The 20 La Liga clubs had combined debt of 3.526 billion euros in 2008/09, up from 3.49 billion the previous season, according to the new study by University of Barcelona professor Jose Maria Gay.
Revenue growth more than halved to a tepid 4 percent, from 10 percent in the 2007/08 campaign, and operating costs rose to 1.704 billion euros, outstripping income of 1.455 billion euros by 249 million, the study showed.
Only La Liga giants Real Madrid and Barcelona, the world's two richest clubs, and lowly Numancia, who were relegated, made an operating profit.
Labour costs accounted for a whopping 85 percent of operating income.
"Let's not kid ourselves, Spanish football is in a very difficult situation, like our economy," Gay wrote.
"You can't spend more than you earn. This is the fundamental rule for economic survival."
Wealthy Real and Barca dominate La Liga because they negotiate their own television deals and raked in half of their 560 million euros income from audiovisual rights last season.
Gay suggested this would have to change if the league wanted to prevent financial meltdown and avoid turning into a "Scottish-style" competition where two teams - Celtic and Rangers - dominated the sporting and economic arenas.
RECORD TALLY
Champions Barca compiled a record points tally of 99 this season, while Real, who spent 1/4 of a billion euros on players before the start of their campaign, were second on 96 with Valencia a distant 25 points further back in third.
"Who can win the league? The answer is obvious: Barca or Madrid. Madrid or Barca. Nobody else," Gay said.
"Maybe now is the right time to renegotiate the rules of the economic game between all the protagonists," he added.
Real and Barca have come under pressure from poorer clubs to relinquish their stranglehold over TV cash and adopt the system in most rival European leagues where money is shared around.
The two clubs argue that losing TV money would make them less competitive in Europe as they would be unable to buy the best players and pay top wages.
"Barca and Madrid will have to make an effort, sacrificing today so that the league can flourish," Gay said.
"One step back, several forward. If this does not happen, the league will be in its death throes."
Gay said one of the main reasons for the dire finances of Spanish clubs was the sky-high cost of labour, noting that in many, including Sevilla, Atletico Madrid and Valencia, it was significantly greater than operating income.
"This means the economic model is unsustainable and they are often forced to fall back on extraordinary revenue to wipe out their deficits," Gay wrote.
"Like the Spanish state, soccer needs to make drastic spending cuts, especially in wages," he added. "And this means that everyone has to tighten their belts."
Gay said Atletico Madrid, Villarreal
