Not sure what the source for this was, as it was posted onto a general forum, but I felt it was too interesting not to share:
When faced with the prospect of the Spanish government waiving the collective Euro 752m debt the nation’s football clubs owe to the country’s tax authorities, the reaction in Europe last week was one of outrage. The German tabloid Bild even asked how long the German taxpayer would be obliged to subsidise the wages of Lionel Messi and Cristiano Ronaldo.
What they meant was that while the European Union members bailed out the Spanish economy, successful Spanish clubs were failing to meet their own tax obligations. Strictly speaking, Real Madrid have no tax debt among the Euro 170m debt that the club carry, but Barcelona owe Euro 48m of their overall Euro 364m debt to the Spanish taxman.
Uli Hoeness, the outspoken president of Bayern Munich, got to the point rather more quickly when asked about the proposal to excuse Spanish clubs their tax debt. “This is unthinkable,” he said. “We pay them hundreds of millions to get them out the *%^@ and then the clubs don’t pay their debts.”
It is a uniquely modern European dilemma, encompassing EU bail-out funds and the competitiveness of the continent’s respective leading clubs, all of which ultimately adds another fiendishly complex element to the concept of Financial Fair Play, as proposed by Uefa president Michel Platini. It is further proof that while Spanish football is undoubtedly top dog in Europe, with five teams in the quarter-finals of the two Uefa competitions, it is not without problems.
As The Independent’s Pete Jenson reported in these pages on Saturday, a government report in Spain last week disclosed that the equivalent of £625m is owed by Spanish clubs to the country’s public purse, with £353m of that due from 14 of the 20 clubs in the top division. This is not money owed to banks, investors or owners. It is owed to the Spanish people.
On a sporting level it is “financial doping” at its very worst. On a social level it is nothing short of a disgrace in a country where youth unemployment currently runs at 50 per cent.
Not all top Spanish clubs are culpable and it was reassuring to read in the breakdown of club debt by AS newspaper that Athletic Bilbao, the team of largely home-grown Basque stars who left English football spellbound with their schooling of Manchester United last week, do not owe the taxman a cent. So too Real Sociedad, Getafe, Villarreal and Sporting Gijon.
On the other hand, Atletico Madrid, currently eighth in La Liga and drawn against Hannover 96 in the quarter-finals of the Europa League, owe the Spanish public purse Euro 155m, more than any other club. The money from the Euro 50m sale of Sergio Aguero to Manchester City last summer went straight to the tax authorities. Valencia, who play AZ Alkmaar in the same stage of the competition, owe Euro 6m in unpaid tax.
When Hoeness expressed German football’s bitterness that their government is, indirectly, subsidising the success of Spanish clubs it is the likes of Hannover he was talking about. Atletico’s big signing was Radamel Falcao from Porto last summer, a £33m signing financed by third-party ownership deals. Hannover bought Mame Biram Diouf from Manchester United. Enough said.
No one would pretend that British football is the perfect financial model, especially given Rangers’ and Portsmouth’s debts to HMRC. Even the Germans have had their problems with Borussia Dortmund and Schalke. But unpaid taxes at a time when public services are being cut and jobs lost are particularly repugnant.
Real Betis, Real Zaragoza, Racing Santander, Levante and Mallorca (denied a place in last season’s Europa League because of their finances) owe a total of Euro 118m to the Spanish tax authorities between them. There are also suggestions that unpaid social security contributions by some Spanish clubs rival those eye-watering figures for unpaid tax.
In the past, Spanish football has been protected by the assumption that punishing badly-run clubs would cause such a backlash against government by voters that it would not be politically expedient. There is no points penalty in Spain for going into the equivalent of financial administration as there is in England. But attitudes are changing.
The governing political group Partido Popular has described the situation as “intolerable”. The government was forced to disclose the figures of unpaid tax because of an official request by Caridad Garcia of the Izquierda Unida (IU) party.
A spokesman for IU, José Luis Centella, made the connection last week between the financial hardship felt by the Spanish people and the clubs’ failure to pay. “This is bad news for all the people who have lost homes and suffered from the cutbacks while there is this tremendous generosity towards football.”
Wisely, the Spanish sports minister Miguel Cardenal announced last week that the government had dropped any consideration of giving football clubs a clean slate on their tax debts. There has even been a call from the centre-left party PSOE to ban clubs with tax debts from competing in the league, a rule that, already in place in Italian football, would change the face of La Liga overnight.
Were the Spanish tax authorities to call in their debts tomorrow, Barcelona would surely be able to find, or borrow, the Euro 48m they owe. Atletico, on the other hand, would find themselves in the kind of dire situation currently enveloping Rangers.
Food for thought, and once again an expression of the shambles that is La Liga, for all its quality. The above article also makes no reference to the convenient state purchase of the Real Madrid training ground for £170m a few years back. An equitable distribution of TV rights, a la England or Germany’s top tiers, would resolve the financial issues of most of the smaller clubs, but the entire system is set up to benefit Barca and Real (who otherwise wouldn’t be financially viable in the short term). A glance at the tables tells you all you need to know.
Yes, that’s right. The Spanish League, though with a much higher standard, is now officially less competitive than the Scottish League.
Time for a change?