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La Liga Players’ Strike is a Shameful Example of Clubs Spending Beyond their Means

Samrin Hasib, August 22 2011,
The start of the Spanish La Liga will be delayed by two weeks due to a strike withheld by unpaid players.
La Liga will not be on our television screens any time soon.
La Liga will not be on our television screens any time soon.
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Related Articles: Atletico Madrid, Villarreal, Barcelona, Real Madrid, Valencia
The beautiful breathtaking football tends to hide the financial mess that has seemingly overtaken La Liga. Reportedly, the clubs owe more than $72 million in wages to around 200 unpaid players. As expected the Association of Spanish football players (AFE) and the Spanish Football Federation are at loggerheads over this issue.

To resolve the matter, the Spanish FA has offered to place a central fund of about $14.5 million to pay unpaid players. $345,000 would be the minimal annual salary paid to unpaid top flight players and the amount would be $172,000 for the players in the second division.

Real Zaragoza signed Juan Carlos for a fee of a little more than $3.5 million. Zaragoza’s debt amounts to more than $244 million. Hardly anyone associated with the club hasn’t been paid for a long time. How they could go ahead and make such a purchase is beyond every fan.

Atletico Madrid sold Sergio Kun Aguero for a massive transfer fee to Manchester City. This should have helped them ease their debts which are said to be in excess of $430 million. Instead of lowering their debts, they went ahead and purchased Radamel Falcao of Porto.

Valencia’s situation is a little different. The greed of the hierarchy for a new stadium which seated 20,000 extra fans more than their current stadium’s capacity of 55,000 seats destroyed their financial health. Thanks to intelligent signings by Unai Emery, the sales of David Villa and David Silva and a government bailout package of $106 million, they have been able to pay their players recently.

Other clubs from the top two Spanish divisions in administration which have been unable to pay their players include Rayo Valecano, Hercules, Racing Santander and Levante.

So, will the fund really be able to help the aforementioned debt-ridden clubs? The AFE doesn’t think so.

“The fund to guarantee salaries is a system imposed by the league so that the teams can continue to take advantage of bankruptcy protection with complete impunity.” This is a recent statement from the AFE.

In truth, the AFE is correct. The clubs buy players with outrageous transfer fees and promise them high salaries. The fund will allow the clubs to continue buying and offering players salaries which they cannot really pay. Only a club which has success which can match Barca’s will find an economic model which consists of paying outrageous transfer fees and salaries while in debt sustainable.

Just in case one wants to know, Barca is in debt. However, due to their successes, they can afford to cut down on the debt year by year. Real Madrid is in rude financial health thanks to incredible revenues.

Real Mallorca was bailed out by the famous tennis player, Rafael Nadal. Espanyol has been focusing on the products of their youth academies in order to improve their financial situation.

Finally, while the likes of Lionel Messi and Dani Alves are paid extravagantly, plenty of players in the same nation are suffering following months and months of non-payment. A long-term solution to this problem is unlikely to be found too soon. Spain can take a look at Borussia Dortmund and the rest of the Bundesliga’s financial model as an example.

Moreover, the long term solution seems to be an easy one: focus on youth academy players mainly and forget about new stadiums. Spanish clubs must remember that a club cannot exist without players and they have to act now and pay up or risk losing their players.

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