change if the league wanted to prevent financial meltdown and avoid turning into a “Scottish-style” competition where two teams — Celtic and Rangers — dominated the sporting and economic arenas.
Champions Barca compiled a record 99 points this season, while Real, who spent 250 million euros on players before the start of the campaign, were second on 96 with Valencia a distant 25 points further back in third.
“Who can win the league? The answer is obvious: Barca or Madrid. Madrid or Barca. Nobody else ... Maybe now is the right time to renegotiate the rules of the economic game between all the protagonists,” Gay said.
Real and Barca have come under pressure from poorer clubs to relinquish their stranglehold over TV cash and adopt the system used in most rival European leagues where money is shared between all participating clubs.
The two clubs argue that losing TV money would make them less competitive in Europe as they would be unable to buy the best players and pay top wages.
“Barca and Madrid will have to make an effort, sacrificing today so that the league can flourish ... One step back, several forward. If this does not happen, the league will be in its death throes,” Gay said.
He noted that one of the main reasons for the dire finances of Spanish clubs was the sky-high cost of labor, noting that in many, including Sevilla, Atletico Madrid and Valencia, it was significantly greater than operating income.
“This means the economic model is unsustainable and they are often forced to fall back on extraordinary revenue to wipe out their deficits,” Gay wrote.
“Like the Spanish state, soccer needs to make drastic spending cuts, especially in wages ... And this means that everyone has to tighten their belts,” he added.
Gay said Atletico Madrid, Villarreal, Almeria, Racing Santander, Sporting Gijon and Recreativo Huelva had not filed their accounts for the year ending June 30, 2009 with the official registry in time to be included in the latest study. For those clubs, the previous year’s accounts were used.
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