Spain props up soccer amid crushing austerity PDF  | Print |  E-mail
Written by JORGE SAINZ, Associated Press   
Friday, 13 June 2014 17:23
VALENCIA, Spain (AP) — 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 20 million euros ($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. The government says soccer subsidies are simply part of a policy of supporting sports around the country.

An Associated Press review of official documents shows that Spain's highly autonomous regions are helping to keep some soccer teams alive through massive direct cash injections. The financing has some politicians and ordinary Spaniards questioning the support.

The 20 clubs in Spain's top soccer league received at least 332 million euros 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 time period, the clubs have also benefited from an additional 476 million euros in indirect aid, such as allowing clubs to run up tax and social security debts.

That makes the total 810 million euros in the years reviewed — $1.1 billion.

The AP tally is based on club accounts, the budgets of local and regional authorities, and documents submitted to regional audit courts that oversee public expenditure.

"Soccer puts the fear of God into politicians," 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 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 advantage 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.

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 can be found in the city of Valencia, on Spain's eastern seaboard. The AP found that over the 2008-12 period, the Valencia region pumped 169 million euros 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 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, an hour's drive from the city's other airport, opened in March 2011 at a cost of 150 million euros. The advertising deal provided the team with almost 20 million euros between 2008 and July 2011.

The issue of taxpayer money handed to Spanish clubs is "legally murky," said Juan Carlos Hernandez, a professor of administrative law at the University of Navarra, and any judicial assessment would need to be made on a case-by-case basis.

Miguel Cardenal, president of the Spanish government's Superior Sports Council, said there was no wrongdoing, as did club officials.

"Generally speaking, the amount paid by public bodies is a little above the market price" of advertising, said Ignacio Garcia Gil, Levante's finance director. "But the Spanish league has a global reach."

Soccer clubs Valencia and Villarreal, and officials with the Valencia regional government, all declined to reply to AP's questions.

Meanwhile, Valencia laid off more than 5,000 teachers while cutting budgets 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 were privatized, and 262 hospital beds were cut. The regional government fell behind on social services payments of 110 million euros for 30,000 people who could not get by on their own. Some Valencia associations catering to the needy lost 95 percent of their public funding.

Most countries spend some public money on soccer. Public funds have been used to build stadiums from England to Italy to the United States. But outside of Spain it's hard to find a league that gets so many sweetheart deals.

Apart from Real Madrid and Barcelona, titans that are healthy enough to survive on their own, public money provided a lifeline for all the top-flight clubs.

Still, soccer teams have not been immune to Spain's economic meltdown.

Since 2004, close to 30 Spanish clubs have filed for bankruptcy protection. All of Valencia's teams — except for Villarreal — came close to collapse. To keep themselves afloat, the Valencia teams borrowed a total of 119 million euros. The banks demanded a guarantor for the loans, and the regional government filled that role.

When the clubs couldn't meet payments on the loans, authorities stepped in to prevent the bank from foreclosing by using taxpayer money — 28 million euros of it so far.

"The Valencia case is a covert rescue operation," said Francesc Pujol, a professor of sports and business at the University of Navarra.

___

AP reporters Raf Casert in Brussels, Barry Hatton in Lisbon and Graham Dunbar in Geneva contributed to this story.

 

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