Cristian Tello, Betis forward, scored the last goal of the last game played with the public in the Spanish League.
It was on March 8, 2020, during the 27th day, and thanks to their goal, the Andalusian team defeated Real Madrid (2-1) to the enjoyment of the 50,596 fans who gathered that Sunday at the Benito Villamarín stadium in Seville.
Although another match was played two days later between Eibar and Real Sociedad, this was behind closed doors due to the coronavirus infections that had begun to register in Europe during the previous days.
Shortly after, on the 13th of that same month, LaLiga announced a "temporary" suspension of the championship, which, after the declaration of the state of alarm and the imposition of home confinement, was extended until June 11.
Since then, not a single fan has returned to occupy a seat in any stadium in a League match, and both the Higher Sports Council and LaLiga only slightly open the door to the return of the public in the last days of next June —more one year later — as long as health developments allow.
In the current pandemic scenario, the economic losses of football clubs throughout Europe have skyrocketed, and competitions such as the Spanish one are already putting numbers to their particular sangria.
According to the report carried out by the consulting firm PwC in collaboration with LaLiga and which the entity presented last Tuesday, the impact of the pandemic on Spanish football on its income account - taking into account the period between March 2020 and until the conclusion of this championship— will be 2,013 million euros: 366 million for the 2019-2020 season and 1,647 million for the 2020-2021.
This accumulated amount is the sum of the losses collected in the four main items from which the clubs are nurtured: 848 million for the matchday, 146 for broadcasting rights, 221 for marketing, 727 for income from transfers of players and 71 million from advertising.
To compensate for this significant decline in billing, during the last 12 months Spanish clubs have cut their expenses that the study quantifies at 984 million, so the net impact of the virus will be reduced, slightly exceeding 1,000 million (1,030 ).
The clubs mainly affected by covid-19 have been those with the highest income in all these areas, as are Barcelona in Spain - which closed the last year with 97 million losses after taxes and predicts a decrease of 199 million in revenue for the next one— and Real Madrid, which, although it ended its last budget with a slight balance (+0.9 million), projects a 14% reduction in revenue for the current campaign due to the drop in contributions in concept of matchday (box office and contributions from members and subscribers) and merchandising and the impossibility of operating its facilities, something that is also affecting Barça.
Extrapolating the accounting hole to the global sphere, FIFA, the highest international football organization, has also recently released its calculations about the debacle, which amounts to 12,000 million euros of lost revenue.
Olli Rehn, president of the FIFA commission in charge of the covid-19 Support Plan program to help the federations that make up this body - endowed with 1,260 million for grants and loans -, assures that “the member clubs and associations of Europe were the most affected in absolute terms ”, but that“ relatively have suffered more outside of Europe, especially in South America ”.
Rehn estimates that the soccer industry in the world before the pandemic moved between 40,000 and 45,000 million dollars a year (between 33,000 and 37,500 million euros) only in club competitions.
Effervescent growth
The outbreak of the pandemic has led to the freezing of an upward business in recent years that had approached or even exceeded in several sections - such as the increasingly prosperous sale of broadcasting rights or the increase in the amounts invested in the transfer of footballers— the concept of a bubble.
So has the virus punctured her?
"I would say yes, that there has been a puncture, but not that the bubble has been completely punctured", points out José María Gay de Liébana, doctor in Economics and Law, and tenured professor of Financial Economics and Accounting at the University of Barcelona .
"I do not consider that there was a bubble to the extent that the entire professional football industry was generating profits and not losses," defends José Guerra, corporate general director of LaLiga.
“What has occurred is an economic impact that has had an impact on the players, who on the other hand are the highest expense account in any club.
In addition, we calculate that in two seasons the figures that were handled before the pandemic could be recovered, ”he predicts.
The sale of the League's image rights began to emerge in Spain on May 2, 2015, when Royal Decree-Law 5/2015 came into force, establishing a centralized marketing system for the audiovisual rights of the main Spanish competitions —Primera División, Segunda División, Copa del Rey and Supercopa de España—, similar to the one already used in other European countries.
This new model, in addition to giving regulatory bodies the power to negotiate for the entire competition batch (prior to this regulatory change, many teams did it on their own), also includes a more generous income distribution system;
financial control over the accounts;
a compensation fund for downgraded clubs;
and the imposition of allocating such income to cancel, guarantee or contribute to the payment of the debts of the entities or clubs with the Tax Administration and Social Security.
A whole letter of adjustment with which LaLiga and the Royal Spanish Football Federation (RFEF) put an end to a market that from that moment began to compete directly at the highest level: of the little more than 765 million euros that were obtained by broadcasting rights in the 2013-2014 season —the last one with the old regulation—, in the following negotiation it went to 1,500 million, almost double.
In June 2018, LaLiga announced the figures for the sale of the rights to exploit audiovisual content for the National League Championship of the First and Second Division in Spain and Andorra for the 2019-2020, 2020-2021 and 2021-2022 seasons.
The total amount for the three-year period was 3,421 million euros (1,140 million per season), which represented an increase of 15% compared to the four equivalent lots in the previous three-year period (2,978 million).
However, with the arrival of the coronavirus, the broadcasts of the matches have been devalued.
The televisions are aware that the lack of public reduces the impact of the product on their subscribers, so from LaLiga they reformulated the amounts agreed for this season, agreeing a reduction that would not have a profound impact on the accounts of the clubs.
This decline, which was finally set at 88 million euros for last season (5% less) and 58 million for the current one (-3%), has been, however, much lower than that which has been forced to carry out the other European competitions: the Premier League reduced the amount by 16%, Serie A by 13%, the Bundesliga by 18% and Ligue 1 (which experienced an unprecedented shock with the resignation of Mediapro to the rights in December considering that it could not make the investment profitable and that Canal + France ended up acquiring 30%.
The fear resulting from all these downward movements is a reduction in the negotiating position of the competitions in front of the televisions in the next renovations.
A circumstance that is not alien to either party.
“Certainly there is going to be a correction and this can be seen and interpreted as a deflation of rights.
Over the last 20 or 30 years we have seen a huge amount of money being paid for them, and I don't think that much will happen in the future, ”warned Simon Green, head of British pay TV station BT Sports, during the Business of Football Summit 2020 forum organized by the Financial Times last February.
“Football is made up of the stadiums, the people, the euphoria, the disappointment, the screams… It is a social industry, and this with the virus has been lost.
I am somewhat afraid that at the moment there is a disaffection of football.
Seeing it on television, but canned, without emotions, is detracting from enthusiasm, "says Gay de Liébana, whose assessment, in addition to appealing to the fan's sentiment, is also oriented to the economic consequences that would derive from this falling out of love:" Soccer is the means of reaching a number of people, so if football loses interest, sponsors may leave the clubs.
And if this is so, what will happen to the television operators?
All this would suppose a cut of income in all the levels ”.
Signs of tiredness
According to the Football Money League 2021 report, prepared by Deloitte, the English League sold its broadcasting rights to Sky and BT Sports - which distributed the different packages - for the 2019-2020 and 2020-2021 seasons for 1.7 billion pounds (1,975 million euros) and 1,500 million pounds (1,743 million euros), respectively;
an amount 8% higher than that obtained in the two previous campaigns.
However, the fact that the value of the last season was lower than that of the previous one - something that had not happened before - already warned, at least, of a stagnation in the growth of the sales curve.
In the same report figures are put on the loss of income for this season in those 20 clubs that have a greater capacity to attract them: 2,000 million euros;
a fall that exceeds the 1,083 million that they stopped receiving in the coronavirus season.
Almost half of this figure, 937 million, is attributed by Deloitte to lost broadcasting rights (23% of the agreed amount), based on reimbursements to television networks and broadcasters for the period in which the competitions are held. kept interrupted.
They also include the fall in income from the days that were canceled, postponed or ended up being held behind closed doors - in all of them the box office was canceled -, and estimated at 257 million euros (-17%).
Luis García is the manager of the Mapfre Behavioral Fund, which invests 10% of its assets in three clubs: Borussia Dortmund (Germany), Olympique de Lyon (France) and Ajax (Holland).
Three clubs from three different countries that share, however, the same sports philosophy based on the training and appreciation of their players, from which they have benefited in recent years with multi-million dollar transfers.
That success has served as a cushion to face the current situation.
“The financial impact of COVID-19 on the football business, which could be framed in the long term, has been significant in the clubs' accounts, as it has also been in many other companies that have not aroused the same suspicions.
However, the numbers of these three clubs in which we have invested, even accounting for the damage of the pandemic, are still quite good, ”says García.
"As for the short-term market situation, there is a bit more noise because the world of football is very emotional and the impact is very visible: just observe that there are no people in the stands for suspicion to remain", Add.
However, the recovery periods for the pre-pandemic figures handled by the investment funds are not very different from the cabals carried out by the competitions themselves, which converge in signaling a recovery two years from now.
“It is curious to see, on the other hand, how the stock market has been recovering the shares of companies from other sectors that are today at levels equal to or higher than those of March last year.
And, on the contrary, the shares of these three clubs are still half.
It has to do with that emotional part that football awakens ”, García completes.
"It is true that in recent years there was a suspicious trend in the sales of rights that Spain was not suffering, but England was due to the very close relationship between the English League and Asian countries.
It was a warning.
LaLiga is resisting reasonably well, although it is clear that the income of the televisions will fall in the next negotiation because the scenario is worse ”, recognizes José Antonio Martín, Petón, ex-footballer, director responsible for the sports area of Huesca and CEO of the company of player representation Bahía Internacional, one of the agent firms that has channeled some of the highest transfers in recent years.
“In a scenario without a pandemic, the growth of television contracts was going to stabilize and be more sustained, as in any sector.
Double-digit growth was going to go down in history ”, adds Jon Ander Ulazia, CEO of Eibar.
His club, much more dependent on these revenues than on other games - his stadium has only 8,164 seats, the second smallest in Primera, so matchday revenues are low -, projects losses of three million euros for the present exercise.
"It may seem little, but they represent 10% of our budget," says the president.
Reducing spending on transfers, the main solution adopted by clubs - especially the Spanish ones - to stop the bleeding, may not in itself be the solution to the problem.
"The payrolls of the footballers are also going to go down," says Gay de Liébana.
In fact, many clubs have agreed or are negotiating the reduction of the players' chips, a game that in many cases takes 60% or 70% of the budgets.
It is a weight of the salary mass of the workforce unthinkable in any other business.
“We are facing a year of dimensioning.
After 2020, which has been a year of unprecedented health and economic shock, we are all reacting and adapting to the new scenario.
And football clubs will have to modulate personnel expenses and footballers' depreciations, which are the main items to adjust the drop in income.
It will have to be this way because there will be no borrowing capacity to deal with the purchase of first or second level footballers, at least in Spain ”, predicts Ulazia.
“We are going to see an emptying of templates beyond many incorporations.
This will lead us to look at quarry football again ”, he added.
Regain the seduction
Faced with this concatenation of holes through which the necessary resources to feed the football business disappear, what escape is left for the clubs?
“They must gain attractiveness.
First, trying to re-engage the football fans who have abandoned them, and secondly, capturing the attention of the millennials.
If we are already seeing how physical stores like those of Inditex are closing to go to electronic commerce, football will also have to reinvent itself.
It cannot continue to be a product that can only be enjoyed through television, but will also have to penetrate through social networks ”, suggests Gay de Liébana.
“We will have to reinvent ourselves in order to continue in the values in which we moved.
It is in our hands.
Advancing in the digitization process is something that sounds very hackneyed, but clubs have to move at the speed of light to adapt to that process ”, shares Ulazia.
Unlike what happens in many European countries, no Spanish club is listed on the Stock Exchange.
However, the covid could accelerate the jump to the floor of some team.
Javier Torres, Head of Sports at KPMG in Spain, recently wrote an article that pointed to this financing alternative at a time of crisis like the current one.
"We do see it possible that a Spanish club will be encouraged to explore an IPO, once the competition returns to full normality and the fans fill the stadiums again," he says.
“The revenue figures of the main European leagues, especially the Spanish one, have experienced strong growth in the last 10 years and we believe that this trend still has a long way to go.
As shown by the recent evolution of the valuations of the different sectors, investors currently have a clear preference for stocks with high growth potential, therefore the football sector is very well positioned to capture this investment appetite ”, he concludes Towers.
Spain loses weight among the big leagues
Last Tuesday Javier Tebas, president of LaLiga, and José Guerra, corporate general director, presented the limits on the cost of sports staff (LCPD) of the sports clubs and corporations of LaLiga Santander and LaLiga Smartbank that they could consume during this season.
These salary limits have been drawn up by the employer for six years and form the core of the financial control by which the clubs must be governed.
They are established for each of them independently and estimate the expenditure that they can make on players, head coach, assistant coach and physical trainer of the first team, in addition to the cost on subsidiaries, quarry and other sections.
To reach this maximum figure, the income obtained by each club is taken into account, and the costs of structure and those of the payment of the debt they hoard are subtracted.
After the conclusion of the last winter market, the total amount that clubs can spend until the end of the season has been cut: from the 2,333 million euros they had at the beginning of the season, it has been increased to 2,224 from February (109 million less).
Tebas congratulated the Spanish teams for their behavior during the last summer transfer market for having been "very responsible."
The boss of the football association was referring to the fact that between all of them they spent just 438 million euros, 66% less than in the same window of 2019 (1,291 million).
According to Transfermarkt.es, the portal specialized in the valuation of footballers, the Spanish was the fourth of the five main European leagues that invested the least in summer, surpassed by the English Premier (1,510 million), the Italian Serie A (856) and the French League 1 (454);
but ahead of the German Bundesliga (364) and the Portuguese Liga NOS (180).
"There is a much more cruel data, so expressive, than the others and that is that LaLiga, which was the one that was constantly spent the most in the winter markets, has become the tenth in the latter," says José Antonio Martín, Petón, ex-footballer and player agent.
With only 21 million euros invested (150 less than the previous year), the Spanish competition has been surpassed this winter by the leagues of Turkey, Holland, China and even the US, among other reasons because neither Real Madrid nor Barcelona signed any.
In the case of whites, it is the third consecutive window in which they do not perform any incorporation.
"The drama of all this is that if you don't have the best players, you don't have the best league and your product is worth less," Petón emphasizes.
According to the latest list drawn up by KPMG on the most sought-after players, the Spanish League has experienced a drop of 1,400 million euros in the added value of its players since February 2020, which is equivalent to a loss of 21.1%;
well ahead of those of the Premier (1,100), those of Serie A (500) and those of the Bundesliga (400).
The market price of footballers is perhaps the most permeable element to the economic situation of the clubs, despite the fact that the slowdown in their growth is observed by some of the interested parties as a punctual and limited event in time.
“Although clubs that are traditionally good sellers, such as Dortmund or Ajax, cannot transfer players for values as high as they were used to in these next markets, they will do so in the next one.
They have not forgotten the methodology they have to buy low and sell high.
Furthermore, whoever wants to sign a top footballer already knows that they will have to pay a very high amount even if the current situation is this, ”recalls Luis García, manager of the Mapfre Behavioral Fund.
"The transfer figures are going to normalize, and some prices are going to be humanized, since the clubs are going to bet on good sense for a while," says Petón, whose agency agreed to the arrival of Athletic exporter Kepa Arrizabalaga to Chelsea from Athletic Bilbao in 2018 for 80 million euros, the highest amount paid so far by a Spanish footballer.
Tebas himself has also stated that he does not believe that the financial situation of Spanish clubs allows large signings to be carried out, such as those of Haaland (Dortmund) or Mbappé (PSG), two of the most sought after today.
“Nobody expect big bombs in the summer.
The clubs are doing a good job reducing their expenses, but none are in an optimal position to make a great signing, "he said last Tuesday.
The employer's association, however, does not consider that the fact that the loss of value of its footballers, together with the impossibility of hiring the most prominent on the world scene, will place its product below that of other competitors.
"What a television operator wants is a reliable and sustainable product in the long term, and that thanks to the fulfillment of its obligations it cannot generate uncomfortable situations in its broadcasting, such as a strike by players or the announcement of non-payment of wages.
That in LaLiga is not going to happen.
Of course we would like to have the best players and coaches in the world, but if that cannot be done right now, what must be maintained is long-term sustainability ”, says José Guerra, corporate director.
According to Transfermart, LaLiga is currently the third competition with the highest market value, with 4,850 million euros, behind Serie A (5,110) and the Premier League (8,840).