The absurdity of Zaragoza’s financial woes

Let me start by saying I’m not a multi-millionaire entrepreneur but I seem to know more about basic economics than the men in suits running a lot of Spanish football clubs. The 1^st of May to the 30^th of June is tax return season in Spain and having just completed mine, it seems I owe my good friends at the Spanish Inland Revenue 500 euros. Hardly a small sum but don’t worry, I’ll survive. I’ve managed to keep my income higher than my expenses and I’ve got a little put away, for times like this. To me, and no doubt most people, that’s just common sense. Unfortunately, this same common sense has eluded the minds of  Spain’s top football clubs. The situation has become so drastic that Marca took the unprecedented step of running a serious story on their front page. That’s right, no fantasy transfer gossip but a factually correct, important issue. The headline was simple and to the point, Bankrupt!

It seems football clubs can’t function nowadays without carrying some serious debt and eventually the debt catches up with them. In Spain there are 11 clubs with financial problems that are so serious they have had to enter into voluntary administration. The list includes some less well-known sides such as Poli Ejido and Recreativo de Huelva but also includes some big names such as Real Zaragoza.

The Aragonese club is a model of how not to run a football club. They’ve recently gone into voluntary administration with a debt of around 100 million euro. That really puts my tax return into perspective. Joking aside though, football fans everywhere have to start asking serious questions. How is it possible to get into so much debt? Just how incompetent are the people running the game? Zaragoza is hardly a small provincial town, it’s the fifth largest city in Spain. If you take into account the surrounding region and the fact there is no other big club for hundreds of miles then you are talking about a catchment area of over a million people. While their stadium isn’t full every week (no La Liga team’s is), Real Zaragoza have the 9^th highest average attendance (25,210) in the league. That means on average 72% of seats are occupied which is not bad considering the club spent the entire season in the bottom four and Barcelona, Europe’s top side, only filled 79% of their seats in the same season. When the club took around 10,000 away fans to Levante for the last game of the season, it was clear to most people that Zaragoza have a good support base.

So the club had an average of 25,000 paying customers every second week and still ended up 100 million euros in debt? And let’s not forget, gate receipts are not the only source of income. As a La Liga side, Real Zaragoza receive television money and also have a sponsorhsip deal with Telefonica, one of Spain’s largest companies. So again, I ask the question, how is that possible? Where does the money go?

No doubt a large part of it goes on transfers and wages. After all, Zaragoza is the club who paid Jermaine Pennant the equivalent of 80,000 pounds per week! Seriously, whose idea was that and why were they ever let near a football club? Surely you can get a similar player on a much more realistic salary than that? The club’s ridiculous salary policy means they owe money to several ex players including Roberto Ayala who is owed 2.6 million euros in unpaid wages.

Zaragoza’s financial ineptitude is not only effecting players but other clubs with Deportivo La Coruña, Getafe, Valencia, Barcelona, Wolfsburg, Udinese, Napoli, MTK Budapest and Shakhtar Donetsk owed money for unpaid transfer fees. Indeed the club owe just about everyone money, including our good friends at the Inland Revenue. It seems Zaragoza were not willing to pay for anything with one creditor owed 9.74 euros for photocopies.

So we know how Zaragoza got there, the next question is what is the solution? How can football solve its financial mess. The chairmen of some clubs, including Real Zaragoza, believe they need access to more money. They want bigger TV deals, higher ticket prices and an end to free to view football on TV. Should we give it to them? Leaving aside the welfare of  the fans; would throwing more money at the problem make it disappear? Of course not. The people who run football are addicts, give them more and they’ll spend more. We have to rehabilitate football.  The long-term solution is to reduce costs. That means lowering wages and transfer fees. That means clubs and leagues agreeing on salary caps and enforcing financial fair play rules. That means players and agents coming to terms with realistic salaries. Those are the long-term solutions and as for the short-term. Let’s start by getting rid of the men in suits who put 2+2 together and come up 100 million.

Tags: Financial crisis Spanish Football, Real Zaragoza