Spanish Football Debt

Spanish Football Debt

Racing Santander We Salute You

For those of you following La Liga from outside Spain you can be forgiven for believing that everything’s rosy on the pitches and terraces at the Bernabeu, Nou Camp, Mestalla and Vicente Calderon to name but a few. As the Spanish national team finally realised their destiny by winning the World Cup and two European Championships fans the world over were able to marvel at the wonderful talents of Iniesta, Xavi and the rest of ‘La Seleccion’. At a domestic level FC Barcelona have probably been the best team in world club football for the past decade whilst Real Madrid are the most successful club team of all time. But let’s stop there with the accolades as there’s a much darker story only just beneath the surface.

How is it that a country where outrageous levels of debt and obscene levels of unemployment is home to two of the world’s richest sporting institutions? The answer lies in looking beyond Real Madrid and Barcelona for the moment and taking a look at what happened at last month’s Copa del Rey quarter final between Racing Santander and Real Sociedad.

Racing Santander were formed in 1913 and have spent most of their existence in the top level of Spanish football. Plagued by debt in recent years they were forced into administration and suffered two successive relegations to the third tier of the national sport. In spite of their lowly position they managed to defeat top flight teams, Seville and Almeria, on their way to the quarter final of the Copa del Rey. They lost the first leg 3-1 in San Sebastian so had to overturn that two goal deficit if they were to progress to a semi final date with FC Barcelona. But the match never happened. The Real Sociedad players warmed up on one side of the pitch whilst the Racing players stood together in the centre circle and refused to play. This was their response to months of unpaid wages. The players had stated that they would take such action prior to the game unless the club’s president and his board resigned. Fans of Racing Santander applauded their team and players from teams all over the country supported their action.

Football Debt v Club Value

These are not teams in the Europa League!

This is just one example of a small club with no money. Racing Santander only made the news thanks to their stance in this particular match. In total it is estimated that the combined debt of all the clubs in La Liga amounts to approximately €4.1 billion. Interestingly Racing’s €50 million of debt pales into insignificance next to the total debt of the big clubs but the key figure here seems to be debt as a percentage of overall club value. The Forbes Rich List shows Real Madrid as the world’s richest football club. They are valued at $3.3 billion with a total debt of $165million which represents just 5% of their value. Barcelona’s accounts show debt of $156 million representing just 6% of their overall valuation of $2.6billion. So whilst the big two splash the cash on the latest superstar on their shopping list, the minions of Spanish football aren’t even getting paid for going to work.

FC Barcelona Tickets

Level Playing Fields in Madrid and Barcelona?

A number of Spanish football clubs are being investigated by the EU with regard to illegal state aid in the form of favourable loans, dubious land deals and favourable tax regulations which could be worth several billion Euros. The national government itself has been accused of apparent negligence in collecting the tax debts of numerous football clubs which have spiraled to around €663 million. A fairly significant figure when you consider that Spain is the recipient of a European Union bailout worth around €100 billion!

Joaquin Almunia, an Athletic Bilbao fan, is the competition commissioner at the European Union. He is responsible for ensuring that businesses across the whole EU face fair competition and that includes the football industry. He is leading this investigation into Spain’s football clubs and clearly acknowledges that clubs must stand on their own two feet rather than relying on state benefits.

On tax issues alone it seems that Atletico Madrid are the worst offenders with tax debt in the region of €100 million. But this story gets a lot worse. That tax debt does not even include four clubs which are classed as ‘member-owned football clubs’. This means the government consider them as ‘not-for-profit organisations’ which provides them with enormous tax advantages. So who are the privileged few? First of all there’s Osasuna, a relatively small club from Pamplona, then there’s Athletic Bilbao who were one of the founding members of the Spanish league back in 1929. And finally there are two other clubs owned by their ‘socios’ that you might have heard of … Real Madrid and FC Barcelona!

The combined value of these two clubs according to Forbes is $5.9 billion making them two of the world’s richest sports clubs ahead of even the New York Yankees and Dallas Cowboys yet it seems they don’t need to pay the same taxes as everybody else. Youth unemployment in Spain is 50%, the number of homeless people in Madrid has reached frightening proportions and queues outside soup kitchens in the capital is a sharp reminder that this country is virtually on its knees. Yet just a couple of kilometres up Paseo de la Castellana all seems well at the Santiago Bernabeu stadium unless you’re Cristiano Ronaldo who’s still upset that all the referees are against him! The Spanish Government refuses to disclose how much the four privileged clubs owe to the national Treasury.

Football fans I’ve spoken to throughout Europe often complement Spain’s big two football clubs for this member owned business model. In theory there’s a lot to be said for it on a social level but on the pitch it generates grossly unfair competition as only four clubs are granted these favourable financial conditions. No doubt fans in England could point out that this is preferable on a sporting level to having billionaire owners who buy success with their vast fortunes.

Such favourable tax advantages provide a rather worrying reminder of 1950s Spain under the dictatorship of General Franco when football was seen as a way of pacifying the masses. Such was the popularity of the sport that the regime saw the advantages of providing as much coverage of football as possible as way of minimising social unrest and political activity:

Most Spanish fans treated futbol as a religion, and this fanaticism was reflected in the existence of three daily football papers in Barcelona and two each in Bilbao and Madrid. These papers, and the prospect of the next match, helped the worker to get through his daily low paid drudgery. Without the game, and the other manifestations of this ‘culture of evasion’ which occupied the free time of the workers, such as radio and TV serials, the cinema and photo-novels, Franco would almost certainly have had to face an angrier and more politically mobilised working-class in the 1950s and 1960s.

The above quote comes from Duncan Shaw who describes this policy in his excellent article entitled The Politics of ‘Futbol’

This investigation into unfair dealings in Spanish football goes beyond these huge tax issues. Real Madrid’s training ground used to be at Ciudad Deportiva just a stone’s throw from their stadium. Back in 1998 this land was valued at €595,000 when the club bought it from the City Council of Madrid. In 2011 a property swap of this prime real estate (also not in the Europa League!) allowed them to sell this same land back to the Council for €22.7 million. Three football teams in La Comunidad Valenciana (Valencia, Hercules and Elche) are also under investigation with regard to state loans which were used to bolster their dwindling finances. Even the TV deals in Spain favour the ‘Big Two’ who get about 42% of the revenue whilst the rest is split amongst the other 18 clubs in La Liga. No wonder the league’s a two horse race!

Such is the importance of the Spanish football and tax issue that it is expected that the case will be referred to the European Court of Justice. The government has announced that from next season the tax authorities will be taking 35% of football TV revenue at source. Whether the football powers that be will permit this remains to be seen. And finally, back in Santander the club were fined €3,006 for refusing to play their cup match and have been banned from next season’s competition. FC Barcelona beat Real Sociedad in the semi final and now face Real Madrid in the final!

Share With Your Friends

You Might Also Like

Close up View of Montserrat

How to Get to Montserrat from Barcelona

The sacred Catalan monastery of Montserrat is located on top of a range of craggy mountains some 60km north-west of Barcelona. It is one of Spain’s most important pilgrimage sites where more than two million annual visitors come to visit ‘La Moreneta’. This is a small statue of the Virgin of Montserrat which stands high ... Read more

Dalí Museum in Figueres

How to Get to the Dalí Museum in Figueres from Barcelona

Spanish surrealist painter, Salvador Domingo Felipe Jacinto Dali y Domenech made a dramatic impact on the world with his often bizarre, always striking and beautiful artistic images. Best known for his brilliant “The Persistence of Memory” where “melting” clocks are draped across a barren landscape, Dali’s work was always creative and imaginative. As for entertaining ... Read more

Fatima Excursion from Lisbon

Shore Excursions to Fatima from Lisbon Cruise Port

The town of Fatima in Portugal is most famous as the site where the Blessed Virgin Mary, or Our Lady of the Rosary, as she is known in the country, was said to have appeared as a vision to three shepherd children in 1917. Lucia Santos and her cousins Jacinta and Francisco Marta had these ... Read more

15 thoughts on “Spanish Football Debt”

  1. Spains regional and national politicians may feel football clubs like Real Madrid are more needy than the homeless unemployed and get away with that. But we see the popular protests against austerity and the mad anti-Keynesian pressure on the economy. But it should be a matter at European level for the FIFA Financial Fair play. Because nothing gets done, we all pay escalating admission fees, while owners engage in inflationary bidding up of prices and wages for the best players, and many clubs that don’t win go into administration. If they are bailed out in Spain, that is illegal state aid. The UEFA/FIFA are themselves corrupt in the allocation of World Cup venues, are not elected, and introduce rules during World Cups that have primacy over local laws. Bidding countries that object cannot win the World Cup (or Olympics either). The real problem is that the football tail is wagging the democracy dog.

    The Real Madrid car park sale stank at the time, and it still does. But there are also questions about the links between the cajas, politics, the elite owners like Jesus Gil that ran football clubs, and the state subsidies and backhanders to Spain’s football teams, that should have them evicted from European competitions. I was surprised by how much money went into little Vilanova in the 1990’s and how indebted the Valencia region was – yet its team had the excellent manager Benitez and competed as the third best teams. Nowadays nobody apart from Bayern and Abramovich’s Chelsea can really compete with Real and Barcelona at European level. It is also odd how often their games are swung by blatant refereeing decisions in their favour – but the big team bias in refereeing performances is also evident in the UK.

    Football needs to clean up its act. Its beginning to smell rather unappealing. The already big do not need favouring more with bribes, tax tricks, pressure on refereeing appointments, and seedings of groups at the European Championship early stages. Biggest clubs buy the biggest stars, and turn games into processions. Its not sport watching Real beat Valadolid 6-0. In UK, Chelsea’s opponents actually started resting their best players to be ready for more even matches where they had a chance of winning. This isn’t sport.

    So any evidence of corruption and illegal state aid should be rigorously punished. If they are guilty, they should forfeit places in European Competitions. Will the corrupt rulers allow this? I think we are more likely to see flying pigs, but hope it will happen.

    Reply
  2. Not only in Madrid. Here in my local village there are families with young children where there are no wage earners and no state financial aid. They are having to rely on food banks and charities to keep them alive!
    We, as local Masons, are doing all we can to help support the locals without appearing to be benefactors by donating dried goods and tinned foods, which are then distributed to the local needy. The Ayuntamineto supplies a list of the needy people, but does NOTHING to help to feed them, rather passing the responsibility to people who DO care and do their best to help the local community.
    It is scandalous that the Government help football clubs, yet deny the genuinely needy the help they so desperately need. I would be ashamed to be part of the Spanish Government.

    Reply
  3. There is no doubt that people take precedence over frivolities such as sporting organizations. They must be subject to the same market forces that affect any business and have an even greater effect on individuals. People do not choose to live in poverty but their government can choose to help them to help themselves out of poverty by subsidizing enterprises that will allow them to work and support themselves, pay taxes and contribute to the well being and self esteem of their country. It is time that the Spanish government started to listen to the Spanish people and respond to their wishes, not those of a few vested interests.

    Reply
    • The sooner the UK waves goodbye to the corrupt EU the better! It’s a crying shame what is happening in Spain, they should never have joined, and if they have to leave it will be a blessing in disguise.

      Reply
  4. In Spain, as everywhere else, the People get the government they deserve. If you put up with corruption, if you beg the governement for a living instead of going out and earning it, YOU are responsible for your situation. It’s time for the People take the responsibility of controlling their governemnts. Darwin was right.

    Reply
    • Very well put. I have spent a great deal of time in Spain over the last ten years and have to agree. Spain’s social provision FOR SOME is breaking the Country. They don’t appear to appreciate you cannot take money out of any system, if you do not put money in to start with. Tax avoidance by many Spaniards is treated as a sport, well guess what the coffers are well and truly empty!

      Reply
  5. Very interesting reading, here in the UK we also have our football bias but it is not the UK coalition government that are condoning it they are to busy looking after their toff friends and pushing the poor into further poverty. Its the sugar daddies and sugar Sheiks that pour their millions into what were ordinary football clubs that ruins any competitiveness as in Spain.

    Reply
  6. This is a dreadful situation which reflects badly on the moral ethics of the people who influence and control world sport. It is so sad that corruption, greed and political expediency taint what should be honest and pleasurable physical activities which give undoubted pleasure to millions across the globe. Whatever happened to honesty and integrity ? Sad, indeed, but it is a world-wide problem and not just restricted to Spain.

    Reply
  7. Hi Gerry,

    It is really disappointing to see the terrible problems in Spain – as well as in many other countries where the economy is moving away from workers to automation and self directing devices-machines. Many years ago Henry Ford took Walter Reuther – president of the auto workers union for a stroll through the factory. Proudly he pointed out all the robots making the autos – “yes indeed- 24 hours a day- 7 days a week- no overtime- no vacations- just production” – to which Reuther responded – “wonderful devices BUT THEY DON’T DRIVE CARS!!!!!”

    Now this problem of super production – fewer workers – and of course – fewer customers.

    This is now the problem for too many countries and worse for countries where the biggest industry is tourism – which doesn’t make anything and is the cheapest labor. Countries need to be able to provide jobs and other life benefits for its citizens – and buy fewer warplanes and warships.

    Que lastima –

    Harold

    Reply
  8. Thanks for raising this Gerry,

    Sometimes, we forget that there are people suffering misfortune and poverty when we set off on holiday to see the sights and indulge ourselves in what are relative luxuries.

    It is a serious issue and when we were visiting friends in Madrid we saw several instances of real poverty. Normally I am careful of giving to people on the street but sometimes there is no doubt that an individual is in dire straits and I wondered, as you have, why the Spanish government can provide financial support for something that is already well patronized when there are people in desperate poverty. However, it isn’t just Madrid.

    When we went to visit my sister near Mazarrón we got to know a family is a state of real poverty, living rough with children and after seeing how and where they lived, we had no reservations buying them food and some cheap sundries from the Chinese market. These are not scroungers or rogues – they are ordinary people struggling with hard times and having mentioned it to a few of our neighbours, I am happy to hear that they too put a bit extra in their shopping baskets and show they care.

    I shall be posting something on Facebook and blessings on you and yours for the thought.

    All the best,

    Paul

    Reply
    • Thanks Paul – it is indeed shocking to see the dire straits that so many people in Spain currently find themselves. And as you so rightly point out, these people are not scroungers, the state that the Spanish economy is in has transpired against them leaving them with no job, no income and little hope.

      Reply
  9. I have just come back from Tenerife and heard first hand how hard it is for the non workers there to feed their families. Again I heard that the percentage of unemployment in the islands is less than in main land Spain. The tourist sector in Tenerife is actively promoting the islands to attract cruise companies to bring more of their cruise liners to the Islands. It was evident that this scheme was working as throughout my stay there were always coachloads of tourists visiting and spending their money in local shops.

    Reply
  10. This is truly a world-wide phenomenon…here in the state of Louisiana college athletics are robbing resources from academics to spend on lavish spectacles (American football) to entertain the public. Much like the public displays that the Roman elite used to keep the masses entertained (Bread and Circus). The elite of the world still rule whether they be government officials, college administrators, or club owners.

    Reply

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.