Spanish league backs rules curbing financial excess

Reuters, Tuesday 12 Jul 2011

Spain’s professional soccer league (LFP) has approved rules designed to control spending by clubs in the country’s top two divisions and stop them accumulating unsustainable debts

Cristiano Ronaldo & Lionel Messi
Real Madrid's Cristiano Ronaldo from Portugal, right, holds the ball besides Barcelona's Lionel Messi from Argentina (Photo: AP)

Club officials backed the proposals, which are in line with UEFA regulations that begin to come into force next season, at an assembly in Madrid on Tuesday, the LFP said in a statement on its website (www.lfp.es).

Under the new rules, to be introduced over a period of three years, the LFP would establish a committee of independent professionals to analyse accounts and recommend possible sanctions for transgressors.

These could include docking of points or the withdrawal of licences for the worst offenders.

“We are not immune from the wider economy,” LFP president Jose Luis Astiazaran was quoted as saying in local media.

“The current situation means we the clubs must regulate ourselves.

“This is a journey that starts now and ends in three years, with the aim of striking a balance between revenue and spending, regulated with the creation of a control department.

“The wish is to foment more financial discipline and rationality and we will try to encourage clubs to operate taking their own capacity into account.”

Many Spanish clubs have overspent on players and wages in recent years in an attempt to compete with richer rivals and try to preserve their place in the top two divisions.

The situation has been exacerbated by the practice of negotiating contracts with TV companies individually, which means around half the pot of revenue goes to Real Madrid and Barcelona, the world’s two richest clubs by income.

CREDITOR PROTECTION

Racing Santander became the latest side to seek protection from creditors last week, joining fellow La Liga clubs Real Mallorca and Real Zaragoza as well as all three teams promoted to the first division at the end of last season—Real Betis, Rayo Vallecano and Granada—in administration.

A study by an accounting professor at Barcelona University published last month showed the 20 clubs in the top flight made a combined net loss of some 100 million euros ($143 million) in the year to the end of June 2010, up from 19 million in the year-earlier period.

Total debt fell slightly from the previous year, to 3.43 billion euros, but was still more than double revenue of 1.61 billion euros.

A separate study Gay published on Monday showed second-tier sides made a combined net loss of around 43.1 million euros in the 2009-10 season and total debt was more than 550 million.

More than half of the 22 teams were in administration and their total income of just under 170 million euros was only a 10th of the revenue in the top flight.

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