Valencia face the threat of bankruptcy

Running a football club in Spain can be an incredibly costly business.

The daily delivery of premium ham to get the directors through those boring board meetings. The five-star foreign trips to sign deals on foundation schools that are never heard of again. The pricey purchase and swift retirement of the club super-jet. All these expenses eat their way through the annual budget like Maniche at a Las Vegas buffet.

But life is very much a hard-knock one for poor old Valencia – the club that is to financial management what Bernd Schuster is to motivational speeches.

Not only do the bean-counters at the Mestalla madhouse have to handle the normal extraordinary expenses associated with running a football club, they also need to budget for multimillion-Euro severance packages at least three times a year, along with pointlessly purchasing the likes of Hedwiges Maduro, Nikola Zigic and Ever Banega – around 45 million Euros spent on unused ‘talent’.

Loss leaders: (clockwise from top left) Maduro, Zigic, Banega 

Years of frightening financial mismanagement has finally taken its terrible toll at Valencia, with the club now suffering all kinds of pecuniary problems. Marca reports that Valencia are “on the brink of bankruptcy”, writing that the financial situation at the club is probably even worse than it looks at the moment.

At its heart is a financial subject known even to La Liga Loca, which much prefers the sports pages thank you very much: falling property prices. What's worse for Valencia is that they've started building the Nou Mestalla without yet finalising the sale of the current one.

The current crisis began late last week when they asked Bancaja to extend their credit line by 100 million Euros. "No way, José" (well, "No way, Vicente") was the reply from the local financial institution – an organisation quoted as saying that “We are at the maximum level of risk allowed for any client”.

Press reports over the weekend suggested that president and majority shareholder Vicente Soriano was going to continue the long-standing Valencia tradition that when the going gets tough, the tough either quit or get fired with an enormous pay-off.

The sun sets on Valencia 

However, AS suggest that the latest winner of the Mestalla President Idol 2008 competition will hang on in there, for the moment.

The big issue – something that Valencia’s players may be selling soon – is that Soriano and his board appear to have spent recent months thumbing through Cufflinks Monthly rather than the financial papers and seem to be oblivious to the fact that now isn’t the best time to ask banks for huge amounts of cash.

But that tiny point is irrelevant to Soriano, who feels that Bancaja should cough up the loot simply because they happen to be based down the road.

“It’s hard that a Valencianan institution has turned its back on the club,” sulked the club’s head honcho.

A meeting held on Monday between Valencia’s big cheeses and Bancaja ended with the financiers demanding details of the deal agreed for the sale of the land where the old Mestalla is based.

These details will be supplied immediately, insists Valencia’s director general Miguel Zorio, saying that the bank will “study our proposal with a great deal of care”.

Marca write that if this request for the 100m Euro loan is turned down once again, then Valencia are up the creek without a canoe considering the club has to fork out 50m Euros by the end of the month on salaries, bonuses and building costs for the new stadium.

Nou Mestalla's going up; are Valencia going down? 

The good ship Valencia is being buffeted by the perfect storm of dreadful financial mismanagement, the lack of Champions League income, ridiculous sums of money wasted on ludicrous players, billions spent on severance payments, a property crash affecting the resale value of the old Mestalla stadium and the need to borrow at a time when banks are tighter than a Catalan the week before pay-day.

Over the next few weeks, it should become clear whether the ship will eventually sink. 

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