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Paying a debt: Cash woes take shine off Spanish Premier League

Rags and Riches: la liga clubs run up massive debts totalling more than four billion euros ; but teams show no sign of frugality

Written by Reuters | Madrid | Published:July 1, 2013 1:35 am

Right now,Xavi and Andrés Iniesta of Barcelona and Iker Casillas and Sergio Ramos of Real Madrid combine the talents of the big two clubs on the Spanish national side to show the world how soccer should be played. With the conclusion of the Confederations Cup,Brazil’s new superstar,Neymar,will travel to Barcelona,adding $50 million or so to the cost of the team.

And,season after season,politicians and mathematicians spend their summer months telling the team owners,the players and La Liga about what needs to happen to spread the riches around,to impose equality when it comes to both income and opportunity. Miguel Cardenal,the president of the Spanish Sports Council,figured that the collective debt of all the clubs is now beyond euro 4 billion. Of that,he said,euro 670 million,or $874 million,is owed to the tax authority.

It is easy to imagine how those debts owed may enrage the Spanish people and their politicians. More than a quarter of Spain is unemployed,with the rate dramatically higher among young people. Every summer,they are graduating with little or no prospects of getting jobs. On the other side are extravagantly rich players and clubs that are failing to pay taxes.

On June 12,Lionel Messi was accused of using a network of offshore companies to underpay his taxes by about ¿4 million. Spain’s most coveted Argentine was named and shamed,and a little over a week ago he was summoned to appear in court over the charges.

The global media jumped on that Messi story,but comparatively little was reported when the player flew into Dakar on Thursday to lend his fame to a Qatari initiative to start giving a million nets per year to Senegalese children in regions infested with malaria. Maybe it is a romanticized view I hold of Messi,but the flight to Dakar was more than likely to be a heartfelt calling to give something to children who are far less privileged than he is. It wasn’t so long ago that he was a schoolboy whose family could ill afford the $900 or so per month to treat his growth hormone deficiency.

Barcelona paid for his treatment and gave him an education at its academy while nurturing what has turned out to be the most effective and appealing talent on earth. The vision of Messi and Neymar sharing the attacks,running onto the passes of Iniesta and Xavi,is almost beyond a price. But somebody will pay,and not just the 99,000 fans that Barcelona can count upon in the Camp Nou stadium.

Each club for itself

Television contracts and endorsement deals fund the bulk of the players’ wages,along with the fees that Barça and Real Madrid must pay to get those top players. It is the TV income that is a perennial bone of contention in Spain. In England,where the salaries are comparable to Spain,the seemingly ever-escalating global TV rights are shared among the clubs. There are 20 teams in the Premier League,and the core of the television income is split among them.

In Spain,it’s every club for itself. Barcelona and Real Madrid get ever richer,while the one thing guaranteed to get bigger every year is the debt accumulated by the other clubs that aspire to compete with them.

They do not,of course,compete. Even Atlético Madrid,which finished third in the league this spring behind the two giants,plays with a pile of debts and is helpless when the likes of Manchester City or Monaco come to buy Atlético Madrid’s star strikers,Sergio Agüero and Radamel Falcao. For years,José Maria Gay at the University of Barcelona has warned that the reckless spending was creating a bubble that was sure to burst one day.

“When people ask what clubs could be in danger of going out of existence,” Gay has said,”I reply that there are just three clubs – Barcelona,Real Madrid and Athletic Bilbao – not in some kind of danger.”

The Spanish mess is a big reason Michel Platini,head of the European soccer authority,UEFA,is pioneering his “Financial Fair Play” rule. This policy,which goes into effect next season,threatens expulsion from the Champions League or Europa League for clubs that spend more than their soccer-related income.

Out of time

Time will tell whether teams bankrolled by oligarchs or oil sheiks or investment cartels dance around the Fair Play rule. But time is not on the side of clubs like Deportivo la Coruña,Zaragoza,Racing Santander,Mallorca,even Valencia. Their existence is threatened. Cardenal,the Spanish Sports Council president,spoke of a solution as unpalatable as it appears logical.

“We have to become an exporting country,” he said. “It’s a historic change,and Spanish football has to recognize it.” It might be hard to swallow. But it is the way that previous world champions,like Brazil and Argentina,had to go.

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