Spain’s soccer finances close in on final whistle

They excel at soccer, but their teams are collapsing under the weight of bad debts

The game might be beautiful, but the balance sheets of some of Spain’s top soccer teams these days would offend the senses of the most starry-eyed fan. Three clubs in the country’s elite circuit, La Liga, are in receivership, while financial pressures have forced teams to spend 70 per cent less on players this season than they did last year. It’s not just the poor sisters suffering: debt-ridden Malaga C.F., which placed fourth in the 59-club league last season, sat helpless this summer as star winger Santi Carzola bolted for England’s Premier League. Valencia, once a perennial contender for the national title, was forced two years ago to sell off national icons David Villa and David Silva. “Spanish football is dying,” economist Jose Maria Gay de Liebana of the Universidad de Barcelona declared recently. “I think it has around five years left to live.”

For a country considered the reigning power of world soccer, it’s an astonishing paradox. Spain’s 2010 World Cup and its two consecutive European championships are the fruits of a culture where football has all but replaced Catholicism as a focus of community spirit. But as Europe’s financial crisis deepens, Spanish soccer has also come to reflect the fortunes of its debt-crippled fan base. After decades of overspending fuelled by cheap credit, the clubs stagger under debts totalling $4.5 billion, with scant prospect of paying them off. Fully $960 million of that is owed in unpaid taxes, with Atletico Madrid—currently second in the national standings—leading the way at $197 million. Only the iconic sides Real Madrid and Barcelona fly above the financial fray, in the way the New York Yankees transcend challenges faced by baseball’s small-market clubs. Yet the misery of lesser clubs is their problem, too. Without Malaga, Valencia and Sevilla, who would they play?

Spain is not the only place the football bubble has burst. Italy’s leagues lost $550 million last season, according to the country’s national soccer federation. But the troubles of Spanish clubs resonate beyond the soccer world, in part because they illustrate the intractability of Europe’s debt woes. Even a recent bump in club revenues won’t shoo the financial wolves from La Liga’s door, Gay de Liebana says; it’s been eclipsed by the ongoing bull market for talent, where a reliable starter like Carzola commands a whopping $29 million in transfer fees. Meanwhile, established clubs are scrambling to find television partners and shirt sponsors, whom five years ago would have lined up at their doors, but now face the same pressures as the teams.

None of that changes the simple equation that made Spain a wellspring of soccer talent: child plus ball equals happiness. It does, however, return the game to its rightful place in the hierarchy of human needs. With nearly a quarter of the population out of work, a gold-plated soccer league is a luxury the kingdom can no longer afford.