Is Atlético at risk of disappearing?

Stricter financial measures are expected to be implemented by UEFA

atleti graph

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)

  • starvs

    revenue sharing; the big two need to realize it’s in their best interest too in the long run.

  • Ahmad Hossainy

    few years ago, Brussia Durtmond were at the edge of Bankruptcy before they received a generous loan from … wait for it : Bayern Munich
    yes , you read it correctly, they received a loan from Bayern Munich, their biggest rivals and everyone knows the rest of that story : BVB came back as one of not only Germany but Europe’s biggest teams

    but what about FCB?! .. they had their reward, financially & at sporting level

    the revolution that BVB made at Budesliga raised it’s value and much more broadcasting money went to all Bundesliga teams accounts including both FCB & BVB

    at sporting level, it’s true that FCB lost 2 consecutive league titles and 1 cup to their rival BVB, BUT the strong competition with them made them strong enough to reach 2 champions league finals in 3 years

    SO, just as @starvs said above : the big two need to realize it’s in their best interest too in the long run to have a (FAIR SHARING of Broadcasting Money)

    BUT the big question is : will they realize that ?!!

    and if they did, would they do it before it’s TOO LATE ??!!!!

  • DJ_ZA

    Everyone acknowledges the problem, yet those in authority offer no solution.

  • Kaminero

    Very interesting piece, Ricardo. Thank you for posting it.

    I would really like to read your take on the future ownership of Atlético. By that I mean the possible ramifications of the Marbella corruption court case. As I’ve understood it, the Gil family have already been sentenced to pay huge compensations and in order to meet this obligation they would have to give up their shares in Atlético. I think the appeal by the Gil family is still being processed, but if the verdict stands everything would change in the club.

  • shlomgar

    There are two nations calling Espana their home these days, and I’m not talking about Castilla and Cataluna. Spain had won a lot of success at the international level at the last year’s with successful runs in football, basketball, tennis, cycling biking and a lot more. Yet nothing is more obvious then the epic Barca-Real MultiClash of the last few seasons which has now come into a new unfamiliar chapter that has changed the face of what we used to call competitive sports.
    Try and think of the financial decisions which faded rose two clubs in the last four seasons, signing spare players they didn’t really need, extending contracts for outrageously huge sums, keeping living legends as bench warmers because they are “still needed”. These rivalry has gotten out of control. It is killing la liga and European football, and should be brought to a stop by regulation of some sort. Barca should pay for rightfull

  • shlomgar

    Unrightfull TV rights and Real should too for their tax manipulation of past years. This would undoutfully weaken the two, but not in a manner of non existence. They would survive and continue to thrive, but with financial stability and not as money behemoths swimming at a dwelling pool of drowned ex-victims.

  • athenssuper3

    well, i live in greece… here we have the same problem espatially at basketball we used to have many good teams and a competitive championship… suddenly olympiakos and panathinaikos gained a lot of power with because they had huge budjets all the other teams couldn’t pay the same amount… now no one watch greek basketball and the stadiums are empty those two teams start losing at europe and all the other big teams have no goal(there is no euroleague place)…

  • mohamed

    this article got me scared -.-

  • I can confirm Ahmad Hossainy’s story about Borussia Dortmund. They got a € 2m loan from Bayern Munich back in 2003. Otherwise they would have been bankrupt.

    Ricky’s story is very interesting and to the point. Financially the club is in a very shaky state, a few looks in the balance sheets are enough to confirm this.

    Giving all the short and long term debts I would even say the club is more or less screwed if for example Falcao breaks his leg next week and Atleti can’t sell him for 60m in the summer.

  • Ahmad Hossainy

    disappearing of big clubs like Atleti, Valevcia & Sevilla sounds too unlikely to happen

    BUT when clubs like Deportivo who won La Liga title season 1999-2000 and Villareal who finished 2nd season 2007-08 and reached UCL semifinals 2005-06 when these clubs who did that few years ago being relegated to Segunda several times (Deportivo) and even suffering in Segunda (Villareal) , for me : THIS IS DISAPPEARING !

  • Jorge

    If this uneven division of revenue continues, the fans will disappear long before the clubs.

  • rummenige

    Unfortunately it may happen – just look what is happening with Glasgow Rangers right now, where were Napoli five years ago, remember bankruptcy and relegation of Fiorentina? All this clubs are too big and have too devoted fans (like, of course, Aletico) to disappear, but risk was real. Fiorentina and Napoli gained wealthy and well-connected owners (Della Valle and De Laurentis), Rangers will also survive, Ibrox Park is regularly fulfilled even in the Third Division. But, even if (in case of our bankruptcy and relegation) we will succeed in finding reasonable investors and organizing our finances , it will took 5, 10 years (how difficult it was to bet back to Primera after our relegation?).
    But worst thing is, that, in fact Real an FCB may not need us in a few years… Every year there are increasing rumors about some “Super league”, where only biggest and richest clubs are invited, without time- consuming and troublesome requirements like adequate place in national league and qualifications as in Champions League. UEFA stance right now is clear – they do not agree, but one day the biggest clubs may not bother about UEFA and they sanctions, and cross-country NBA-like league may be a fact. I do not know where will Atletico be then…