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Sport and Power: a Story/Hysteria in Every Club

Football: the Perfect Metaphor of Our Time

Text David Castillo Writer and journalist

© Vicens Giménez

© Vicens Giménez

Football is the mirror that most properly reflects the multi-faceted human personality, which is why it has succeeded in becoming an object of desire or reflection of the poetical and the prosaic, the generous and the speculative. Football stadiums are the modern circuses in which an epic is played out of which the footballers are the owners.

For years we have been hearing about the problems of football clubs and about directors with fingers in all sorts of business. With the crisis everything has changed and directors with links to the construction boom are suffering the after-effects of the bubble bursting and the international super-crisis. So are the clubs. In this article we shall also be looking at the advent of public limited sports companies, changes in the Beckham law that will affect the hiring of mega-stars and the latest affairs between club patrimony and the private finances of their chairmen, which are back on the pages of the press again. Sport is seething, but things go on more or less the same. The new opium of the people still pits eleven players against eleven every Sunday, everybody pays and the masses keep quiet. Who says there is a problem? Who is questioning anything?

       The marriage between clubs and their owners is curious, to say the least. The most flagrant and best-known case is that of the Italian President Silvio Berlusconi and AC Milan, not to mention the pageant of Russian and Arab tycoons who have taken over the English Premier League. These are the tip of the iceberg, the most visible part of a business that moves millions every year and that hides a whole series of paradoxes we shall be looking at, with the focus on Spanish teams and especially the Catalan First Division teams. In Catalonia, Barcelona's leadership eclipses most other teams, of which only Espanyol survives. The city of Barcelona is not like London or Buenos Aires or even Madrid. Here only one line of thought is possible and Barcelona is the undisputed king, with no-one to cast a shadow on it. The chances of Sabadell or Lleida getting into the First Division are remote. So is the possibility that Terrassa, Sant Andreu, Barcelona's reserve team, Figueres or Palamós will make it to the Second Division. Nàstic and Girona have reached silver category after years of trying and failed attempts. Girona succeeded after the city's basketball team broke up. Was this unconnected?

Not much equality between clubs

The case of Barcelona in Catalonia can be extended to the rest of Spain. In the Spanish League there is no wish to encourage greater competitiveness between teams and you could almost say that rivalry is limited to Barcelona-Madrid bipartisanship, with competitors who do not bear comparison, as in the case recently of Seville, Villarreal and Valencia, who seem not to be getting their act together. If we look at the way the English League works we can see that the television cake is shared out equally, which undoubtedly adds to the excitement and to equality, the same as in the American NBA. In England, Manchester United or Liverpool get more money than Wyndham but rivalry is bolstered by a fairer fee for each club. This is not the case in Spain, where television companies negotiate individually and benefit Madrid and Barcelona over the rest, who keep quiet because they need the money to survive. This situation is discriminatory and prevents the equality that fans of all clubs would appreciate.

       The second main difference, which derives from the previous one, is that the English Premier League has become very attractive because the title can be fought over by five or six teams. It is not unusual to find United, Liverpool, Arsenal and Chelsea at the top and even City, backed by international capital. Large investor groups have bought up a number of English clubs in a move away from the decadence they suffered in the century's closing decades. After Italy's domination, the English have cornered the continental competitions, with only a handful of exceptions. The shortage of alternatives in the Spanish League is a burden we need to re-examine, it affects the general interest and means that the majority of the population is drawn to one or the other of the two clubs, leaving their own city's or region's team as second choice. A sorry state of affairs.

Public limited sports companies

These are not the only differences. In the Spanish League we have something that does not exist anywhere else. There are two types of teams based on different concepts: the 'classic' type, with boards of directors along traditional lines, and a second type, which were converted to public limited companies. Amongst the so-called 'classics' we find Osasuna (when the law was passed it was able to show it had no debts), Real Madrid, Futbol Club Barcelona and Athletic de Bilbao. All four work in the old way; that is, they have the traditional elections, in which members vote for upper crust candidates who are keen to preside them and are wealthy enough to cover certain guarantees, which was the case of Laporta's boards of directors, the most successful in the team club's history, despite the internal problems.

       The other clubs are public limited sports companies, a product of legislation intended to make directors responsible for the accounts. One aspect of the law was its elimination of the clause requiring directors to guarantee or put money into the budget they had to administer. These public limited sports companies have gone through the classic procedure for public limited companies: general shareholders' meetings, board meetings, division of capital and the chance for members to buy shares.

       One example of this is Espanyol, which has 11,000 shareholders with no one person holding a majority. The largest shareholder lacks a sufficient proportion to control the rest. A few months ago there was a group centred around José Manuel Lara Bosch, of Grup Planeta, but in the summer of 2009 they got rid of their shares. The club has an Association of Small and Medium Shareholders of Espanyol, made up of almost 600 members and with a little more than 4% of the company capital. This very democratic arrangement, with capital divided and broken up, has nevertheless proved unusually perverse in other clubs. The most notorious cases are Seville, Villarreal, Atlético de Madrid, Depor, Betis, Valencia, etc. The way it works is simple: there is one owner, who owns most of the shares, and in practice management is top-down and dictatorial. This owner can run the club as he wants and take any decisions he likes, including taking a seat on the trainer's bench. This is what one extravagant Russian tycoon did who spent a time in our country and whose name will not be mentioned. If one of these characters owns 51% of the shares he is in full command, but with smaller packages it is also possible to exert absolute control because shareholders' meetings never represent 100% of the club's capital.

       This has visibly changed the image, the philosophy and the nature of many football clubs. The old romanticism has been replaced by the power of numbers. The paternalism of the historical model has given way to the coldness of meetings and boards of directors and the tantrums of the chief shareholders, be they bourgeois trying to show off, nouveau-riches or straightforward crooks who end up in prison. Things have reached a point where newspapers are often unsure where to put certain types of news: sports, economy or society if the issue is problems with the law, which has been common since the days of scandals like the ones involving the Gil family, which are still dragging on, or Del Nido. Some people have bought shares as an investment, for speculating or for whatever reason and others because they want to have the power that goes with clubs, television, press briefings, the obsession with the microphone in football's vanity fair. Just think that for a minimal investment of capital (compared to other businesses), a businessman can get fantastic visibility in the media and even control a football club's fabulous urban patrimony, normally in the centre of the most industrialised cities.

       What at first sight looks like a loss-making business proposition can in the long run prove highly attractive for a businessman who can afford to pay out between seven and thirty million euros and buy a majority of the shares of a public limited sports company. It is not difficult to become the majority shareholder of a Spanish League First Division football club. Take the case of Lopera, for example, who managed to get control of Betis. After investing heavily in remodelling the stadium—where he had his name replace the historic Benito Villamarín—and buying a number of players out of his own money, poor results and relegation caused a catastrophe and the fans' insistence that he should leave the club.

       The fans' mentality is the same as ever, but they do not realise that Lopera is the owner and will only give up the chairmanship if he feels like it or if he really messes things up like Jesús Gil y Gil did. From being the all-powerful football club owner, mayor, political party chairman and a long list of other things, Gil ended up in the court dungeons with countless lawsuits against him and then in prison along with many of his former partners and part of the opposition, who eventually became soiled by the speculation promoted by the former mayor of Marbella and chairman of Atlético Madrid. In short, we must accept that clubs are always bought for less than their patrimonial value, without counting the players, who should also be considered an important part of a modern club's patrimony.

The real estate crisis

The real estate crisis had a decisive effect on the nouveau-riche atmosphere of Spanish clubs, with the added problem of the tax benefits international players got for playing in Spanish competitions. The issues surrounding sponsorship have also changed. A lot of chairmen who had connections with the construction business have left their clubs because they no longer have the money or the power they once had. The only one who has stood the test of time and returned to chair Real Madrid is Florentino Pérez with his new galactic revolution. Florentino is back with the same policy of signing big stars from the English, Italian and French competitions, players like Cristiano Ronaldo, Kaká, Benzemá, Alonso, Arbeloa and co. A new set of great names that will affect sales of T-shirts and other business dependent on the huge financial machinery of the big clubs. Deportivo de la Coruña, for example, was for years sponsored by Faresa, a large construction company. If we look at the advertising on today's football shirts, we can see that Getafe is wearing Burger King. One wonders if this refers to the national chain, the international one or the local one in the home town of this little club that has carved a place for itself in the First Division not without a titanic effort and ambition.

       In general, income from public television and the large corporations has declined, but business is still brisk because it is full of paradoxes and, especially, because everyone watches. It is said that Telemadrid owes almost 30 million euros to Getafe alone. This is public money falling into private hands, but peanuts if we compare it with what this money means to the company. A television contract can be enormously profitable. We could say that all the entertainment generated by football is still big business for television companies: through audience figures and advertising. TVC's monumental debts are not a result of their broadcasts of Barça or Espanyol, as some people say. Broadcasting a match is not expensive, either as regards production or rights, in comparison with the advertising it attracts. When the great football circus starts rolling, public and private television companies reap the benefits.

Changes in the Beckham law

The changes in the Beckham law are another controversial point in football in our country today. It is hard to justify a series of multimillionaire stars paying less tax than they should. This is discrimination against the whole of the population, arising from a law that was originally intended to motivate and attract the researchers and professionals needed for the country's technological, scientific, cultural and economic development. A very interesting article by Joan Herrera, spokesman for ICV in the Congress of Deputies in Madrid, appeared in the opinion section of El País. It began with some extremely revealing facts about the state of the matter:

       'After years of insisting, denouncing, some sarcasm, even, and much perseverance in parliamentary activity, we have managed to put a stop to something unheard of: that foreigners with millionaire salaries, especially elite sportsmen, should pay the same income tax as people earning 18,000 euros a year. The origin of this regulation was a legal reform promoted in 2004 by the PP, with the support of CiU, which meant that foreigners living abroad who became resident in Spain for tax purposes, paid tax on their financial activities at the rate of 24%, regardless of the size of their salary, and for a maximum of six years. They told us this would attract scientists, highly qualified personnel and top management, in the naïve belief that they would bring with them the headquarters of important transnational companies. But at the end of 2009 we can state categorically that the law has failed. Added value is created through investment and resources, not by competing with lower tax costs. But instead of what had been announced, in the end the Beckham law played a different role: lowering the tax burden on elite sportsmen and giving an unfair advantage to some football clubs and certain footballers. A few months ago, the Ernst & Young firm of auditors and advisers on tax, finance and transactions made a comparative study of the taxes paid by professional footballers. Despite the complexity of some models and the many tax exemptions that made it difficult to compare each state's taxation rates, a clear conclusion could be drawn: foreign footballers in Spain were the ones who paid least tax. Less than Italy, with a maximum tax rate of 43%, less than the United Kingdom, verging on 50%, and less than Germany or France.'

       Within the same team there are incredible injustices. The big clubs, though, have a vested interest in continuing this state of affairs, because business is brisk when big stars can be hired who draw the attention of advertisers, the public and international companies. The powerful defend this discriminatory approach to taxation because Madrid knows that Cristiano Ronaldo will not want to renegotiate his contract if it means losing money. Therefore the club will not accept a change in taxation that it will have to cover to be able to hold on to one of its most valuable stars. This will be a sensitive point in the future because there are myriad conditioning factors and a close examination will have to be made of contracts, the role of tax havens and all the legal trickery affecting not only non-EU players but also a host of players' agents, intermediaries and rights owners all over the world.

       The legislation has been dominated by ambiguity, but the economic situation could serve to bring order to the chaos. One curious case is what happens in the Nordic countries. In Denmark, for example, the League is poor. To favour the arrival of players from Sweden, Norway, Finland or Iceland they have introduced a special tax so that their competition is not filled with amateurs as it was a few years ago. They have managed to attract players from larger countries thanks to favourable tax legislation. Formulas will have to be found in Spain so that no-one loses money and at the same time the situation is fair or not too unfair. I do not think the cure will be easy. We must bear in mind that the stars in the Spanish League are surrounded by interests of all types.

       Over and above their potential sporting performance—often far below expectations—, stars are a selling line in themselves. Even so, in the course of the last few years, teams like Real Madrid have signed players in a way which, from the point of view of economics, looks odd, to say the least. The cases of Figo, Ronaldo, Beckham, Kaká and Cristiano Ronaldo are symptomatic of a particular way of understanding football's pageant of businessmen. After reading all sorts of newspapers, interviews and studies, one comes to the conclusion that the money invested bears little relation to ticket sales, membership fees or even local television broadcasts. There is the advertising, but also the political connotations and the urge to be seen as the centre of the world thanks to football. Barcelona should also be put in this group, which also has important political and representative connotations in the club's national symbolism and the Catalonia it represents. These views, seen in perspective, might be difficult to understand, but, in short, they also represent today's football, now we are out of the Franco era and the much criticised policy of bread and football it exemplified and which we so often heard repeated.

       Barcelona Football Club's emblematic chairman during the last years of the Franco era (1969-1977) told the newspaper Avui, on the occasion of the publication of his memoirs, that 'today, Barça v. Madrid is still a confrontation between Catalonia and Spain'. The team under Montal's chairmanship, having hired the legendary Johan Cruyff, thrashed Madrid at Bernabeu and caused a minor earthquake in the mentality of the time. Montal says that the whole of civil society and the worlds of culture, business and politics felt identified. He also admitted that getting round the regime called for a bit of trickery. The most notorious example was the large investment to hire Cruyff, the world's top player in those days and three times European champion with a modest Ajax of Amsterdam who became one of the great names of modern football and won the European cup three times in a row. To procure the Dutch forward's services, Montal admits that as the law did not allow hiring someone for money, 'we had to cheat and say we were not buying a player but a product, cotton'.

Global business

Now the business has become more complex and is part of a global economy. When you hire a big media star you know you can sell matches to television companies all over the world: China, Japan, United States and wherever anyone asks. The club's potential increases because the pull of the stars is very enticing. The Spanish League is once again more interesting than any other because in a match between Barcelona and Madrid there might be a gathering of names on the pitch who are more popular than Hollywood film actors or than rock stars. It is easier to sell a Barça or Madrid T-shirt with Messi's or Cristiano Ronaldo's name on it than any other player's with similar performance. Any team like Madrid, Barça, Milan or Manchester has to have two or three international mega-cracks who can guarantee massive sales of T-shirts and attract advertisers; in other words, a media star for multinational businesses.

       The question of popularity is apparently no different to when Alfredo di Stefano, Ladislao Kubala, Ferenc Puskas or Johan Cruyff were playing (Cruyff, on a smaller scale, appeared in an advertisement for the Bruguer paint company). What is different is the approach and the global scope. Capitalism has become sophisticated and a paint factory today would not be able to afford a legend on the scale of Cruyff, who arrived in Barcelona in the winter of 1973. Today's stars have to have an impact so big that any child, in any country and a fan of any club in any league on the planet knows them and wants their T-shirt. At the same time, the firm producing and distributing the T-shirt will also benefit from the whole carousel.

       When we mortals wonder about the figures for the clubs' accumulated debts, the symbiotic relationship with the television companies and even the political connections, nothing escapes from the system's relentless logic and its perpetuation. Everything is part of a pattern in which recovery is automatic. One year a club can lose three, five or ten million euros (or sixty, in Madrid's case), but the income the following year makes up for it. This income has so far never failed in the case of the big teams. They can never go broke because the income covers the debt and earns interest for the banks.

       One paradigmatic case is Lendoiro's 'Superdepor', which is now in serious financial trouble but is having good results at the sporting level. Depor's margin for business is very small if we compare it with that of Madrid, Barcelona or Valencia. When Lendoiro arrived some twenty years ago, Depor wisely hired Brazilian stars who had great sporting—and economic—results, such as Bebeto, Mauro Silva and Rivaldo, amongst others. From a team that had spent two decades in the basements of the second and third divisions, the qualitative leap was a fabulous one. Even more so in a small city compared with those of the big teams. A Coruña has a population of 250,000, comparable to Sabadell or Terrassa. All of Lendoiro's management and investment was aimed at building up a competitive team, playing in European competitions, aspiring to winning titles and asking a high price for what he had bought cheap. If he spent the equivalent of 10 million euros, he made up for it by making 18 and generating a surplus. If he was unlucky he lost two, if he was lucky or very lucky he made eight or ten million, which was reinvested in the club with the chairman receiving a wage and becoming professionalised.

       The pattern was interrupted when Bebeto and co. disappeared from the club and there were no replacements with their charisma or their capacity for generating surplus value. The formula was to sign players who were coming to a small club but for a big salary. In the future, the player could be transferred to a big club. Nevertheless, no recipe lasts for ever and when things started to go wrong everything changed. Lendoiro has changed his approach and now what he wants are players he can get without a transfer fee, who are paid well and are given the chance of an economic departure if someone else is interested in them. The team, which numbers 40 players in the professional squad, has changed its style.

       A similar case is that of Seville under Del Nido, who is also famous for his problems with the law. Seville had the right directors of football and the right group of players, both home-grown and those hired at affordable prices. This was the case of Reyes, who came at zero cost and was transferred to England Arsenal for 36 million, Sergio Ramos, also from the junior categories and sold to Madrid for 30 million, and an endless list including Batista, Kanouté, Dani Alves, Luis Fabiano, who was a reserve for Porto... Seville have become a top team, regulars in the Champions League, with a lot of players on million-Euro salaries and with ready cash to go on investing. The opposite case is that of Betis, who have paid dearly for their sporting mistakes and been relegated. Eighty-five percent of Spanish clubs currently implement a similar policy, keeping the handbrake on or staying in low gear. They can not take risks because they are burdened by debt that is a drag on the market.

An unwritten law

There is also a kind of unwritten law that has changed the market. Where did the money Madrid paid to sign Cristiano Ronaldo go? Not one player from a Spanish team has been hired recently. Barcelona's money went to Inter and Madrid's to other European teams, mostly to Manchester, Liverpool and Milan. The suggestion is there is a reluctance to strengthen the home market, rival Spanish teams. If Madrid invests 50 million in a player from Seville, Seville will spend 30 on one from Valencia. Valencia will try to get hold of players from Zaragoza or Espanyol. The trends over the last few years show that the money goes abroad, with exceptions like Dani Alves, transferred from Seville to Barcelona for 32 million euros two seasons ago. Foreign spending, in the case of Cristiano Ronaldo, Kaká and Ibrahimovic, even roused protests in parliament. But these were moral arguments because there is no law forbidding this fabulous carousel of money that football moves. The equation works more or less as follows: if the money for Kaká or Ibrahimovic had gone to Valencia for Villa, Valencia would have been made stronger and I do not believe that capitalising the direct competition formed part of either Madrid's or Barcelona's plans.

       The national chain has been broken and most go for players whose contracts have expired or who are cheap, the case of the departures of Espanyol's home-grown defenders Sergio Sánchez (for three and a half million) and Marc Torrejón (for one and a half million) to Seville and Racing and the transfer to the white-and-blue team of Joan Verdú, for free, and of the more economical Argentinian defenders, whose sporting performance has failed to live up to expectations.

       The smaller teams in the League do feed one another. Getafe signed Osasuna's Soldado and paid 6 million and Osasuna spent three on a Villarreal promise. The great fortunes circle outside while everything changes. Espanyol's present deficit of 80 million would have been worrying at any other time, but, as Chairman Daniel Sánchez Llibre said recently, the ground at Cornellà-El Prat and the sports city in Sant Adrià are worth infinitely more than the debts. The challenge is to make it all pay, get results and have the new stadium and facilities bring in capital.

       Villarreal is a different case, a newcomer amongst the greats on the Spanish League and a fixture in international competitions in recent years. The town has a population of just over 50,000, though the club is backed by the capital of the Roig family, owners of Mercadona. They signed some good players, recapitalised the club and managed to keep up their position at the top of the table. They paid a lot, but charged even more. Getting the right replacements for the transfers has been the key to Villarreal's success, and the same goes for Seville. These two cases are similar today, despite the difference in the two clubs' historical importance.

       The lottery is not always kind but managers and directors of football have had their say. The case of the wager for Guardiola is the one that best illustrates the policy on home-grown players implemented by the present Barcelona board, which in spite of all the resignations has a track record unequalled in the club's history, whatever the detractors or dissidents may feel.

Home-grown or media stars?

Another debate amongst fans is the policy regarding home-grown players. For Barça to have seven or eight home-grown regulars (Valdés, Puyol, Piqué, Busquets, Xavi, Iniesta, Messi and Pedro) is a source of pride for La Masia. If it did not bring results, everyone would demand urgent solutions. Whatever the case, Barcelona has returned to the policy that brought great results at the most important moments in its history, the time of the five cups in the 1950s, when Cruyff was playing in the 1970s and when he was coach in the 1990s. It consists in building up the core of the team with the structure and the approach to the game used in the junior categories, with foreigners of proven ability. This formula seems to work if the levies adapt to the first team. And with a bit of luck and patience.

       In short, football, with all its passion and bile, its testosterone and its drug effect, may or may not be the replacement for the religion that Marx saw as the opium of the people. One thing that can not be denied is its relationship with power and with a people's imaginary, especially in Catalonia, where all the symbolism that goes with Barça is so powerful. Whenever I dream about football I remember Helenio Herrera's Catenaccio, his maxim 'We shall win this match without getting off the bus' and his saying that with ten players there is more room to play. When a journalist asked him why he did not convene Canito for a match, Helenio Herrero answered that he was not taking him because he would not play. When the journalist insisted on the possibility of leaving him on the bench, the coach, 'Il Mago' (the Wizard), answered straight-faced: 'How do you expect me to leave a player of his category on the bench?' During the same period, another wizard, José María Maguregui, invented 'galactic football', long before the ineffable Florentino. Nkono, Espanyol's goalkeeper, kicked from the goal area as hard and as high as he could to start the team's attack. There was no question of controlling and playing the ball, it was pure chance. When we discuss football, some of us like to remember those stories, priceless ones involving Helenio Herrero, the ones about Cruyff and Reixach or about Javier Clemente when he was asked at a press conference whether he was anxious about the state of the club he coached at that time, which was having trouble. Clemente looked at the journalist, smiled and began to sing the famous bolero: 'Ansiedad de tenerte en mis brazos'. All the rest is mere claptrap.



Spring (April - June 2010)