La Liga: Debt Crisis Looms For Spanish Clubs as Economy Struggles

   on April 19 2012 8:11 AM

Spain appears to have a leg up on the competition when it comes to the beautiful game.

The reigning World Cup champions also have a league that boasts perhaps the two best clubs in the world: Real Madrid and Barcelona. Meanwhile, some of the lower-tier clubs continue to produce solid results in European competition.

But La Liga, and the Spanish economy, are struggling.

According to recent government assessments, clubs in the top two divisions owe 752 million euro ($988 million) in unpaid taxes. Six of the top division teams have payments due by June 30 and are in bankruptcy protection.

Spain's economy is now heading into another recession and is facing the danger of following Greece, Portugal and Ireland into seeking a bailout.

Real Madrid have a 589 million euro ($773 million) debt, while the debt figures for Barcelona and Atletico Madrid are at 578 million euros ($756 million) and 514 million euros ($675 million), respectively.

Valencia had to sell stars like David Villa, David Silva and Juan Mata to drop its debt to 382 million euro ($500 million). 

Spanish sports secretary Miguel Cardenal said clubs have to pay the back taxes, but the government also considers it "impossible" to expect full payment by June.

The sports ministry plans to have a solution "within a reasonable period of time." 

University of Barcelona economics and finance professor Jose Maria Gay pointed out that the debt problems extend beyond the two major clubs.

"At the end, everyone is concentrated on [Real] Madrid and Barca, who are the kings of the banquet while the rest live a real uncertain future."

League spokesman Juan Carlos Santamaria said discussions with the sports ministry have taken place and attempts were being made on how to resolve the debt situation.