Friday, 31 August 2012 15:02

The La Liga - A Balance Of Imbalance

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Who’s going to win the league this time? Is it going to be Barcelona or Real Madrid? It is hard to look beyond them for a winner and with good reason as well. The two teams are arguably the best in the world at the moment, Barcelona have the cups to prove it and Real Madrid has a strong team with a good coach. But the total lack of competition they face in the league causes grave concern regarding the health of the league. Last season alone the gap between Real Madrid in first place and Valencia in third was 25 points and 8th place Espanyol were just 5 points above the relegation zone.

real-barca

The two teams are good, no two questions about that, but to get this good they needed the funding to buy players, pay their wages, build facilities. And this is where these two clubs are miles apart from their competition. In this write-up I take a look at my top 2 reason for the imbalance, there may be others, but these for me are the main reason.

 

TV RIGHTS

 

The majority of revenue for any club comes from TV rights. And this is where there is a huge gap between the clubs in the La Liga. Let’s understand how TV rights work in other leagues work. The following is an extract from premierleague.com:


The Premier League sells its television rights on a collective basis.

In the Premier League, domestic broadcast revenue is divided on a 50:25:25 basis; 50% is divided equally between the clubs; 25% is awarded on a merit basis determined by a club’s final league position and the final 25% is distributed as a facilities fee for the number of matches shown on television involving the club.

The income from overseas rights is divided equally between the 20 Premier League clubs.

The Italian Serie A works on a similar structure where the rights are negotiated collectively and distributed evenly. This after individual negotiating led to a very weak league and the top clubs agreed to lose revenue in order to strengthen the league.

The La Liga however works completely on a different model. The league allows each club to negotiate their own deals. What this results in is the top clubs to receive huge payouts whereas the lower clubs are paid dirt. Barcelona and Real Madrid take home revenues in the region of 140mil while Malaga gets a payment of only €14mil. The gap suddenly become evident and also goes to show why these clubs are not able to improve themselves.

1. RM

€140M

1. Barça

€140M

3. Valencia

€48M

4. Atléti

€46M

5. Sevilla

€31M

6. Betis

€29M

7. Villarreal

€28M

8. Getafe

€18M

9. Espanyol

€17M

10. Athletic

€17M

11. R.Sociedad

€15M

12. Zaragoza

€15M

13. Osasuna

€14M

14. Málaga

€14M

15. Mallorca

€14M

16.Levante

€14M

17. Sporting

€14M

18. Granada

€14M

19.Rayo

€14M

20. Racing

€13M

La-Liga Revenue From TV Deals (Fall 2011)

And now that the networks have paid these clubs these insane amounts of money, they get priority on telecast. Telecast priority has got to such ridiculous levels that kickoffs of other matches are being delayed so as to accommodate live telecast of press conferences of coaches of these two clubs. The recent delay of the Seville match to telecast the press conference of Jose Mourinho led to this tennis ball protest by the fans.

This prioritised telecast is helping Barcelona and Real Madrid gain world-wide exposure, which in turn raises its already high stock value. Helps it sell shirts all over the world and help itself secure higher sponsorship deals. While all this is good for them, what about the other 18 clubs? They have to contend with delayed matches which end well past midnight. They receive minimal or no exposure which leads to even lower TV right deals and probably even lower sponsorship deals. The cash crunch would lead to more clubs heading to administration and liquidity. Two clubs in the past 6 months have already set upon this path. Racing Santander has already gone into administration and Malaga is a few millions away from joining them.

As bad as this might be do not expect Real Madrid or Barcelona to make the sacrifices the Italian clubs made to start collective TV rights and strengthen the league. The two clubs have received the money and spent double of it. They are so deep in debt that neither could gamble to lose this revenue. In fact without their TV revenues being at values they are, neither club would be afloat.

 

Regional Pride

 

To understand why the two clubs are given the importance they have in the country we need to understand the geography of Spain.

Spain-Catalunya

Now while Madrid is the cultural and political capital of Spain, Barcelona is the same of a completely different region of Spain called Cataluña. Both these regions are part of the same nation, but they couldn’t be more different. They speak different languages, they eat different food and well they support different teams. If you have not figured out already Real Madrid C.F is situated in Spain and F.C Barcelona in Cataluña.

With these two communities looking for every opportunity to show one above the other, and since wars cannot be fought (although the Catalans are lobbying for a separate nation), the two clubs have become somewhat of a national pride.

The El-Clasico has become so intense for the fans and officials that losing it would take a hit on their pride. The clubs have become an institution which represents the community.

For this same reason the clubs receive unconditional backing from their respective governments. These clubs have got away with tax evasion, they receive partiality when it comes to debt payment and I’m sure they would be bailed out if they should get into any financial troubles.

Now these are not the same benefits that the other clubs receive in their own region. The government in Madrid do not extend the same favouritism to say Atletico Madrid nor do the government at Cataluña to a club like Espanyol.

 

Where is this headed?

 

Where is this saga headed? It surely can’t be for any good? You’d be surprised that there are a few plus points to this.

For one there are two absolute super teams representing Spain in European Competitions. Both the clubs were in the last four in last season’s Champions League, and Barcelona have made it to the last four for 5 years running and winning the competition twice.

With that said there are a lot of negatives that creep in.

The league would be the worst sufferer. With the league heading to a possible duopoly like the Celtic/Rangers (Rangers own a miniscule number of shares in Arsenal, random fact) control of the Scottish league, a similar situation could play out in Spain. The competition is won every year by one of these two teams, with the other teams not having the financial or the will power to compete against them. And like the Scottish league the viewers lose interest and the even the top clubs would fail to fill stadiums. This in turn would mean that the top clubs would earn less in further TV and sponsorship deals.

Once the league is marked as a weak league and with the Spanish entrants to European competitions not faring as well as these two clubs, the league’s European co-efficient comes down. It is based on this co-efficient that UEFA allocates the number of places in the Champions league to each nation. With lower co-efficient it would mean that only the top two would get automatic qualification to the group stages out of the four or if it goes even lower only 3 berths could be allocated to the league.

  Assosiaction 07/08 08/09 09/10 10/11 11/12 Total Clubs
1 EnglandEngland 17.875 15.000 17.928 18.357 15.250 84.410 8
2 SpainSpain 13.875 13.312 17.928 18.214 20.857 84.186 7
3 GermanyGermany 13.500 12.687 18.083 15.666 15.250 75.186 6
4 ItalyItaly 10.250 11.375 15.428 11.571 11.357 59.981 7

 

Now this will have a very adverse effect since clubs like Valencia, Villareal, Athletico Madrid etc would not be able to attract top talent with the promise of Champions League, and this would only widen the already massive gap between the teams.

Although I believe a team should be rewarded for doing well and winning competitions, I feel that should not be at the cost of healthy competition.

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Aditya Kavoor

An avid gooner for over a decade, a dangerous interst level in technology. Wants to combine these two into a platform for everything a gooner wants.

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