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SBD Global/April 2, 2014/Finance

Spanish Second Division Side Eibar Could Be Relegated By Law Requiring Major Cash Influx

Funding shortfall could scuttle Spain's Eibar move to La Liga.
For Spanish second division side Eibar, which is leading its division, "a first-ever appearance" in La Liga next season appears more likely "with each passing week," according to Sid Lowe of ESPN. Eibar was promoted from Spain's third tier last summer. The club has the "smallest ground and the smallest average attendance in the Second Division at around 3,000." They have the "smallest budget too" --  €3.5M ($4.8M) -- and pay "lower wages than anyone." Relegation, however, "may be closer than promotion." The "situation is stark:" if Eibar does not raise €1.7M ($2.35M) by August, it faces "being relegated back to the Second Division B." According to the Real Decreto 1251/1999 law, which "became applicable to Eibar when they were promoted to the Second Division in the summer and thus took their place in what is formally classified as professional football -- every team has to have a capital" equal to 25% of the "average expenses of all the teams in the Second Division, not including the two clubs with the biggest outgoings and the two clubs with the smallest outgoings in the division." Eibar is "financially sound: they never spend what they do not have and there is money in the club account." Eibar had "few financial problems until, that is, financial problems were imposed upon them through no fault of their own." Eibar is "being punished for earning the right to compete in a division where every team's budget dwarfs their own." It is "forced to create a budget dictated by other clubs," more than 50% of whom "are in or have been through administration." Eibar's social capital is €422,253 ($528,900) -- "they are in the black, not the red" -- but that "is not enough." The club has "six months to increase their capital value in shares" to €2.15M ($2.97M), a figure set "not by their budget or their ability to guarantee survival, but by everyone else's." And "they may pay for that with their own survival." Eibar has to find $2.35M "and in only six months." A share issue "will start in August; in the first phase, members will be allowed to buy shares" at €50 per share. In the second phase, it will be "opened up to others." Eibar is "not optimistic." The amount Eibar needs is a "lot of money, especially for a small club in a small city with few fans, many of them under eighteen, over sixty or unemployed." The "only solution, the last resort, may be an investor." If Eibar "cannot raise the money, the immediate consequence would be relegation back to the Second Division B -- the division's best team dragged down by its worst ones" (ESPN, 3/28). The EFE reported second division side Lugo Dir General Carlos Mouriz said that it "would be 'shameful' if Eibar was excluded" from the Spanish Football League (LFP), which includes Spain's top two divisions. Mouriz: "It would be shameful if they take Eibar out of the competition. It is an exemplary club. ... We will have to look for a solution" (EFE, 4/1).
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