The Spanish Armada

The Spanish national soccer team are champions of Europe and of the world. The country’s two elite clubs, Real Madrid and Barcelona, are dazzlingly successful and globally renowned. But there is a danger they are becoming too big for a league in which many teams are coming perilously close to ruin.

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The challenges facing La Liga’s chief executive, Francisco Roca Perez, are almost certainly unique in the world of soccer. Every top league has its standout teams, but in Barcelona and Real Madrid, #    ”    by possibly the two most renowned teams on the planet. They excel in almost every metric. Between them, the two superclubs have won 51 league titles, 42 Copa del Rey trophies, and have been champions of Europe 12 times. With average league attendances of over 70,000, they consistently attract some 30,000 more spectators than their nearest rivals to       $? ”  are also hugely impressive. Real Madrid have some 7.5 million followers on Facebook, while Barcelona’s haul is now approaching the nine million mark. Frequent leaders of the annual Deloitte Money League, Real Madrid became         ”   ±A** million in the latest edition of the report, with Barcelona not far behind in second place on ±<Bš$˜  $     muscle and genuinely global fanbases behind them, both teams attract the cream of the world’s playing talent every year. And so the cycle of winning, and earning, continues. While Roca, who was appointed chief – “   22    understandably delighted that his league is home to arguably the world’s two biggest clubs, he is nonetheless cognisant of the danger that Barcelona and Real Madrid are quickly becoming bigger and more powerful than the league they represent. “They recognise that too,” he says. “Because they recognise that there is a degree of fairness within the competition that you cannot drop below, they’ve agreed to a new redistribution of the television money. That’s very important. They are making right now close to 44 or 45 per cent of the television money. They’ve agreed to go   <A  3 $¥      ”       and Real Madrid has been the fact that in Spain clubs are able to sell their television rights individually. According to the latest Deloitte report, Real Madrid recorded broadcasting   ”   ±+B*$7  )**˜   ±+š7$A  $%    revenues recorded by all but the top ten clubs 0   & ” $0    ±+7$+ million more than Real in Champions League broadcast payouts from Uefa, English giants ,   ;    ±A<$™ million less than the Spanish club in broadcast revenues. Both Spanish giants have incredibly lucrative domestic broadcast deals in place with media agency Mediapro. Barcelona’s ”   ” “±+š*    “)*+)8+<  / &  ±+$+ billion for the seven seasons up to 2013/14. To put that into a domestic perspective, Sevilla,   )**˜       ”    “±)*   $ However, while Real Madrid and Barcelona consistently reap huge annual revenues, both clubs’ debt levels are alarmingly high. Last    &  ±<š*   ,&±B7<  $/     high-rollers from the equation and the parlous      ” &    clubs have been perilously teetering on the         $2 year, the combined debt of Spanish soccer       ±<$š  according to Uefa president Michel Platini, §  -¥#        threat of bankruptcy in the near future. %    -  ”   to a clamour to reform a broadcast monies The Spanish national soccer team are champions of Europe and of the world. The country’s two elite clubs, Real Madrid and Barcelona, are dazzlingly successful and globally renowned. But there is a danger they are becoming too big for a league in which many teams are coming perilously close to ruin. THE SPANISH ARMADA By James Emmett. “You can’t expect Real Madrid and Barca to just forego 50 per cent of their television out of the blue. It’s been like that for 70 years.” Francisco Roca Perez, chief executive of La Liga, has seen the top flight secure a 40 per cent increase in broadcast ratings this year, with the second tier managing 200 per cent SPECIAL REPORT | SPAIN & LATIN AMERICA SportsPro Magazine | 95 distribution system that everyone agrees will only see the rich get richer. The league has been trying to even out the system for years, though so far without success. “Spanish teams    ” ¥ - /  “especially the two elite teams. We have to respect that. You can’t just go and impose a change on the way that they have been doing   $  ”  $¥ Roca’s background is varied. He came to the league having worked for eleven years at the National Basketball Association (NBA). Before that he was a banker, and then the managing director of a Spanish sports channel, Corre !  $%/      the league’s power axis to agree to some form of compromise is testament to his patience, determination, as well as his diplomacy – for the Spanish league has long been a notorious European hotbed of soccer politicking. = “      the situation as it stands is that there are two     $%                division and 20 out of 22 teams in the second division and which, crucially, is being proposed by Barcelona and Real Madrid, would see the big two take 34 per cent of the total league broadcasting pot between them; Valencia and Atletico Madrid would share 11 per cent between them; nine per cent would go to the second tier; and then the remainder would be ”        +B   in the league. “But the point is this,” says Roca. §  )*          &   +7$%  majority of teams agree with that.” The second proposal is backed by a very vocal minority: Sevilla, Espanyol, Athletic Bilbao, Villarreal and Real Sociedad – all of them La Liga stalwarts and most of them perennial challengers for the 9″ 4″          Barcelona and Real Madrid. “They want 40 per        ” >  the English Premier League [but in that case it’s 50 per cent],” explains Roca, “and then the  B*        like television ratings or how many supporters or followers you have.” Either way, Roca believes an agreement will be reached sooner rather than later. Furthermore, recognising that neither of the new distribution proposals represents anything like equality, he nevertheless believes that a unanimous move 96 | SportsProMedia.com towards the collective sale of television rights, as is now the practice across all the other major European soccer leagues, is the logical next step. “We’re not talking here about what is the fairest,” he says of the two proposals. “We’re talking about what is possible. We’re talking about moving in the right direction. You can’t expect Real Madrid and Barca to just forego 50 per cent of their television out of the ” $&   ™* $( “ & change 70 years of history overnight. The most important thing, and what we wanted   3      proposals – is that the increasing gap between the two elite clubs and the rest stops right there. Because they’ve agreed to a cap of 34  $&  $%&    thing. Because if they are right now at 44 or 45 per cent, in the next contractual period they  š)   B*   and then where are we? The most important thing was capping this increase of the gap. &  $¥      that, in terms of maintaining a competitive balance at least, the Premier League’s broadcast distribution model, where 50 per cent of the money is shared equally by the teams and then   ”    ”  positions and the number of times a team was selected for live TV games, is fairer, Roca is adamant that the new model – whichever one is agreed on – will promote a new spirit of collective commercial thinking, if not a new policy of collective selling. He explains: “Because the four biggest clubs in the league have agreed to a redistribution of     -       have to really understand the television market;  '”      &  got to get more money than this guy.’ We need them to see where the money comes from and   >”      marketplace. And that is another major step   $ &    $    & ”         ”     ” this is a step forward that will lead us to the centralisation of rights, commercially speaking. “Once Real Madrid and Barca agree that they are going to get just 34 per cent of the business, the rest will follow,” he continues. “Look at it this way: they are interested in the rest of the teams’ contracts. With what is happening today, they only look at their own contract. But now their increasing money will come from the contracts of the rest of the teams being as good as possible. That’s essential. Because they can only have 34 per cent. So to grow their own revenues, the rest of the contracts have to be good. So they have a direct interest in the rest of the teams’ contracts. That means that between this a  '”  $  happen.” The redistribution of money that is already there is one way of addressing the  ” #  $” it can’t be the only solution. “Financially we have to be much, much bigger and stronger than we are,” says Roca, whose background in banking gives him a comprehension of the global recession that most sports administrators would be envious of. “We have to be on top of our economy – how this is going to affect our markets and our revenue streams.” Roca is heading a committee made up of various club representatives to tie down          SPECIAL REPORT | SPAIN & LATIN AMERICA “When you take a game out of the domestic market there are a lot of economic issues that go with that that you have to take into account.” Star imports like Portuguese Cristiano Ronaldo and Frenchman Karim Benzema have helped Real Madrid become the highest grossing soccer club on the planet, but Roca also has responsibility for the clubs forced to compete with that juggernaut. A centralisation of broadcast rights is finally expected to have some impact SportsPro Magazine | 97 see Spanish clubs fall in line with the Uefa requirements for clubs to break even by 2014. “Actually we already have a system in place that we developed,” he explains. “And the main measure was a restriction of the percentage of the money that teams could spend on players. We were aiming at 70 per cent. But because of the Uefa rules, we decided to change our approach and come up with a system that is very close to theirs. We absolutely believe in it and the teams believe in controlling and    ”   $¥0    overseeing a raft of creaking bottom lines, Roca is decidedly optimistic about the future of Spanish league soccer. Of course, given that the Spanish national team are currently champions of Europe and the world, he has every right to be. “There is a direct translation between the success of the national team and the league,” he says. “The Spanish national team is made of players who, most of them, play in the Spanish league. Some of them play in the UK, but most of them in the Spanish league. All of them have been players in Spanish teams. The translation is direct and      ” ”    in Spanish football, both internationally and   $ &    !”  has a lot to do with it or not, that’s always  “  ” “     “# 3   over a 40 per cent increase; in the second division, over a 200 per cent increase. That’s huge. We had better television technology,    $     a lot from the victories both two years ago in Europe and this year at the World Cup.” Roca insists that, despite the profundity of the Spanish recession, the consistent leaps ”  ”     4″  rise in sponsorship revenue, at least from a league point of view. Centrally managed sponsorship inventory, he says, has seen its value quadruple over the last four years. One of those sponsors, Spanish bank BBVA, which          ” )**7 When online gaming company Bwin extended its shirt sponsorship deal with Real ,#   )**˜     of US$140 million over four years set what was then a world record for such a deal. The online gaming industry, on the whole, was minimally affected by the global recession. %   ”     companies have found they now possess has been evident across many of Europe’s top soccer leagues in the past two years. La Liga chief executive Francisco Roca is one of a growing number of sports administrators who believe that betting companies should give back more than just            from. “We are happy that the opportunity is developing,” he says, “because it’s an instrumental business. We are worried about a few things though. The integrity is obviously extremely important. Anything that hampers the competition is obviously the worst thing that can happen. We think that in a few months there will be a betting law in Spain. There will be legal companies working in the betting industry and what we want to see is money coming back to the league and to the teams. Not sponsorship money; money that comes from the business. Because they are taking advantage; they are taking the content; they are taking     -”    ” $&  ”        betting rights is going to happen, but it should happen. Because that industry is making a ton of money with the product         else is building. So they should pay for that like everybody else. The problem is that in some countries, and Spain is one of them, the government says, ‘well, this is public information. Since it’s public information, the betting companies shouldn’t pay for it.’ Well, it is public information. But if you use it for business, then you have to pay  $  “ ”  ”     as information, for discussion, then there is no issue anywhere. But if somebody is using it to build business, then it is not ”      $&  ”     ” $       it has to be exploited. We welcome the betting industry itself, but we’ve got to get our fair value out of it. This is essential.” Betting rights The front of Barcelona’s shirt has been reserved for Unicef in recent years, but the club has now signed a world-record shirt sponsorship with the Qatar Foundation. However, its support of Unicef will continue 98 | SportsProMedia.com         “±<) million per year, has been instrumental in the implementation of another of Roca’s chief goals: international expansion. The bank, says Roca, has played a key role in promoting the Spanish league in South America. “We’re very strong in the Latin American region,” he says. “But we don’t want to sleep on our success. We still want to do promotions here. And then the United States; that’s a tremendous market for us going forward because the Latin population in the States is just booming. And they are very interested in Spanish football.” Asia is another market Roca has his eye on. La Liga currently lags behind both the   2 ” &#  =   of exposure in China, but Roca is adamant      ”   English pegged back in the race to capture one of the world’s largest emerging soccer economies. “Starting this year,” he says, “we will have a competition in China with three Spanish teams and one local team and that will be managed by us, by the league, to promote the league. The domestic market is what it is; we are one of the smallest markets among the     potential has a limit. We don’t know what the      where we are right now, in terms of television revenues or sponsorship revenues. So for us it’s a must that we take advantage of the strength of the Spanish league and the strength of the Spanish national team right now, and try to expand the interest in the Spanish league all over the world. And that extends to putting on events outside of Spain. We’ve got to do a lot of projects that relate to the grassroots programmes, like identifying and raising the level of youth football, especially in Asia, which is underdeveloped. All those things are instrumental for us in reaching a much higher degree of exposure internationally.” An unashamed admirer of the Premier League, Roca is keen to emulate the success that his European rivals have had in their quest to take their brand of soccer across the world. “We watch very closely some of the things that the Premier League is doing,” he says, “because for us it’s a very good example of good practices.” Nevertheless, without ruling it out entirely, he does not foresee the Spanish league taking         foreign soil, put forward by Premier League chief executive Richard Scudamore. “There     “ &    ¥ ”$§&  ”   &   ”    $ understand that this would make sense for the Premier League because they are so mature, so        $ & makes sense for us yet. The NBA used to do $       $ When you take a game out of the domestic market there are a lot of economic issues that go with that that you have to take into account.  &      well received in England,” he says with a smile. Of course, Roca knows that any such attempt to expand the league’s horizons would be met with a deafening mix of scorn and fury amongst fans in Spain. “Football is like     you try to change something – small or big, whatever – the reaction is always negative. You        you’re doing is well-based and you’re not just coming in with crazy ideas then you have to      year, when we proposed the idea of playing games on Monday, and there are other leagues that play on Monday, in Spain all the media and many, many websites and blogs were saying, ‘these guys are crazy; they’re going to kill football. Football on Mondays! That cannot be done!’ But now it’s perfectly natural. The other thing we did was that for a couple of weeks we didn’t read the newspapers or listen to the radio! And then everything was back to normal.” Having become European champions )**7    )*+*)*++ could turn out to be a landmark year for Spanish domestic soccer. With a new television        “   guidelines to be implemented and an assault on international markets set to be launched, Roca is gearing up for what could be the dawn of a new era. “Within three years,” he says, “we       a much lower level of debt, with no teams            redistribution of the television rights by then. “Football is very tough,” he says. “Right now & '” '    &  doing and for me that’s enough. The moment        back home thinking about what else to do.” The way he is managing to coax notoriously stubborn and self-interested Spanish soccer presidents into reform, Roca doesn’t look like he’ll be needing his CV anytime soon. In Lionel Messi and Cristiano Ronaldo, the league boasts the two players generally hailed as the world’s best “Financially we have to be much, much bigger and stronger than we are.” 94 2011 03 James Emmett {filedir_26}SportsProMag_issue30_94-98.pdf [8077] [sportspro_march_2011] SportsPro March 2011