In a radio interview this past Friday, Diego Pablo Simeone suggested Atlético need to qualify for Champions League play year-in-year-out as the only viable way to secure the club’s economic growth.
In fact, the Argentine tactician made it clear it is a matter of sheer survival.
Can anybody recall another Rojiblanco coach placing club economics ahead of sporting objectives? How severe must our financial problems be when even our head coach seems to be losing sleep over how his squad will make ends meet?
It’s obvious Atleti have been walking the economic tightrope for quite a while now. The ever-growing debt is the consequence of decades of mismanagement in which the only right calls have been having debt deadlines extended and payments spread out more conveniently.
A breaking point could be right around the corner though, as EU officials are starting to raise uncomfortable questions.
Many people believed a major investment bank could never go bankrupt, but Lehman Brothers collapsed. Many thought a country could not default, but Greece proved that notion wrong. We felt so safe keeping our savings tucked away in a bank account and then along came the Cyprus fiasco.
Is anyone still naïve enough not to believe half the Spanish top flight could actually disappear overnight?
EU officials are running out of patience with late-paying Spanish clubs and their unqualified football directors. Spain’s tax authority (colloquially referred to as Hacienda) is believed to have been lenient and over-permissive with the growing debt of domestic clubs over the years.
Hacienda also wasn’t very strict about how accurately football organisations were reporting their income tax liability and how quickly they were paying their fair share.
German and English press and clubs are lobbying to implement higher standards of economic fair play.
The core of the problem is that clubs are living well beyond their means, taking their debt to outrageously high and often unpayable levels.
Failing to meet the wages promised to football players month-after-month is just the tip of the iceberg. These problems make the headlines every year but are just proof of proper cash flow.
With EU officials tightening conditions on the Spanish government in order to press for ways of creating a leaner administration, we might be facing a scenario in which the taxman decides to pull the plug on a large number of clubs, as opposed to a handful of clubs like the ones we saw die out in the ’90s including Burgos and Extremadura.
The EFE reported that the consolidated debt of Primera and Segunda clubs in 2012 decreased by a promising 8.2%, though it is still at €690 million (€535.8 million stem from Primera clubs). €400 million of that total figure belongs to clubs that currently find themselves in the middle of insolvency proceedings or that have been fighting a similar battle in recent years.
The LFP (the Spanish Professional Football League) probably run the worst-organised competition in the world. Vice president Javier Tebas is not shy to claim “two or three clubs are at an imminent risk of disappearing” without naming any club in particular.
On the income side, things look even worse.
La Liga grew 8% last year, though most of that growth went to Real Madrid and Barcelona. What future can the rest of the teams have when only two teams grow and the rest are debt-stricken? Simple, no future.
The so-called Liga de dos — a remake of the Scottish Premiere League where two behemoths are also constantly switching roles as defending champions and runners-up, is leading the other 18 teams to oblivion. If these clubs were shops, factories or any other normal business, their operations would have been shut down years ago and managerial personnel would have been tried in court.
It’s not about coming in second in La Liga for Atlético, Valencia, Sevilla or any of the rest.
It all comes down to having back-to-back perfect seasons to avoid financial losses that could lead to bankruptcy.
The four trophies won in three years have been a shower of glory for Atleti, but from an economic standpoint, it’s only been of use to stop the bleeding.
This never-ending race to avoid the stampede can only end up with most teams getting trampled on and lost forever but in our memories.
Valencia and Sevilla’s declines this season and their financial struggles are cause for alarm.
Do you still think Atleti aren’t at risk of disappearing?
(In part II we will analyse Atleti’s debt, UEFA’s role and their principles of Economic Fair Play and what Atletico’s owners plans are to revert the dire situation)