Spanish second tier clubs facing financial ruin-study

MADRID, July 11 (Reuters) - Spain’s heavily-indebted second division clubs cannot continue to spend more than they earn and wages and transfer fees need to be cut substantially if they are to survive, a study said on Monday.

Spanish second-tier sides, much worse off than rivals in England, Germany and France, made a combined net loss of some 43.1 million euros ($61.7 million) in the 2009-10 season, the study by an accounting professor at Barcelona University showed.
More than half of the 22 teams were in administration and their total income of just under 170 million euros was only a 10th of the revenue in the top flight.
By contrast, clubs in Germany’s top division, the Bundesliga, made about 5.7 times more than those in the second division and the difference in France and England was roughly the same.
“We are the world champions and the champions of Europe at senior and Under-21 level, we have two of the game’s best teams, Barca and [Real] Madrid,” wrote Jose Maria Gay, the report’s author.
“If the first division’s finances are very precarious, the second division is worse. It is impossible that the second division remains viable,” he added.
“The solution is very simple: the second division should cut wages and enormously reduce the cost of transfers.”
Gay, an expert on soccer finances, published his latest study a day before Spain’s professional soccer league (LFP) — which includes first and second division clubs—is due to vote on rules designed to control spending.
The proposals are in line with UEFA regulations that begin to come into force next season and aim to stop clubs accumulating unsustainable debts.
Racing Santander became the latest to seek protection from creditors last week, joining fellow La Liga clubs Real Mallorca and Real Zaragoza as well as all three promoted teams Real Betis, Rayo Vallecano and Granada in administration.
DISHONOURABLE STAIN
A separate study Gay published last month showed the 20 clubs in the top flight made a combined net loss of some 100 million euros in the year to the end of June 2010, up from 19 million in the year-earlier period.
Total debt fell slightly from the previous year, to 3.43 billion euros, but was still more than double revenue of 1.61 billion euros.
In the second division, total debt was more than 550 million euros at the end of the 2009-10 season and labour costs accounted for 113 percent of operating income.
Gay was scathing about the failure of many second division clubs to deposit their accounts at Spain’s mercantile registry as they are obliged to do by law.
Only Real Sociedad, Hercules, Elche, Numancia, Cordoba, Celta Vigo and Huesca had provided their 2009-10 accounts by July 2011, he said.
“The lack of transparency in our football is a dishonourable stain on Spanish sport,” Gay said.