What the Transfer Window Tells Us About La Liga’s Failing Finances


Credit: ESPN

The European soccer transfer window closed September 2 with a flurry of last-minute deals and the most valuable transfer in the history of the sport. Records fell and billions of euros changed hands. But while teams across the continent welcome new players, most Spanish clubs are more concerned about balancing their books. They’re victims of a national financial crisis and an economic model threatening the future of their league.

The close of the transfer window is like the trade deadline in American sports; it represents the last opportunity for teams to add players for the upcoming season. Player-for-player deals are exceedingly rare and draft picks are non-existent. Instead, a team purchases the right to sign a player from another club. This money-centered approach makes the transfer window a clear indicator of the sport’s general financial health. European soccer has no salary caps or revenue-sharing, so the surest way to improve a team is to spend.

The spending statistics from Spain’s La Liga show how wide the gap between the wealthiest teams, Real Madrid and FC Barcelona, and the rest of the league has grown. Real and Barca have always dominated the Spanish game, but as the financial crisis threatens the stability of poorer clubs, the league is quickly losing any pretense of competitiveness. The two giants combined to spend a net of €109 million, bringing in high-profile stars like Neymar (€57 million to Barca) and Gareth Bale (€91 million to Real). Meanwhile, the 18 other teams combined were net sellers, collecting €210 million through player sales and (presumably) weakening their teams substantially in the process.

Unlike other top leagues, La Liga allows its teams to negotiate independent television deals No other team can come close to commanding the massive €140 million per year that Barcelona and Real Madrid can claim (other teams range from €50 million to €12 million). This gives the Spanish giants a buffer against the current financial crisis, while smaller teams have to sell their most valuable players to cover increasing debts.

This is not just a problem for sports fans who want to see tight competition. La Liga’s players went on strike in 2011 after some clubs were unable to pay wages from months, and experts warn that the league itself, or most of the teams in it, could be in danger of bankruptcy. Like the United States, Spain has substantial economy of tourism, dining, and similar services built around professional sport. If La Liga collapses, it will hurt more than just the athletes and team owners.

Compare this to the English Premier League, which negotiates its television deals as a single entity. Deals signed for the three Premier League seasons through 2016 will net the league £1.2 billion per year from domestic broadcasters and £0.6 billion from overseas, both numbers well above any other league. Because this money has a more equitable split, all but one of the twenty Premier League teams were net spenders in the transfer window. There’s still a significant gap between the wealthiest and poorest teams, but even small market teams like Swansea City can bolster their squad with talented young players.

The obvious solution–if the goal is a more competitively balanced league–is to force La Liga teams to bargain collectively for television revenue, and the Spanish government may soon intervene. Real Madrid and Barcalona will have to sacrifice some short-term revenue, but a healthier financial model will benefit them in the long run. La Liga can’t expect to come close to Premier League money; England’s inherent advantages include their long history with the sport and the universality of the English language. However, the demand for broadcasting soccer is growing exponentially in markets like Asia and the United States. Real Madrid and Barcelona are global brands, but if most of their domestic matches are won before they even kick off, networks can’t count on viewers tuning in on a weekly basis. The transfer window shows us that television dollars are determining the competitive balance of the sport now more than ever. If Real Madrid and Barcelona want to maintain their status at the pinnacle of soccer, they’ll have to swallow their pride and do more than throw money at this new reality.