Spaniards reducing debt thanks to Brussels

The European Parliament addressed the growing debts of Spanish clubs two years ago. Since then, they have been reduced by more than half.

“It’s unfair to other companies in the country and to European football clubs,” Spanish MEP Willy Meyer said two years ago in response to the mounting debts of Spanish teams. At that time, tax and social security liabilities to the state exceeded 650 million euros. In addition, most clubs were kept afloat by loans from Spanish banks — the same banks that received financial assistance from the eurozone bailout fund in 2013.

But after Brussels also began criticising the Spanish government’s leniency toward the clubs, a radical change followed. Secretary of State for Sport Miguel Cardenal stated that in less than three years, clubs managed to reduce their debts by more than half to the current 313 million euros. “The overall assessment is positive. We are very satisfied with La Liga’s work and with the results in debt reduction and the financial health of football,” Cardenal said. The biggest debtors are reportedly a trio of top-division clubs — Deportivo La Coruña, Atlético Madrid, and Espanyol Barcelona.

Tougher rules and penalties
The fact that the gradual recovery of clubs from the Iberian Peninsula came only after the issue reached Brussels was confirmed to the Economic Daily by Spanish sports lawyer Jonás Vallina. “The main reasons for the gradual recovery of the clubs are a tougher approach from the tax authorities and the introduction of transparency into the overall running of the clubs,” Vallina said.

The league’s governing body, officially called the Liga de Fútbol Profesional, now controls club budgets and works with them to plan how much they can spend on player transfers and salaries. The clear aim of this measure is to prevent uncontrolled indebtedness such as that seen in Spanish football at the end of the last decade. Evidence of stricter rules toward poorly managed clubs came with the first penalties, handed out in the summer to two teams. Elche was relegated from the first to the second division due to debt, despite finishing second in the top league last season. Sporting Gijón, meanwhile, was banned from signing players for two transfer windows. “The positive trend in debt reduction and the tightening of rules should be appreciated. If they continue like this, they will soon be debt-free,” sports analyst and football agent Jozef Tokos told the Economic Daily.

Clear-out in Madrid
At present, all Spanish clubs, except Real Madrid and Barcelona, must tighten their belts and forget about big-money signings of star players. In fact, to maintain balanced finances, they have to sell. “Atlético Madrid won the league title last year and played in the Champions League final. But it does not have a large enough budget to keep its best players. In addition, it is still paying off its tax debt,” said Jozef Tokos. Just this summer, Atlético lost five regular starters — Turan, Mandžukić, Alderweireld, Suárez, and Jiménez. Altogether, the club earned 104 million euros from their transfers — the second-highest amount among all European teams in the summer transfer window.