Barcelona's financial turmoil threatens to spoil legacy

La Liga Consursal

In a chilling revelation, famed professor of finance, Jose Maria Gay (University of Barcelona) has published a study of the state the Spanish league is in financially. As per Gay, at the end of the 2009-11 season, Sporting Gijon, Malaga CF, Real Zaragoza, Levante UD, Real Sociedad, RCD Mallorca and Hercules had been declared insolvent. Malaga has since then, been taken over by Sheikh Abdullah Al Thani and do not have to worry about insolvency. Sporting Gijon, as per their latest audits have posted a profit of 2 million Euros which is commendable given the puny stature of Gijon.

Meanwhile, local businessman, Eduardo Jarque, has come forward with a proposition, acting as a mediary with funding coming from “English money”, to buy Levante for 70 million euros and eliminate the 68 million euros in debt that saddles the club. Whether this proposal is accepted remains to be seen. The club has every reason to be cautious given their dire financial state, not to mention the scary precedent set by Racing’s MIA owner Ahsan Ali Syed. Racing has asked the regional government in Cantabria and their previous ownership group to step in if current head Ahsan Aly-Syed of WGA does not meet his financial commitments (13.5 million euros owed to players and a tax debt of 9 milllion euros).

The government of Cantabria activated a bank guarantee after Ali Syed missed an installment last month as per reports. However Ali Syed said there was “no default” because the government received his payment via an escrow account. Santander’s Mayor Inigo de la Serna has said it appeared the regional government had been “politically negligent” by not checking Ali Syed’s finances before the sale. The regional administration has said that its contract with Ali Syed allows it to cancel his acquisition of Racing if he fails to meet further installments.

Real Zaragoza is the classic case of a heavily bankrupt Spanish club. The club has announced a stellar debt of 110 million Euros owing to the many sources they owe money to viz. 5 million to current players, 9 million to former players, 30 million in transfer fees and 1.5 million to the league. The current management has blamed relegation two seasons ago for the current state of the club. No one talked about mismanagement.

Coming to the three clubs that have been promoted; Betis, Rayo Vallecano and Granada are all in various stages of administration. The current list of clubs in administration is: Real Zaragoza, Rayo Vallecano, Hercules CF, Real Betis, Cadiz, Ejido, Granada, RCD Mallorca, Recreativo Huelva, Xerez & Cordoba CF. The clubs that have only recently come out of administration is this: Sporting Gijon, Albacete, Levante UD, Las Palmas, Malaga CF, Deportivo Alaves, Celta, Real Sociedad, Real Murica & Alicante. This really puts the league in a new perspective. It is a league where the first, second and third players from the Balon D’Or list play, it is a league where seven out of the top ten players in the world play.

But it is also a league with the largest number of clubs declared insolvent and undergoing administration. The farts leading the FA are not too bothered and the whimsy television rights deal is still paper talk. There are rumors that there might possibly be a strike action in the coming weeks. The old farts at the Spanish FA have declared that they will come down hard on clubs which do not pay their players. Also, players who are owed money from clubs in administration are set to get only 50% of what they are owed.

With such a grim situation all round, even if the words of the Spanish FA are merely to placate fans and players, the clubs might possibly take it more seriously and put pressure on the FA to do something about this almighty mess. Only Real Madrid, Barcelona and the noveau rich like Malaga & Getafe have reason to cheer. Meanwhile, clubs like Levante UD have taken to displaying clickable advertisements on their official website in a bid to earn more money. In case you didn’t know, the amount earned by an entity per ad click is on an average 0.5 cents. This is a sorry state of affairs indeed, and the blog is appalled as it writes this.

In other news, the Atletico Madrid management board is set to vote tonight on whether Cerezo & Miguel Angel Gil should continue with management of club. This is kind of a no brainer as far as the blog is concerned given the fact that the board of seven has three members belonging to the Gil family. So in all probability, nothing is ever going to happen at Atletico until the damn board itself is taken down.

To end on a positive note, La Liga’s new romantics, Malaga, have been able to sell 14000 season tickets the day their counters opened and have been besieged with requests from 600 new applicants. This was on the back of the news that owner Al Thani secured the contract to renovate the Marabella, a place which holds something special in the heart of most Andalucians.