The pain in Spain could really hit the game

by Gerry Farrell

FBL-ESP-LIGA-REAL_MADRID-GRANADA-20120903-110458On the surface there would seem to be quite a disparity between the Spanish economic situation and that of her football teams. Barcelona are the exemplars of modern day Total Football and beloved of sporting purists.  Real Madrid have become the first sports team to generate more than €500 million in revenue over the course of a year and apart from 20 minutes of panic in the second leg against Galatasaray are comfortably through to the semi-finals of the Champions League, Malaga were not so lucky but only for a poor offside call could have been joining them there. That is to say nothing of the exploits of the Spanish national team; the current World and European Champions who can make reasonable claims to be classed as the greatest national team in football’s rich history.

When we compare this with the economic hardships being faced by the national exchequer; Spain is in the middle of a double-dip recession, has had to face the explosion of their own prolonged property boom and has an unemployment rate of a shocking 26 per cent. Things seem far more worrying indeed for Europe’s fourth largest economy away from the football pitch.

But when Spanish football is given anything more than a casual examination the financial problems are quick to appear. Storied clubs like Deportivo la Coruna and Real Zaragoza have had to enter voluntary administration in recent years while 2003-04 Champions Valencia have been victims of the Spanish property bubble; unable to finish construction of their new stadium and unable to sell their current ground as was planned at the height of the boom, this has led to the high profile sales of players like David Villa, Jordi Alba and David Silva and their decline as realistic third force in Spain. There is also considerable ill-feeling in the league at the way that Barcelona and Real Madrid monopolise valuable TV revenue; in 2011 both clubs took around half the total pot of Spanish TV income of 600 million euros with the remaining 18 sides trying to wring out a share of the remainder.

And now to make matters worse the European Union has stepped in.  In March of this year, the E.U’s antitrust department opened an investigation in to the funding of Valencia after the Valencian regional government became guarantor over a loan of €75 million given to the club by the troubled Spanish bank Bankia. Similar accusations of illegal state aid have been levelled at the might Real Madrid, with claims that the local council have significantly overvalued development land around the Bernabeu Stadium which would be in direct contradiction of article 87 of the Treaty of the European Community and would fly in the face of UEFA Financial Fair Play regulations. There is concern at EU level that at a time when services and benefits are being cut and unemployment is rising that governments, regional or national are bailing out debt-ridden clubs to the tune of hundreds of millions. In fact Spain’s government said last year that clubs owe €745 million to the tax authorities. Bayern Munich President Uli Hoeness, seldom anything other than forthright summed up the mood of many other European clubs on the issue “We pay hundreds of millions of euros to get Spain out of the shit and then they let the clubs off their debts” (although perhaps he will revise his view if investigations into his own financial affairs proceed any further).

The involvement of the European Commission creates the very real possibility that debt-ridden Spanish clubs, regardless of their illustrious histories could face being wound-up or in Real Madrid’s case face serious sanctions. In a league where the big two sides are pulling further away from the chasing pack this raises serious question marks about the health of the game in one of Europe’s top leagues. However Spain is not alone, the EU have already commissioned an investigation into five Dutch clubs, including former European Champions PSV Eindhoven, who were in receipt of funding from local Dutch municipalities. As the investigation stated:

The Commission will investigate five measures in favour of NEC, MVV, Willem II, PSV and FC Den Bosch …These measures seem to constitute State aid in the meaning of Article 107(1) TFEU. They involve the use of public resources and they provide an advantage to entities carrying out economic activities. The measures are likely to distort competition and to affect trade between Member States. They are therefore in principle incompatible with the EU Single Market.

Basically professional football clubs were receiving benefits from indulgent local authorities which gave them unfair advantages. That preferential treatment was given.

What is clear is that clubs throughout Europe are given preferential treatment by governments and local authorities. The crucial question is how much of a problem is this, and how much support should a football club reasonably be able to expect from their local authority? While it is clear that the Spanish model of ever-escalating debt is neither sustainable, desirable or fair when basic public services are being cut surely the role of the local club as a focal point for civic pride deserves some form of support from the powers that be?

Football clubs were formed by communities, as sports clubs, charitable foundations, as scions of Church groups and they grew and grew through the decades, they stir collective local passions in a way that little else does. Alloa Athletic Chairman Mike Mulraney, speaking as part of his contribution to Daniel Gray’s excellent book Stramash described the importance of football to the town of Alloa, highlighting the fact that the majority of Britain was only aware of the town because of the soothing narration of the classified scores on a Saturday afternoon. Does local government not have a duty to care for and curate these repositories of local pride? What should be in question is the extent that governments, at national and local level support their clubs. To look at it from an Irish perspective let’s mention at the case of Shamrock Rovers whose situation is often cited as one to be copied, the definition of a model club in the League of Ireland. Rovers’ renaissance has been the product of the hard work of their 400 club members in avoiding bankruptcy but a large part of their resurgence can be traced to the relocation to their new home, Tallaght Stadium which they rent from South Dublin County Council. However this development was not without controversy, local GAA club Thomas Davis objected to the construction of a municipal ground that was not suitable for Gaelic games stating that this was preferential treatment of one sport over another, what proceeded was a long and at times bitter stand-off that ended up involving then Minister for Sport John O’Donoghue.

The move toward greater involvement between League of Ireland clubs and local authorities and/or national government would be welcomed by most teams in the country, especially if it led to a corresponding improvement in facilities, but the long and difficult path to the completion of the Tallaght Stadium shows that this is not an easy route to take. If local authorities fear EU investigation as is the case in Spain and the Netherlands, or inter-sport bickering and Ministerial involvement then perhaps they will adopt the safety first approach of many public bodies and make no investment.

The crux of the issue is that while it seems only right and fair that the EU tackle the Spanish “football bubble” and that there should be the rollout of Michel Platini’s Financial Fair Play protocols, this should be balanced with supportive local and national government particularly for smaller teams and second tier European leagues where huge TV and sponsorship revenue is not readily available. As mentioned above football clubs bring both tangible and intangible benefits to their home town or city in a way that little else can. Smaller leagues need this sort of support more than most. Football is the continents’ most popular sport so not every act of largesse from a local council should be viewed as favouritism, rather it should be seen as recognition of the value of these clubs to their local communities. I personally hope that this is borne in mind when the EU involvement is required in the game.

To finish on a positive note, a recent model of best practice seems to be Udinese’s stadium expansion plans which witness a very productive partnership between the club and the local authority, the deal has been slow to finalise because they have had to go through all the various procedures and satisfy a court ruling on a public bidding process before they could secure the stadium leasehold. The Mayor of Udine is openly supportive of the project which represents a rare good news story in Italian Stadium development. Even with the financial and political turmoil that has surrounded Italy these seems to be a partnership approach born of common sense and a keen understanding of a club’s place within a community.

Author Info

Gerry Farrell

Gerry Farrell, Dublin based football enthusiast with an interest in League of Ireland, the Irish National Team, and a bit of everything else. Bohemian in my outlook and footballing alliegiances, presenter of "The Beautiful Game" on Phoenix FM 92.5. Has nearly completed the Panini Euro 88 sticker album.

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