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Monday 5 December 2016

Real and Barca killing La Liga by hogging TV cash

Iain Rogers

Published 13/10/2010 | 05:00

Real Madrid and Barcelona risk diminishing La Liga's appeal to television clients if they do not agree to share broadcast income more equitably with their rivals sooner rather than later.

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The Spanish league does not yet use the system of revenue distribution common among European peers.

Real and Barca, who negotiate TV deals individually and are the world's richest clubs by income, get about half the total pot of around €600m.

As a result, most other La Liga clubs are unable to meet the huge wage demands of top players or pay the massive transfer fees needed to buy them and they have no real hope of competing for the domestic title.

Many have slipped ever further into the red, with several, such as Real Mallorca, Malaga and Levante, being forced into administration.

Barca set a points record in winning the league last season, with Real three back in second.

Valencia, who were forced to sell prize assets David Villa and David Silva in the close season, were 25 points behind Real in third.

"None of the other clubs, as it stands today, have serious and well-founded hopes of winning the title," said Jose Maria Gay, a professor of accounting and soccer finance expert at the University of Barcelona.

"If Real Madrid and Barcelona make the effort and give up part of their income to help the other clubs it would only be a short-term sacrifice.

"Over the longer term, with a more competitive league and a better level of quality among the other clubs, they would earn even more."

Real, Barca and their La Liga rivals have had several meetings to try to thrash out a deal on sharing TV revenue and are due to hold talks again on October 22.

However, any agreement would not come into effect until around 2014, after current contracts expire, and the proposals tabled most recently would guarantee current income and only share whatever extra clubs managed to negotiate in any new deal with television companies.

The consensus among analysts is that they could expect between €200m and €300m more annually than the current total of around €600m.

Under a proposal from Real and Barca, the pair would get 34pc of the extra income, with 11pc for Valencia and Atletico Madrid and the rest shared among the remaining 16 clubs based on their position in the league standings.

An alternative proposal from Villarreal would result in 40pc of the extra income being shared equally and 60pc distributed according to results on the pitch.

"What is evident is that the two sides are far apart and the talks are very much open," said a statement from Sevilla, who oppose the Real and Barca model, after the latest meeting on October 5.

The gap between rich and poor in La Liga, in which broadcast revenue is a key income stream, is wide.

A study published in May by Sport+Markt, a consulting firm, showed Real and Barca earned almost 19 times more from TV deals than the smallest clubs in the top division, by far the biggest gap among European leagues.

The richest clubs in the English Premier League, by contrast, earned around 1.7 times more than their smaller rivals.

Real reaped €145m from selling broadcast rights for the 2008/09 season, compared with €2.6m for Sporting Gijon and €2.4m for Numancia, according to a study Gay published in May.

Manchester United earned £53m (€60.5m) last season while Portsmouth got £31.8m, according to Premier League figures.

Balanced

Angel Barajas, associate professor of financial management at the University of Vigo, said it would be better from the point of view of balanced competition to share total income.

The most effective system for Spain would be one similar to that used in the Premier League, with a fixed minimum, a percentage according to a club's position in the final standings and a percentage according to how many games are broadcast.

There should also be financial aid for clubs that are relegated to offset the income loss, as in the Premier League, Barajas added.

"It must be remembered that any new (La Liga) deal would take effect only in 2014 and market conditions could have changed notably by then," he said.

The English Premier League, which earns just over a billion euro a year in broadcast revenue, is proud of its distribution model, which has been in existence since the league was created in 1992.

"The purpose of the model was to create a stable platform while rewarding success," said league spokesman Phil Dorward.

"A mixture of fantastic talent on the pitch, excellent competition between the teams across the league, full stadiums with passionate fans and high TV production values is something that travels well and looks great.

"This is what sells the Premier League to international rights holders across the globe."

Irish Independent

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