x Abu Dhabi, UAEThursday 27 July 2017

European Union smarting financially over the real pain with Spain

As Spain's banking crisis continues the EU is annoyed with the country for allowing public funds to help the Primera Liga's debt-ridden clubs. Andy Mitten reports.

Adrian Lopez, left, heled Atletico Madrid get past Ron-Robert Zieler and Hannover in the quarter-finals of the 2011/12 Europa League.
Adrian Lopez, left, heled Atletico Madrid get past Ron-Robert Zieler and Hannover in the quarter-finals of the 2011/12 Europa League.

Spanish football's greatest foe is likely to come from outside Spain.

Not clubs in richer leagues in England and Germany buying up some of their best players, but from the European Union (EU) that wants to stop public funding of debt-ridden clubs.

It has a point.

Why should a German taxpayer, for instance, effectively fund a Spanish club who then spend money they cannot afford to buy superior players and potentially defeat a well-run German club, as Atletico Madrid did to Hannover in the quarter-finals of the 2011/12 Europa League?

Clubs in Spain's top two divisions have bank debts totalling €3.5 billion (Dh16.4bn) but those banks have been reluctant to call them in for fear of ostracising their customers who also support the football teams.

Spanish clubs have always enjoyed favourable credit lines to their local banks, yet most of those local banks have been merged into national banks which are being supported by European money.

Understandably, the EU wants to know why it should provide €40bn of aid to Spain, when Spanish clubs have a tax debt alone of €692m.

If the government cannot collect taxes, it asks, why should the EU support it?

Spain is enjoying a golden age in football, with leading clubs and the national side excelling, but it is being sullied by what is regarded as financial doping.

Which clubs are at risk? It is easier to say which ones are not. And the only ones in that category are Barcelona, Real Madrid and Athletic Bilbao.

The rest wait nervously, for there is no way they can afford to pay back their huge debts.

Madrid may be wealthy, but they are the subject of a European Commission investigation following allegations that they received state aid in the form of a favourable deal for land to be developed into a shopping centre and hotel complex around their home ground at the Bernabeu.

Such deals were typical of the relationships between Spanish clubs, banks and regional authorities, yet these unholy alliances have come under scrutiny as Spain relies on outside funds to get out of the economic plight that it faces.

Madrid will claim their deals have been correct according to local legislation, yet that is not sufficient for the EU who are now picking up tabs all over Spain.

 

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