La Liga 2011-12: Issues and Preview

Written by Dr. Sumit Sarkar on September 14, 2011

For Spanish football it is the best of times, and it is the worst of times. Spain won the European Championship in 2008, lifted the FIFA World Cup last year, and won the UEFA U-21 and U-19 championships this year. FC Barcelona won everything in 2009 and is the reigning champions of Europe. At this very moment while Spanish football is basking in  glory, the La Liga kick off got delayed by a week due to the strike called by AFE, the players’ union, which was the result of a negotiation failure between the player’s union and the league (LFP). Different clubs of the top two divisions owed close to €65 million to almost 200 players. According to José Luis Rubiales, the president of AFE, during the 2010-11 season €52.8 million in players’ salary went unpaid and in the previous season €12 million went unpaid. The players’ union demanded a fund to protect the players against unpaid wages, particularly when clubs are in administration. LFP initially offered a fund of €10 million per annum, which does not cover even a sixth of the current unpaid salaries. Even though the league president José Luis Astiazarán thought that it is blackmailing, the players’ union was perfectly justified in its strike. Players like Puyol, Alonso, Casillas and Villa had thrown their weight behind the players’ union. AFE and LFP reached an agreement on the morning of August 25, 2011. The players’ union called off the strike after LFP promised €50 million towards unpaid wages.

Even though strikes are not unheard of in professional sports and despite the fact that a similar players’ strike loomed large and threatened the Italian football league, the news of this strike may surprise a lot of football lovers who does not closely follow the economic issues of professional football. However it is not at all surprising to someone who followed the finances of Spanish football clubs over last half a decade. The primary, but not the sole, culprit is the lopsided broadcasting revenues earned by the Spanish clubs.

In 2009-10 FC Barcelona and Real Madrid CF made €160 million and €140 million respectively from TV broadcasting rights, which were 21% and 19% of the total €850 million TV revenue of the league. The scenario did not change much in 2010-11 with these two clubs each getting approximately 20% of total TV revenue of the league. Atlético Madrid and Valencia came a distant third and fourth each making approximately 7% of the total TV revenues. Sevilla and Villareal followed with each making approximately 4%. The remaining 14 clubs of the Spanish top flight made between €12 million and €20 million, which is 1.5% to 2.35% of the league’s TV revenue. This is in contrast to the EPL where in 2009-10 the highest earners of TV revenue, Manchester United and Chelsea, each garnered 6.4%, and the least earners, Portsmouth and Hull City, garnered 3.9% each. In absolute terms Portsmouth and Hull City, which got relegated in 2010-11, made more money from TV rights than Sevilla and Villareal, the European contenders from Spain.

In EPL, the broadcasting rights are marketed, negotiated and sold by the league. 50% of the revenue is shared equally among clubs, 25% according to TV appearances (live matches on TV) and the remaining 25% distributed according to position on the league table at the end of the season. This model is also followed in Bundesliga, whereas in Spain, the clubs individually negotiate and sell the TV rights. La Liga has proposed to centrally negotiate and sell the TV rights from 2014-15, after the current contracts expire. 18 clubs including the big two agreed on a deal wherein FC Barcelona and Real Madrid CF will each get 17% of the TV revenue, Valencia CF and Atlético Madrid 5.5% each, and the remaining 16 clubs will share the remaining 55%. This deal will not alter the economic disparity between the La Liga clubs. Being the biggest losers from the proposed deal, Sevilla and Villareal objected to it and proposed a more equitable deal wherein 40% revenue will be equally shared and 60% according to the finishing rank on the league table.

It requires money to make a team, to run a nursery, to build a stadium, and to increase global fan base by making pre-season tours. Given the lopsided distribution of TV revenue, the dominance of FC Barcelona and Real Madrid is not at all surprising. The now deeply entrenched financial crisis with unemployment rate hovering around 20% is not helping either. Attendances in the stadia are sure to go down. Even TV viewership may take a hit. One club that got badly hit by the financial crisis is Valencia. They thought of selling the Mestalla and building a new stadium that will make the owners of Camp Nou and Santiago Bernabéu jealous. They made investments and then the financial crisis hit Spain.  At present, there are no buyers of La Mestalla. Atlético Madrid and Valencia have debts of €300 million and €500 million respectively. To manage their debts they are selling players. Atlético sold Kun Aguero to nouveau riche Manchester City, De Gea to Manchester United and now Diego Forlan to Inter Milan. Valencia sold Juan Mata this year to Chelsea, and last year they sold David Villa to Barcelona. Such downsizing of the two major European contenders is not good for the health of La Liga.

Even FC Barcelona has debts over €400 million. Barcelona can remain solvent with a debt of €400 million, but a club like Zaragoza goes into administration with a debt of €150 million. Real Betis, Zaragoza, Rayo Vallecano, Racing Santander, Levante and Granada are presently in administration. Real Mallorca also applied for administration but they found a messiah in Rafa Nadal who rescued the club. Valencia too could have applied for administration if the Regional Government of Valencia had not bailed them out with €74 million. 22 clubs from the Première Division and Segunda Division passed through administration over last two years. Given that in La Liga, clubs do not dock points for being in administration, the clubs in deep trouble prefers to be in administration. This year AFE succeeded in tabling a bill in the Senate, which if made into a law will relegate clubs that do not pay the players’ salaries specified in the contracts.

Apart from Real Madrid, only Malaga, Villareal and Espanyol managed their finances prudently. Seikh Abdullah Al Thani, after taking over Malaga, spent €58 million in the summer transfer window but spent it wisely. With Toulalan, Joaquin and Diego Buonanotte in their attack, and Sergio Sanchez and Mathijsen in central defense, Malaga is a serious contender for UEFA Europa League, if not a Champions League spot.  A broadened fan base in the Middle East will help them to garner more TV revenue next year. The Yellow Submarine failed to pay their players last year but did well by selling Cazorla and Capdavilla. Espanyol wisely adopted the policy of their Catalan rivals and emphasized on youth program. However, the model club has been Atlético Bilbao. With their policy of picking only home grown players they managed their finances the best. Athletic Club, with help from the Regional Government of the Basque Country, spent €160 million to build their new stadium San Mamés Barria, which is a UEFA 5-star stadium of capacity 55,500. The limitless Basque passion for Athletic Club, when channelized in cash flow from the gate-money of San Mamés, will pay the dividends.

 The 2011-12 Season Preview

The colour of the ribbons on the trophy hasn’t changed in the last 3 years. Even if it changes this year, we all know it will be the colour of Real Madrid. Even before the kick-off of the 81^st edition of the Spanish Première División, it is a well accepted fact that there are only two teams in the title race. The competition will get fiercer and we hope to see some spectacular football. The other 18 clubs will also produce superlative football but the unfortunate reality is well put by the Sevilla president Jose Maria del Nido: “We’re chasing third place because of the adulteration of the league.” The reality, Del Nido added, is that “18 teams can’t compete for the league”.

And we know that there is more than just football behind this reality. Many Spanish clubs including FC Barcelona are in a financial distress. La Liga and the Liga Adelante (2^nd division) together have by far the most clubs in administration than any other league in Europe. Still there were some interesting transfers with creative deals involving players, deferred payments etc.

The title-contenders

The football season started with the two-legged Spanish Super Cup between Barcelona and Real Madrid and it was a pleasant surprise to see Jose Mourinho adopting a positive strategy to take on Barcelona. Although the final result still favoured the Catalans, thanks to the genius of Leo Messi, the two games have shown what the season is going to be like; fiercely competitive and not always in the highest spirit. For both the clubs, the pursuit of perfection is as relentless as it is costly.

Barcelona has made two very significant signings in Alexis Sanchez, the Chilean forward/winger from Udinese and Cesc Fabregas ending the saga that was running for three summers. Much of the spending was funded by selling off Zlatan Ibrahimovich, Bojan Krkic and Jeffren Suárez. With Messi, Xavi, Iniesta, Villa and now Sanchez and Fabregas, Pep Guardiola’s side looks ever stronger and have already bagged two trophies this season. They also have the luxury of dipping into their youth system and give some playing time to the likes of Thiago Alcántara and Andreu Fontàs.

Although Real Madrid failed to land either of Kun Aguero or Neymar, their squad got stronger with the signing of the talented midfielder, Nuri Sahin and the Portuguese international Fabio Coentrão, a specialist left-back who could play in multiple positions in the midfield too. In the pre-season, both Cristiano Ronaldo and Karim Benzema have shown very good form.

Project Málaga

Now that there is a Sheikh in Spain, there is optimism in Malaga. They had a wonderful second half last season and this year is a definite candidate for the European spot. Julio Baptista was in a goal scoring spree for them last year and now they have made significant investment and made some intelligent signings for them. With the additions of Jeremy Toulalan, Ruud Van Nistelrooy, Joris Mathijsen, Nacho Monreal, Isco Alarcon, Santi Cazorla and Joaquín Rodríguez, Coach Manuel Pellegrini has a wonderful and deep squad heading into the season.

The European Spots

Valencia, Sevilla and Villarreal will fight it out for the final Champions League spot, and Villarreal are the most likely of the trio. Although losing Santi Cazorla to Málaga had angered and saddened a lot of the Madrigal faithful, they have managed to retain rest of their stars like Borja Valero, Giuseppe Rossi and Nilmar da Silva. Among the new signings, the most significant is Cristian Zapata from Udinese to shore-up their defense where they were vulnerable last season. They are certainly capable of improving on last year’s success.

Sevilla has a new coach in Marcelino Garcia, the ex-Racing coach. Alvaro Negredo had an exceptional end to last season, and the arrival of Ivan Rakitic finally brought control and creativity to midfield. Manu Del Moral and Piotr Trochowski are good signings for them. The Andalucians will be fighting for a place in the ‘best of the rest’ category.

Losing their star of last season, Juan Mata to Chelsea will hurt Valencia. Before the start of the last season, they had lost David Villa and David Silva, but still managed the 3^rd spot, albeit 21 points behind Madrid which was an improvement on the previous season. They have made some shrewd signings this season in Adil Ramis, Danny Parejo and got the Spanish U20 captain Sergio Canales in loan from Real Madrid.

Atletico Madrid’s Europa League triumph a season before is almost forgotten with the departure of the coach followed by 3 of their key players, Sergio Aguero, David De Gea and Tomas Ujfalusi.  The return of Gregorio Manzano as coach and the addition of the Colombian international, Radamel Falcao Garcia have brought in some optimism and the fans would hope to watch exciting football once again.

Another club which will be watched closely by the people who follow La Liga is Athletic Bilbao. They have got the eccentric Argentine coach Marcelo Bielsa to fit in the shoes of Joaquin Caparros. With the club’s Basque-only policy, there is always a certain degree of stability in their squad. This year they have signed the impressive creative midfielder Ander Herrera from Real Zaragoza and have been able to retain the talented Fernando Llorente, Javi Martinez and Iker Munaín. There is hope that they can improve on last season’s Europa League qualification.

The Survivors

The other football club from the city of Barcelona, Espanyol produce sufficient talent to survive but sales of the likes of Jose Callejon and Javier Chica have weakened them. We may not see them fighting for a Champions League place like midway through last season but with the ambition of the coach  Mauricio Pochettino, we should see some good football from them.

Sporting Gijon’s 1-0 victory in the Bernabeu last season ended Mourinho’s nine-year unbeaten home league record. Manolo Preciado’s side survived a poor start to the season to secure their top-flight status with a couple of weeks to spare. The departure of Diego Castro to Getafe is a blow to them but they will try to remain solid in defense.

Getafe, another club owned by the rich Arabs, didn’t do much shopping except Castro. Instead, they have been selling. Manuel del Moral, Juan Albon, Derek Boateng and Dani Parejo were all sold off, but then managing within a tight budget is not new to the coach Luis Garcia.

Mallorca was chasing a European place last season but found them within a goal of going down on the final day. Coach Michael Laudrup needs to establish his credibility in the role.

Real Zaragoza avoided relegation last season on the final day with a 2-1 victory over Levante. The club is in financial distress and had to sell the star of Spain’s Euro Under-21 triumph, Herrera. Coach Javier Aguirre has the same job cut for him, battling against the drop.

Another club that survived relegation last season on the final day was Real Sociedad. Coach Martin Lasarte has lost his job and the new boss is Philippe Montanier. Primarily a home-grown side, with the likes of supremely talented Xabi Prieto and Mikel Aranburu, Sociedad is expected to produce some good football even after losing Diego Rivas.

Osasuna’s survival last season had reached epic proportion with a bleeding Javier Camunas’ amazing assist against Sevilla in the dying minutes of the penultimate week. They have financial problems too and have lost Josetxo (José Romero Urtasun) and Monreal.

Real Betis is one of the sides promoted to the Première Division this year.  Though La Liga is not unknown waters for them, being under administration, due to presidential mismanagement and accusations will restrict their ability to compete in the top flight. But they have a good coach in Pepe Mel, a huge fan base and an important history.

The Relegation zone

Levante survived last season despite slipping down from the twelfth spot to fourteenth on the last day, but they may not be able to survive this season. Losing their coach Luis Garcia, who managed primarily with effective vocal tonic, could see them dropping down. The new boss, Juan Ignacio Martinez is to work with a non-existing budget and without their top-scorer, Felipe Caicedo.

Racing Santander has been left high and dry by the owner Ahsan Ali Sayed, and there is a vacuum of leadership there.

Granada is back in La Liga after 35 long years, thanks to the Serie A club Udinese. 12 members of the Granada first-team squad came in on loan from there and Quique Pina, Granada’s president and chief executive, was working at Udinese before taking over at the financially-stricken club. Seven of the Udinese players went back this season, but Granada loaned in three players from Benfica to remain afloat.

Rayo Vallecano, another newly promoted side went into administration last season with protests by unpaid players. Jose Ramon Sandoval is an impressive coach but has a very tough job at his disposal.

Verdict

Indranath Mukherjee can be followed on twitter @indranath

About Dr. Sumit Sarkar

Dr. Sumit Sarkar is a football lover and an ardent follower of La Liga. An economist by profession, Sumit has a keen interest in economics of football clubs and leagues. You may follow him on Twitter @SumitS_

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