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In this picture taken on May 18, 2014, Real Madrid's supporters play with a ball inside the official Real Madrid shop of the Santiago Bernabeu stadium in Madrid, Spain. The European Union is investigating whether government loan guarantees for seven soccer clubs violate EU competition law, designed in part to prevent businesses from enjoying unfair advantage through state intervention. The probe is examining tax breaks granted to the Real Madrid, Barcelona, Athletic Bilbao and Osasuna soccer clubs _ but that’s a small part of government assistance to Spain’s soccer league, according to the AP review. (AP Photo/Daniel Ochoa de Olza)
Spain props up soccer amid crushing austerity
Subsidies » Twenty clubs in Spain’s top soccer league got $1 billion in public funds.
First Published Jun 13 2014 11:03 am • Last Updated Jun 13 2014 11:03 am

Valencia, Spain • At the height of Spain’s crushing economic crisis, the Villarreal soccer club sported an eye-catching logo across its jerseys: Aeroport Castello. The local government paid the club $27 million to promote what was to become Spain’s most notorious "ghost airport" — one that hasn’t seen a single flight since it opened in 2011.

The deal illustrates one of the peculiarities of Spain’s meltdown: As austerity measures sap the life from health, education and welfare programs, Spain’s soccer teams have been receiving hundreds of millions of dollars in government aid.

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An Associated Press review of official documents shows that Spain’s highly autonomous regions are helping to keep some teams alive through massive direct cash injections. Some politicians and ordinary Spaniards are questioning the generous support amid hospital downsizing, teacher layoffs and chronic delays in payments for needy people.

The 20 clubs in Spain’s top soccer league, one of the world’s best, received at least $448 million in direct public aid between 2008 — the beginning of Spain’s financial meltdown — and 2012, according to the AP review. The funds were allocated through public agencies and companies run by the country’s 17 regional governments. In the same period, the clubs also benefited from an additional $643 million in indirect aid, such as allowing clubs to run up tax and social security debts.

That makes the total $1.1 billion in the years reviewed.

"Soccer puts the fear of God into politicians who worry that people will be up in arms about the possible disappearance of their club," said Sandalio Gomez, a sports management expert at the IESE Business School in Madrid. "They find ways of getting money to the clubs without which [the clubs] would not survive."

The government says soccer subsidies are simply part of a policy of supporting sports around the country. Miguel Cardenal, president of the Spanish government’s Superior Sports Council, said authorities have made a serious effort to ensure proper financial management at soccer clubs.

"It makes no sense to cast aspersions about public sponsorship that hasn’t been questioned, and which — if it were — would have a perfectly logical explanation," said Cardenal, whose organization is Spain’s top sports body.

The European Union is investigating whether government loan guarantees for seven Spanish clubs violate EU competition law, designed in part to prevent businesses from enjoying unfair advantages through state intervention. The probe is examining tax breaks granted to the Real Madrid, Barcelona, Athletic Bilbao and Osasuna soccer clubs.

Ten of the 23 members of Spain’s national team — the reigning champion playing its opening World Cup match Friday — belong to those clubs. So do many of the World Cup’s other biggest stars; Brazil’s Neymar, Portugal’s Cristiano Ronaldo and Argentina’s Leonel Messi all draw their salaries from clubs being investigated, though the great bulk of their income comes from sponsorship deals rather than government subsidies.


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But that’s just a part of government assistance to Spain’s soccer league, according to the AP review.

The largest case of government subsidies for soccer teams can be found in the city of Valencia, on Spain’s eastern seaboard. The AP review found that over the 2008-12 period, the Valencia region pumped $228 million into its four top-flight soccer clubs — Valencia, Elche, Levante and Villarreal.

Those direct injections came in the form of sponsorship contracts, television rights and subsidies. Three sports finance experts consulted by AP, including Gomez, said that all three constitute direct government aid.

In one of the most striking cases, Villarreal entered into two sponsorship contracts to advertise Spain’s notorious "ghost airport" on its team jerseys. The publicly owned airport, just an hour’s drive from the city’s other airport, opened in March 2011 at a cost of some $202 million, making it an emblem of Spain’s wasteful public spending. The advertising deal provided the team with almost $27 million between 2008 and July 2011.

Levante, Valencia’s second-largest club, got a three-year, $6.1 million public sponsorship contract with the Valencia Tourism Agency, represented by a palm tree logo on players’ jerseys.

Meanwhile, Valencia laid off more than 5,000 teachers while making deep budget cuts between 2009-12. Those who kept their jobs have taken pay cuts of up to 15 percent, according to the General Workers’ Union. Some sanitary services have been privatized, and 262 hospital beds were cut. The regional government fell behind on payments of $148 million to social services for 30,000 people who cannot get by on their own because of old age or infirmity. Some Valencia associations catering to the needy have lost 95 percent of their public funding.

"It’s not a question of money," said Marco Fornes, who looks after the disabled at a public institution and went for three months without pay last year. "It’s a question of priorities."

Valencia’s public television network also signed generous contracts totaling $173 million with Valencia’s four clubs for exclusive broadcast rights. It was a poor investment, the broadcaster’s executives conceded. At the end of last year, the network was shuttered. A thousand people lost their jobs.

Most countries spend some public money on soccer. Public funds have been used to build stadiums from England to Italy to the United States, and state investment funds in the Persian Gulf have taken major stakes in European clubs. Places like Monaco give tax breaks to clubs.

But outside of Spain it’s hard to find a league that gets so many sweetheart deals.

The EU probe is examining tax breaks granted to the Real Madrid, Barcelona, Athletic Bilbao and Osasuna soccer clubs. Brussels is also questioning the multimillion-dollar loan guarantees the Valencia regional government provided for local clubs Valencia, Elche and second-division Hercules. The third part of the EU probe concerns a property swap in which Real Madrid was given land around its stadium in one of Spain’s most expensive neighborhoods.

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