The LFP, TV rights, and a raw deal
It’s not difficult to pass judgment on the Spanish national football association, LFP (Liga de Fútbol Profesional). In fact it’s not even that difficult. Whether it’s burying their head in the sand when it comes to racism, the refereeing quality and controversy in Spain, or the simple fact they cannot schedule La Liga matches more than 2 weeks in advance, the LFP has, rightly, many critics.
Financially, the LFP have dropped the ball, almost criminally. In January 2012, the fantastic blogger Swiss Ramble published a piece on Juventus, part of it focused on the benefit of the 2010/11 collective bargaining TV deal Serie A negotiated. At that point in time, La Liga had the 4th most valuable TV deal in Europe. Obviously England had the highest, with a domestic deal of nigh 800 million pounds (recently that has been renegotiated to 1 billion annually) and overseas distribution of an additional 500 million (approximately 1.3 billion total), but I was shocked to learn that Spain now ranked behind both Italy and most alarmingly France. In fact, Serie A’s total television rights surpassed the 1 billion pound mark, with nearly 90% of that domestic rights. France totaled just short of 700 million total, while La Liga barely broke the 600 million mark. In simple terms, La Liga’s total TV rights were worth less than 50% of England and barely 60% of Italy. Real Madrid and FC Barcelona are the two richest football clubs. In Cristiano Ronaldo and Lionel Messi they have the two most marketable players in world football. Spain and its players are right now gods of the sport. The Premier League has fantastic players, but the best football players in the game on average reside at the Bernabeu and Camp Nou. When these two football clubs square up, the 22 players on the pitch are without argument the crème de la crème of the game, worldclass star side by side to worldclass star. The international explosion of FC Barcelona in the last 8 years, combined with the already established Real Madrid, is the biggest chip on the metaphoric European football table, and the league simply has not capitalized on it. Everyone upstairs is comfy with how it is, why put in effort and rock the boat.
But not everyone is happy. La Liga itself is actually rather unhappy. Total La Liga debt in 2011 totaled over 3.5 billion Euros and it had the worst debt coverage (revenue to debt) over the major 5 European leagues by quite some margin. This season, clubs are threatening to strike again, because at the moment the reality is too many of the smaller clubs are simply not paying their players, they cannot afford it.
Friday August 10th the LFP called an emergency meeting convening of the General Assembly for August 14th under pressure from 13 clubs (Athletic Bilbao, Atletico Madrid, Real Betis, Celta, Espanyol, Getafe, Granada, Mallorca, Osasuna, Rayo Vallecano, Real Sociedad, Sevilla, and Zaragoza) threatening to refuse participating in this year’s season. The order of business tomorrow, attended by all clubs in La Liga and the 22 from Segunda will deal with a few trivial constitutional matters, but the crux of the meeting is around the TV deal.
Of the 2011/12 the 655 million euro TV rights (slightly above the previous year’s amount), 280 million (43%) went to Real Madrid and FC Barcelona (140 each), lowly Real Sociedad got 13 million. Yes, one can argue fairly enough capitalistically, free markets and all, that as Real and Barça are the selling points of La Liga they are entitled to the majority. But the issue appears beyond that now. If La Liga does not follow a collective bargaining agreement, like every other major league, the trend is going to continue. Nobody will be able to compete with the giants, and if the top Spanish players aren’t at the big 2, they will look elsewhere like David Silva, Juan Mata, and Santi Cazorla have, and like Fernando Llorente appears set to do. Clubs will threaten to strike year after year, but because crumbs are better than nothing, will soon fold.
What Juventus showed quite elegantly is that a collective bargaining agreement does not mean less for everyone. Despite their fears of losing 9 million in revenue, the new deal boosted it by 23. Under the collective agreements in Italy and England, the majority of the money still favors the big clubs. Whether it’s done on a “merit” basis in England or based on number of fans, city population, and recent history like Italy, La Liga can formulate a deal that will eventually still see Real Madrid and Barcelona winners, but end seeing others as essentially losers.
The solution lies less in how to divide the pie, and more in increasing the size of the pie. I’m sorry, but the league with the two best football clubs on the planet should not be trailing Italy and France in terms of TV value. It’s simply illogical. Real and Barça won’t earn the stellar 140 million like years gone by, but a number near or above 100 is quite realistic. If Ligue 1 can be sold for 700 million back in 2011, is it fantasy to believe La Liga is worth at least 1 billion? Last year, the Manchester clubs took about 6.5% each, amounting to about 95 million pounds. The English deal is the most equal sharing, so if La Liga, as it likely will, uses more Italian measures like number of fans and past performance to favor the historic super-clubs, Barcelona could expect reasonably a 10% slice. If that pie is 1 billion, that’s 100 million annually.
Real Madrid and FC Barcelona have advantage enough in commercial prowess, business support, and inevitable European spoils. Sandro Rosell has rightly stressed that Barça needs to protect itself against the privately owned super wealthy clubs, correctly so. But with UEFA FFP coming into place, and whispers of an even stricter Premier League financial model, the unfair advantage of the ‘sugardaddy’ club should lessen over time. I personally hope, and I also believe, a collective deal is soon on the cards. Let’s hope today’s meeting is the starting point. Audi are still going to give each and every FC Barcelona player another new car this season, that won’t happen at Rayo Vallecano, new TV deal or not. But a better negotiated, more equitably divided deal can at least see players from Rayo and many other such clubs at least pay their players on time, not months, even years late. It’s about time the LFP stand up and see La Liga for what it is worth, sell it as such, and put an end to annual preseason bickering. All the ingredients are there, it’s only effort and guile missing.
Special thanks to, as mentioned already, Swiss Ramble, for the source of my financial figures.
