No fewer than six teams in Spain’s top flight are in administration at the time of writing; Real Mallorca, Racing Santander, Real Zaragoza, Granada, Real Betis and Rayo Vallecano.
The majority of the £3 billion debt of Spain’s La Liga is held by Barcelona and Real Madrid, both crippled by debt but who continue to spend large sums of money safe in the knowledge that they can negotiate individual pay TV deals which give them a huge financial advantage of their rivals.
But just below them, the likes of Valencia have been forced to sell off their best players in recent years to compete, with David Villa and David Silva leaving last year, whilst Juan Mata looks set to depart this summer.
Atletico Madrid have long been plagued by debt, but it’s at the bottom of the league where the problem is at its worst. The attempt to spend high on wages to remain competitive in the league has led to many teams overreaching themselves in order to remain at the top level.
Some 85% of income, according to a study by a professor at Barcelona University, is accounted for by player wages, an unsustainable situation.
Without a parachute payment scheme that there is in the Premier League, teams who are relegated to the Segunda Liga face financial collapse. Real Betis still suffer the outcome of relegation in 2009, and Deportivo La Coruna have just gone down to that level with staggering debts.
“Let’s not kid ourselves, Spanish football is in a very difficult situation, like our economy,” said José Maria Gay, who wrote. “You can’t spend more than you earn. This is the fundamental rule for economic survival.”
With Barcelona and Real Madrid accounting for £1.2 billion of the debt, Spanish football has been warned against slipping into ‘an economic coma.’
Jose Luis Astiazaran has said that Spain will be bringing in new rules to monitor club finances, something which already happens in France.
“Spanish football needs to make progress towards an exemplary state of solvency,” he said.
“Among the clubs that form the LFP we currently have some dysfunctions which we have to get under control and we will make some decisions that will not be pleasant.
“It’s time to marry the sporting excellence we have achieved with financial excellence.
“Spanish soccer, and La Liga to be exact, has gained global admiration and we have to earn this distinction for economic management as well.”
After the general assembly approved the rules, Spanish clubs now have to submit various financial information and can have their licenses taken away.
It is too early to tell whether the plan will work, but if the example of France is anything to go by, it could be a crucial step towards financial sustainability. Spanish football is sleepwalking into economic despair; it now needs to take careful steps back from the edge of the cliff if it is to retain the standard it has reached.