Spanish cuts demand fairer TV cash split

As the newly-elected Spanish government's sweeping austerity drive begins to bite, the need for wealthy Real Madrid and Barcelona to agree to a more equitable distribution of television revenue will become increasingly urgent.

Already deep in debt and under pressure from rising wage and transfer costs, the majority of Spain's 42 professional clubs are bracing for a possible new recession, a fresh squeeze on advertising and sponsorship revenue, painful tax rises and a growing reluctance among distressed banks and parsimonious local authorities to provide loans and financial assistance.

The confluence of these factors, coming after years of profligacy and mismanagement, could even mean some of the worst-affected clubs disappear altogether, according to Angel Barajas, an associate professor of financial management at the University of Vigo.

"We could see some going into administration but not being able to clean up their accounts in the time allocated by the court and doomed to dissolution," Barajas told Reuters.

The sale of audiovisual rights for La Liga, which unlike in rival European leagues is negotiated by each club individually, nets around 600 million euros and Real and Barca scoop up about half the total between them, helping make them the world's richest football clubs by income.

Their dominance means they can afford to buy the best players, and pay lavish wages, while many of their rivals have been forced into administration following a futile struggle to remain competitive.

A study published in June by Jose Maria Gay, a professor of accounting at the University of Barcelona, showed the 20 clubs in Spain's top division had combined debts of some 3.48 billion euros at the end of the 2009/10 season.

Add to that more than 550 million owed by the 22 teams in the second tier and Spanish professional football is roughly 4 billion euros in the red.

Clubs owe nearly 700 million to the tax authorities alone, according to a report in El Pais last month.

TERRIFYING NUMBERS

La Liga urgently needs a complete financial overhaul, particularly with UEFA's new economic guidelines coming into force that include sanctions for clubs spending more than they earn, analysts say.

Introducing a system of collective bargaining for TV rights similar to the one used in the English Premier League would help stop more clubs getting into difficulties and make the league more competitive again, they add.

"The solution is to put into action a serious rescue plan which would allow clubs access to cash to settle their most pressing debts," Gay told Reuters.

"Then what is needed is a viability plan which would be equivalent to a relaunching of Spanish football," he added.

"The prerequisite is that the clubs centralise television rights and agree a serious and effective means of managing them, at the international level as well as the national.

"Until this step forward is taken, the finances of Spanish clubs will continue to deteriorate, with ever-more terrifying numbers in their accounts."

A study last year by consulting firm Sport+Markt showed Real and Barca earned almost 19 times more from TV than the smallest clubs in Spain's top division