Levante: Number One in the Table

     After eight games played in La Liga, the name atop the table is a new one. FC Barcelona has enjoyed one of their most successful starts in La Liga now with 14 games without a loss. Real Madrid have seen great success on the pitch as well, losing only five points out of a possible 24. Sevilla, like Barcelona, still has a zero in the loss tally as they remain unbeaten through eight. Málaga also had its best start to the season after being taken over by a foreign owner. Even Valencia was one win away from their best start in club history after three successive wins at the start of the season. Despite all this, these big fish all find themselves trailing a minnow.

     For the first time in club history, Levante is beating out every other club in the Spanish Primera. This is an incredible feat for a couple reason. First, with a 3-0 win versus a top Spanish league team in Villareal, Levante have now won six straight games. This winning streak marks a record in their club history. Also, Levante have only been in the first division for six seasons with their best finish being around the middle of the table with the number 10 spot. Last season they escaped relegation by only two points. All these records become even more impressive with one thing considered: Levante spent the least amount of money in the last transfer window. 

     According to Sid Lowe, Levante only spent €210,000 this transfer window. Levante has a payroll of €6.5 million and a budget of €22 million. When considering that Barcelona and Real Madrid have several players that make more than Levante's payroll, the success this team has achieved is incredible. Their entire budget is only five percent of Barcelona's budget, yet they are still leading La Liga. This raises several questions. Is it necessary to have financial restrictions and revenue sharing? Right now one of the smallest teams is leading the league regardless of its budget. Does success come down to money or is it about how the team is organized? We will see as the season progresses whether or not Levante is able to keep their spot at the top of the table.

Sources:  http://www.guardian.co.uk/football/blog/2011/oct/17/levante-la-liga-expendables-2 ; http://en.wikipedia.org/wiki/Levante_UD

La Liga vs. EPL: Television Rights

   

  

     How does La Liga sell it's television rights?  What are the differences between La Liga's set-up and that of the European Premier League?  There are pros and cons of each, but which one is better?

     In La Liga, each team is on their own to set-up television deals.  This means that the better, or more popular, teams are more likely to reach more lucrative deals for their clubs, while the less successful teams will simply take what they can get.

     In the EPL, the structure is much more equitable.  The television rights are sold collectively, rather than individually.  The total revenue is split into three groups.  The first group has 50% of the revenue, which is split equally amongst each of the twenty EPL clubs.  The second group has 25% of the revenue, and this is split-up based on league rankings.  The team at the bottom earns X amount of money from this 25%; the 19th-place team earns 2X, 18th-place team earns 3X, and so on.  The team who comes in first will receive 20 times more money from this pool than the team that finished in last.  The remaining 25% makes up the third group.  This money is paid as facility fees, which are determined based on the number of TV appearances.

     There are a few key points to think about when analyzing the differences between the two set-ups:  which one is more fair for the clubs, which one better maintains a competitive balance throughout the league, and which one brings in more money for the league as a whole.

     We'll start with the issue of fairness.  It seems only right that if you succeed on the pitch, you should be rewarded for this.  The better teams deserve to get more money than the worse teams.  In this way, La Liga is more fair than EPL.  But keep in mind that EPL does still give an advantage to the teams who do better.  They split up 25% of the revenue based entirely on league rank.  Is the EPL giving enough money to the better teams in the league?  Are the better teams in La Liga receiving too much money for their success?  If the EPL split up the 25% evenly, and the 50% based on rank, would that be more fair than either of these two current set-ups?

     Competitive balance, which is undeniably a good thing for a league, is clearly more likely to be achieved through the EPL's more equitable distribution of the revenue.  Having more teams in the league with similar finances minimizes the chances for one or two teams to monopolize the talent.

     Finally, we need to look at which television rights structure more greatly benefits the league financially.  Looking at the Domestic markets, we see that while the EPL brings in 1,179 million euros from its television deal annually, La Liga brings in only 500 million euros each year.  In addition, more than half of this 500 million goes to just two clubs, Barcelona and Madrid.  La Liga as a whole not only brings in less than half of the EPL, but it makes less from Domestic TV deals than Serie A and Ligue 1.  This evidence shows that La Liga's teams, outside of the top two, are not getting anything close to what they deserve financially from television deals.

     It seems clear that the EPL structure is better for the league as a whole without a doubt.  La Liga benefits Barcelona, Madrid, and maybe a couple of other clubs who have gained popularity and achieved success throughout the years, but the large majority of the league misses out on receiving much more revenue.  The EPL benefits the league as a whole, but if the top teams in the EPL decide they don't like sharing the money that they're bringing in, could this be yet another factor in setting up the much talked about European Super League?  Even if we assume that the EPL set-up is better, which not everyone does, this does not mean that the EPL set-up is the best.  Would changing the percentages of the three groups to decrease the amount of money split equally and increase the amount of rank-based distribution make things more fair while still keeping the desired competitive balance?

Sources:  http://www.premierleague.com/page/Faqs/0,,12306,00.html ; http://forzafutbol.com/2011/04/tv-revenues-comparative-view.html ; https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8wzYBj0IjBWcpBYqlvdaP20YyEDU-4r7Nrt6PX0C2gdNaf31lp02yH53uUw7xxkkmOw69MCpbkRfHudi7-WnePZibUjtgP1_YNlV-Ye2p7Q5Wh2y51mGHAVEpwQwCdeOOAwu_hoBiSw/s400/16+Hearts+TV+Rights.jpg

A Never Ending Cycle

     Finding a financial balance within La Liga will not happen unless league-wide, serious restructuring is done to share revenue.  In the current system, top-tier clubs must make more than smaller clubs within TV revenue sharing.  It is the current understanding that if certain clubs and players increase television attraction more so than an opponent, the overall TV revenue will not be split equally.   There are many reasons for the larger clubs to protect this right, including how the revenue acts as a necessity to sustain all of larger clubs inflated player salaries so there are zero non-paid salaries.  If the players continue to be offered enormous salaries, the big market teams will continue to fight for more revenue.  So unless there is a well-structured salary cap, one that does not scare off the footballers to other leagues both nationally and internationally, there will continue to be imbalance.

     One could say that as it is seen in the EPL, a balanced revenue sharing from TV contracts helps maintain more thorough competition.  However, a full-blown restructuring would need to happen in La Liga.  Completely evening the playing field between particular clubs and markets simply is not realistic, and most likely will not happen in a democratically governed sport that has turned more into a business than anything.  The large market clubs need the large endorsements and revenues in order to even stay afloat.  Jose Maria del Nido is quoted as saying, “The kind of debts that Real Madrid has, in truth, is manageable, just as the €532 million debt (2010 audited figures) that Barcelona has, but to make them serviceable, both clubs need to generate money, at least €400 million annually, to sustain themselves.  A reason why they are resisting any major restructuring of the TV money deal – at least for now.”  So what is the best way for financially balancing competition between clubs?  Is the Super League indeed what should happen?

Sources:  http://www.totalbarca.com/2011/opinion-pieces/the-truth-behind-del-nidos-tv-deal-revolution/ ; http://file.shotsharing.com/photo/311414490/mid/Mediapro's-sign-on-top,Torre-22@-Mediapro,-Barcelona.jpg

Summer Spending

     There are several ways to evaluate the financial means of any team.  One could look at total revenue, total spending, or total profits in any given season.  On a smaller scale, it is also possible to get an idea of a club's spending power by looking at how much cash they spend in a transfer window.  To get a better idea of the recent spending of clubs, we will look at the 2011/2012 summer transfers.  Because there are 20 teams in La Liga, we will specifically look at a couple of the top and bottom teams in terms of summer spending.
     1. Athletico Madrid: €65.5 Million - Los Rojiblancos made a huge splash in the transfer window, signing a total of 11 players from different clubs.  Of these 11 players, only five were actually purchased (the others were on loan or free transfers).  The most notable was Colombian striker Falcao, who arrived for €40 million from Portuguese side Porto.  It is important to keep in mind that Athletico sold Diego Forlan, Sergio Aguero, David De Gea and others for €85.8 million.
     2. Malaga: €58 million - With their new owner, Malaga bought eight new players and acquired ex-Madrid star van Nistelrooy on a free transfer.  Their two most expensive signings were Santi Cazorla from Villarreal for €21 million and Jeremy Toulalan from Lyon for €11 million.  That being said, Malaga did not sell a single player during the summer transfer window.
     3. (tie) Barcelona: €55 million - The Blaugrana spent a load of money on two star players in the form of Cesc Fabregas (€29 million before incentives) and Alexis Sanchez (€26 million before incentives).  With the sales of Bojan Krkic, Oriol Romeu, Jeffren Suarez, and Martin Caceres, Barcelona recovered €21.5.
     3. (tie) Real Madrid: €55 million - The royal whites made some high profile moves in order to try to compete with Barcelona.  The additions to the squad were Fabio Coentrao (€30 million), Raphael Varane (€10 million), Jose Callejon (€5 million), Nuri Sahin (€10 million), and Hamit Altintop (free).  With all this cash spent, Madrid only made back in the region of €10 million from the sale of a couple players.
     For comparison, five teams spent under €3 million in the summer transfer window.  The bottom two teams are as follows:

     19. Mallorca: €1.1 million - The small island team only spent money on two players this summer. Alejandro Alfaro from Sevilla cost a mere €0.7 million before incentives, while defender Pablo Caceres made up the rest of the transfer budget with a fee of €0.4 million.  They sold two players for €9.25 million.
     20. Levante: €1 million - Levante received a load of players from other teams, but only spent cash on Felipe Caicedo from Manchester City (€1 million).  Interestingly enough, they immediately sold the same player to a Russian team for €7.5 million.
     Through these statistics, it is easy to see that there are only a couple teams that are able to spend above their costs.  Even though Athletico was first in the spending category, they sold many of their best players so they did not incur a loss.  Even the teams that spent very little sold players so they did not lose money in the transfer window.  Does this demonstrate the power of the top couple clubs?  Does Malaga's new owner just increase the uncompetitive balance?  Will Malaga challenge Real Madrid and Barcelona in the next couple years like Man City has done in the Premier League?

Sources:  http://www.betinf.com/spain_transfer.htm ; http://en.wikipedia.org/wiki/List_of_Spanish_football_transfers_summer_2011 ; https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYIykJbaIfv6QzVDDIn5d_8YMqu-jB-psvtdhBdiuOj-9I1JcWLJuFL8uK1-1DhQLStHaF6s2bJ6CQSkvFXwn1ZzQHG7Ghe9QWyCkahv8CKqmZixF9iKlfk10-F4lFhY8zXG1Z5eKhb6Y/s760/radamel-falcao-atletico-madrid-fotofootball-002.jpg

The Weak State of La Liga

     "[La Liga] is the dullest league in the world" - Eduardo Bandrés (former president of Real Zaragoza).  Is it?  How can a league with two of the most popular clubs worldwide be the "dullest league in the world"?  The answer is simple.  While Barcelona and Real Madrid continue to thrive, they make-up only ten percent of the league.  The remaining ninety percent is really struggling.
     At first glance, it would appear that La Liga is doing great.  After all, Real Madrid and Barcelona were recently ranked at the top of Deloitte & Touche's rich list, and they also managed to scored more points than any other team in Europe two seasons ago.  But if two teams are just so dominant both financially and on-the-field, then how can other teams compete?  And if they can't compete, then how is this a league that millions of people would want to follow?   Also, while one could assume that Madrid and Barcelona have amazing teams and that's why they lead the league in points, couldn't one also assume that the teams that they're playing are have horrible teams and that's why they consistently lose?
     Unlike in other European soccer leagues, the teams in La Liga create their own TV rights deals.  This appears to be fair because the better teams with the larger fan bases deserve more money.  But when two teams are earning right around 120 million euros per year, and the next highest club is earning less than 30 million euros per year, this is not in the best interest for the league as a whole.  La Liga is in a situation where the rich are only getting richer and unless something is done, it will only continue to get worse.
     As much as it must be great to be Barcelona or Real Madrid right now, if current trends continue, these two teams are going to be left without any competition at all.  The league is at risk of imploding if eighteen of the twenty teams are forced to spend more money than they take in just to have a small chance each year of competing.  As one director reportedly told Jorge Pérez, the secretary of the Spanish Football Federation, "if I do a good job economically, we'll go down and they'll kill me."  The teams in the league have to be financially irresponsible in order to have a chance to win.  If they're financially responsible, they have no chance to win, they'll be relegated out of La Liga, and then making money or having a chance to win become just that much harder.
     While the top two teams continue to thrive, the large majority of the league is stuck in a vicious, paradoxical cycle of being forced to spend too much money in order to stay afloat as a club.  Until something changes, whether it be through a salary cap, changing up the TV revenue sharing, or some other way, La Liga will continue in this weak state.


Sources:  http://www.guardian.co.uk/football/blog/2010/mar/28/barcelona-real-madrid-spain ; http://aeryssports.com/soccer/files/2011/05/fmkjd.jpeg

History of La Liga

     While those who follow Spanish football know that La Liga is made up of 20 teams all throughout different regions of Spain, they might not know the origins of the league's existence and how it came to be today.

     In April, 1927 the director of a Spanish football club, Jose Maria Acha, initiated the idea of a Spanish national league.  Ten teams were decided upon in 1929 to make up the first Primera Division.  Of the ten original teams, only Barcelona, Real Madrid, and Athletic Bilbao have yet to be relegated.  Barcelona and Real Madrid each won titles in the early years; however Athletic Bilbao was the clear power-house at first, reaching the finals of the Primera Divison six times and winning four times in the first eight years.

     La Liga was suspended during the Spanish Civil War, but it came back once the war had ended and continued as it had been before.  FC Barcelona had a period of dominance from the late 1940’s through the early 1950’s and Real Madrid had a great deal of success starting in the mid-1950’s and continuing on all the way through 1980.  Real Madrid won an unprecedented 14 times from 1961-1980 and then continued their dominance in the late 1980’s, winning five in a row.

     FC Barcelona won four in a row in the early 1990’s, and in the past decade, they have advanced to the same level as Real Madrid.  Many people today view La Liga as FC Barcelona, Real Madrid, and then everyone else.  And in terms of both finances and on-field success, it truly is a league dominated by two.  The question now is just how long will these two teams continue to dominate La Liga, and is it inevitable that a third or fourth team will enter the mix as elite clubs in the next decade or two.

     Looking at the history of La Liga clearly indicates that Real Madrid and FC Barcelona have been at the top tier for most of, if not all of, the league’s existence.  Is it good for a league to have one or two teams consistently winning decade after decade while the other teams simply hope to have a successful year here and there?  Or would the league be better off being more competitively balanced?  Even if you think it would be better off for the league as a whole to avoid teams monopolizing the success, how to go about doing this raises another question:  should a salary cap be implemented?

Sources:  http://en.wikipedia.org/wiki/La_Liga#History ; https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj49n2G3nRXP2kuYPWOIQjfeLSHSVd5d65RqITaGqrX2pJNj4LW8cBalujIbFCT4rxtSkDxbVupJ2-PvUbcZQHR294stDRspACyfkEs0i2Novj6DgS0tbrPXPVNMhOroX8XGjRyiUIlgYc/s400/madrid60.jpg