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SBD Global/October 10, 2013/FinancePrint All
The European Commission is "going forward with its investigation about various Spanish football clubs and does not have any indication regarding when the investigation will conclude," according to the EFE. EC Competition Commissioner Joaquin Almunia confirmed that the EC is "investigating the distinct treatment of Spanish professional football clubs in terms of their legal function." The case is focused on La Liga sides Barcelona, Real Madrid, Athletic Bilbao and Osasuna, the only La Liga sides which are not Sports Limited Companies. The investigation began in '09 after "a complaint about possible advantages that this status gives these four clubs." Almunia: "The Commission cannot indicate when the investigation will conclude. It is ongoing and the Commission is still not in a position to make comments about the investigation's possible result" (EFE, 10/9).
Barcelona Economic VP Javier Faus "recently talked about a number of subjects related to Barcelona," according to MUNDO DEPORTIVO. Faus pointed out that when he entered the club it owed €440M ($595M), but that it is now €330M ($446M) in debt. Faus described the revenue earned by each area of the club. He said that the stadium (ticketing, hospitality, the museum and season tickets) generates €126M ($170M), media contracts (with Mediapro and UEFA) generate €160M ($216M) and marketing (including with Qatar and Nike) produces €176M ($238M). Faus said that "a new stadium could generate" €30M-€40M ($41M-$54M), while "renovations could produce" €20M-€25M ($27M-$34M). On the subject of the stadium providing fans with Wi-Fi, Faus said, "Introducing Wi-Fi ourselves would cost" €4M ($5.4M). Faus: "But we are negotiating with American businesses and seeing if we can reach an agreement. It is not clear whether fans would have free access or if they would have to pay €.5-€1" ($.68-$1.35). Faus said, "Personally I believe this is essential, not just as a service for the fans but also for the raw strength that 100,000 people sending live pictures would mean." Faus also answered questions about Qatar and said, "I accept that some Barcelona fans do not accept what is happening in Qatar, but this does not damage the Barcelona brand. We all know that China is a dictatorship and all businessmen go to China and we are united with Shanghai. If the team's debt is reduced, we would be able to plan on not renewing the agreement with Qatar. We would prefer to be in the hands of a sponsor and not a bank" (MUNDO DEPORTIVO, 10/8).
Spanish economist Gay de Liébana recently addressed Real Madrid's financial situation, according to Marco Ruiz of AS. The following is an excerpt from the Q&A:
Q: What feeling do you get from the audit of Real Madrid's accounts?
Gay de Liébana: That Madrid is very oversized. Its results, from a practical and athletic point of view, are very poor. I do not know if it is worth it to invest so much to obtain these results.
Q: Where can such a large amount of debt come from?
De Liébana: The team's €541 million ($731M) debt comes from excessive spending. One does not have to underline that a business has a lot of debt. What one has to ask is why. And it is because of the high investment in players. At the end of last season, there was €267 million ($361M) invested in the roster.
Q: If the debt continues growing, could it threaten the team's ability to keep its members?
De Liébana: Totally, totally. A situation would occur where Real Madrid would have to become a Sports Limited Company, and this would completely change Real Madrid's status quo.
Q: When does the debt become dangerous?
De Liébana: The debt is uncomfortable right now. For my liking, to be financially prudent, the debt would have to be at €426 million ($576M), not at €541 million.
Q: Does excessive spending on player transactions explain why Real Madrid's revenue only increased 1% this year?
De Liébana: Of course. From €512 million-€518 million ($692M-$700M) [this year]. In '08-09, Madrid's revenue was €400 million. In '09-10, it was €430 million. The next year, it was €475 million. And in '11-12, €512 million. Now €518 million. The pace has slowed, first because of the worldwide economic situation, but also because Madrid cannot earn more.
Q: Why not?
De Liébana: Because it is earning more than is possible. In what way? A club that does not win the Champions League can not make this much money (AS, 10/9).