how is the financial health of spanish football clubs
DESCRIPTION
Presentation to the 16th EASM CongressTRANSCRIPT
INTRODUCTION
The financial viability of professional football clubs is a
major issue for football authorities. The UEFA licensing system reflects the interest on
financial control in football. Sloane (1971) broke with the tradition of studying
American professional sport considering that a club’s
aim is to maximize profit. At least, for English football, profit making clubs are
not the rule.
INTRODUCTION
Szymanski and Kuypers (1999) affirm that, historically,
there is no relationship between profit and playing
performance. Morrow (1999), asserts that a fundamental dilemma
exists for football clubs. This is to achieve the balance
between playing performance and economic aims in
the long term. Barajas (2005) concludes that Spanish clubs do not
have as a primary goal to reach profits through their
sports performance.
OBJECTIVE OF THE STUDY AND METHODOLOGY The aim of this paper is to analyse the financial
situation of the Spanish Professional Football Clubs and to check its evolution since year 2000.
I have worked with the Financial Statements of 27 clubs of the First (15) and Second A Division (12) corresponding to year 2005.
Firstly, I have checked the quality of these Annual Accounts studying their Auditing reports.
Then, I have analysed the financial structure of that clubs following the Morrow’s (1999, 111) methodology.
OBJECTIVE OF THE STUDY AND METHODOLOGY
An efficiency analysis and a study of the weight of
different accounts have been carried out. Finally, I have made a comparison between the
situation in year 2000 and 2005.
RESULTS
The financial information delivered by Spanish football
clubs is quite poor. Only five clubs of the sample have positive auditing
reports.
RESULTSTotal Assets
2005Total assets less current
liabilities (2005)
Equity funding
Asset value per € of equity
funding
REAL MADRID 558,856,000 286,268,000 86,281,000 3.32
RCD ESPAÑOL 93,248,872 34,773,242 26,931,127 1.29
REAL BETIS BALOMPIE 90,460,415 38,910,635 24,984,625 1.56
DEPORTIVO DE LA CORUÑA 273,674,803 110,480,328 15,223,550 7.26
RECREATIVO DE HUELVA 15,742,358 11,714,112 8,906,540 1.32
ALAVES 18,198,515 10,385,517 6,320,902 1.64
CELTA DE VIGO 54,873,564 26,880,336 6,252,036 4.30
REAL MURCIA 16,707,586 9,462,904 5,574,625 1.70
CADIZ CF 7,561,905 5,701,378 2,780,538 2.05
UD ALMERIA 4,155,159 2,573,032 2,573,032 1.00
POLIDERPORTIVO EJIDO 6,324,796 2,295,638 2,140,042 1.07
GIMNASTIC DE TARRAGONA 2,087,080 1,603,411 1,603,411 1.00
VILLARREAL CF 141,758,045 68,092,217 772,445 88.15
GETAFE CF 3,483,760 2,583,323 -48,159
TERRASA FC 3,060,734 835,963 -789,379
NUMANCIA DE SORIA 8,402,013 -659,963 -1,355,370
ALBACETE BALOMPIE 14,813,722 3,213,925 -1,451,390
MALAGA CF 41,488,681 -284,727 -1,503,235
REAL SOCIEDAD 51,519,482 5,572,193 -2,695,831
CORDOBA 7,097,361 1,153,915 -2,971,870
SEVILLA CF 46,046,455 12,794,894 -3,411,706
VALENCIA CF 259,396,685 127,611,365 -9,158,020
UD SALAMANCA 11,030,103 -8,759,646 -18,586,096
ZARAGOZA 67,428,829 27,213,536 -20,536,485
RACING DE SANTANDER 34,710,844 -14,284,782 -21,062,087
BARCELONA 377,218,000 206,457,000 -37,094,000
SPORTING DE GIJON 5,395,416 -43,214,437 -47,562,739
52% of clubs has
negative equity
funding.
RESULTS
Excluded
Real Madrid
RESULTS Cash at bank
(bank loans and overdrafts)(€)
Cover ratio (over
operating profit)
Cover ratio (over
operating profit + Extra
profit)
Operating profit
Operating profit + Extra
Profit
Equity funding Debt to Equity ratio
REAL MADRID 160,426,000.00 * * 30,281,000.00 7,933,000.00 86,281,000.00 5.48
RCD ESPAÑOL -29,504,813.00 ** ** -3,290,246.00 -2,169,593.00 26,931,127.00 2.46
REAL BETIS BALOMPIE 2,285,744.00 * * -6,843,075.00 -11,240,292.00 24,984,625.00 2.62
DEPORTIVO DE LA CORUÑA -8,387,162.00 ** 1.04 -14,790,630.00 4,265,666.00 15,223,550.00 16.98
RECREATIVO DE HUELVA n.d. ** 4.83 -1,665,591.00 291,377.00 8,906,540.00 0.77
ALAVES -565,163.00 ** 2.04 -4,141,219.00 261,381.00 6,320,902.00 1.88
CELTA DE VIGO -1,304,336.00 ** 3.17 -12,584,263.00 1,709,525.00 6,252,036.00 7.78
REAL MURCIA 1,460,255.00 ** ** -11,197,480.00 -3,472,930.00 5,574,625.00 2.00
CADIZ CF n.d. ** 2.12 -135,934.00 388,297.00 2,780,538.00 1.72
UD ALMERIA n.d. ** ** -1,084,365.00 -1,106,150.00 2,573,032.00 0.61
POLIDERPORTIVO EJIDO -690,061.00 ** 3.11 -276,733.00 157,951.00 2,140,042.00 1.96
GIMNASTIC DE TARRAGONA 209,207.00 * * -937,740.00 -263,869.00 1,603,411.00 0.30
VILLARREAL CF -39,158,546.00 ** 1.02 -8,211,537.00 3,819,240.00 772,445.00 182.52
GETAFE CF n.d. * * 129,123.00 73,017.00 -48,159.00 *
TERRASA FC n.d. ** ** -1,231,482.00 -504,909.00 -789,379.00 *
NUMANCIA DE SORIA 83,616.00 14.42 15.34 2,718,952.00 2,892,543.00 -1,355,370.00 *
ALBACETE BALOMPIE -1,953,743.00 3.03 4.65 698,321.00 1,073,915.00 -1,451,390.00 *
MALAGA CF -697,291.00 ** ** -12,136,376.00 -8,036,191.00 -1,503,235.00 *
REAL SOCIEDAD -8,713,655.00 ** ** -20,143,906.00 -4,553,233.00 -2,695,831.00 *
CORDOBA -807,218.00 ** ** -7,348,502.00 -1,897,533.00 -2,971,870.00 *
SEVILLA CF 1,053,015.00 0.96 7.17 367,467.00 2,755,141.00 -3,411,706.00 *
VALENCIA CF -2,659,019.00 ** ** -35,537,746.00 -33,407,259.00 -9,158,020.00 *
UD SALAMANCA -332,609.00 ** ** -2,088,224.00 -1,858,738.00 -18,586,096.00 *
ZARAGOZA -9,809,843.00 ** ** -16,162,249.00 -4,387,185.00 -20,536,485.00 *
RACING DE SANTANDER -18,787,189.00 ** 1.83 -7,091,387.00 570,685.00 -21,062,087.00 *
BARCELONA -16,347,000.00 2.60 5.97 18,379,000.00 42,297,000.00 -37,094,000.00 *
SPORTING DE GIJON -2,451,084.00 ** ** -3,291,598.00 -20,740,737.00 -47,562,739.00 *
RESULTSOperating profit (€)
Operating profit + Extra
Profit (€)
Net Profit (Losses) (€)
BARCELONA 18,379,000 42,297,000 36,715,000
REAL MADRID 30,281,000 7,933,000 6,032,000
NUMANCIA DE SORIA 2,718,952 2,892,543 2,704,000
SEVILLA CF 367,467 2,755,141 2,413,192
ALBACETE BALOMPIE 698,321 1,073,915 843,097
CELTA DE VIGO -12,584,263 1,709,525 760,782
RACING DE SANTANDER -7,091,387 570,685 258,250
CADIZ CF -135,934 388,297 137,609
ALAVES -4,141,219 261,381 133,480
POLIDERPORTIVO EJIDO -276,733 157,951 107,207
DEPORTIVO DE LA CORUÑA -14,790,630 4,265,666 98,617
GETAFE CF 129,123 73,017 81,414
RECREATIVO DE HUELVA -1,665,591 291,377 64,714
VILLARREAL CF -8,211,537 3,819,240 58,665
GIMNASTIC DE TARRAGONA -937,740 -263,869 -263,845
TERRASA FC -1,231,482 -504,909 -527,046
UD ALMERIA -1,084,365 -1,106,150 -1,128,146
CORDOBA -7,348,502 -1,897,533 -2,181,947
UD SALAMANCA -2,088,224 -1,858,738 -2,381,078
RCD ESPAÑOL -3,290,246 -2,169,593 -3,444,823
REAL MURCIA -11,197,480 -3,472,930 -3,541,738
ZARAGOZA -16,162,249 -4,387,185 -3,893,059
REAL SOCIEDAD -20,143,906 -4,553,233 -5,615,443
REAL BETIS BALOMPIE -6,843,075 -11,240,292 -6,776,711
MALAGA CF -12,136,376 -8,036,191 -8,465,727
SPORTING DE GIJON -3,291,598 -20,740,737 -21,246,199
VALENCIA CF -35,537,746 -33,407,259 -23,836,474
Median Profit (2005)
is € 58,665 1st D. € 81,414 2nd D. € -395,445.5 Median Profit (2000)
was €116,632
RESULTSTurnover (€) Wages &
Salaries (€)Wages & Salaries /
Turnover (%)
Amortisation (€)
W & S + Amort. /
Turnover (%)CORDOBA 4,421,422 7,831,966 177.1% 601,151 190.7%REAL MURCIA 4,526,008 5,807,156 128.3% 3,238,745 199.9%SPORTING DE GIJON 5,392,248 6,381,248 118.3% 420,850 126.1%UD SALAMANCA 2,805,814 3,229,947 115.1% 591,984 136.2%ZARAGOZA 21,404,697 21,574,811 100.8% 10,738,484 151.0%ALAVES 7,113,842 7,048,972 99.1% 1,215,894 116.2%TERRASA FC 3,481,819 3,016,410 86.6% 101,920 89.6%MALAGA CF 19,725,139 16,982,688 86.1% 10,494,615 139.3%GIMNASTIC DE TARRAGONA 3,807,773 3,181,871 83.6% 93,504 86.0%RECREATIVO DE HUELVA 4,943,393 4,048,993 81.9% 549,077 93.0%REAL SOCIEDAD 25,012,832 20,394,374 81.5% 13,649,691 136.1%VALENCIA CF 87,489,751 71,180,163 81.4% 30,089,179 115.7%RACING DE SANTANDER 14,997,176 12,033,379 80.2% 3,555,358 103.9%DEPORTIVO DE LA CORUÑA 48,803,627 37,580,754 77.0% 19,099,932 116.1%UD ALMERIA 4,055,702 2,797,558 69.0% 100,060 71.4%CELTA DE VIGO 15,491,979 10,353,730 66.8% 12,091,024 144.9%RCD ESPAÑOL 30,311,229 20,162,380 66.5% 7,874,780 92.5%VILLARREAL CF 29,336,617 18,022,582 61.4% 8,683,488 91.0%POLIDERPORTIVO EJIDO 5,216,771 2,978,115 57.1% 547,895 67.6%SEVILLA CF 38,886,631 22,198,487 57.1% 7,125,294 75.4%GETAFE CF 15,180,964 8,501,894 56.0% 477,076 59.1%REAL BETIS BALOMPIE 20,102,828 11,256,571 56.0% 11,501,605 113.2%REAL MADRID 275,653,000 144,483,000 52.4% 16,392,000 58.4%BARCELONA 207,872,000 102,335,000 49.2% 35,746,000 66.4%NUMANCIA DE SORIA 10,541,326 4,857,646 46.1% 212,759 48.1%CADIZ CF 6,616,652 2,759,708 41.7% 813,999 54.0%ALBACETE BALOMPIE 14,894,591 6,063,939 40.7% 779,389 45.9%
RESULTS
Efficiency of expenses in players (2005)
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
Wages Cost per point (€)
Wages + Amort. per point (€)
The cost of wages for getting a better classification in
league grows exponentially when clubs compete for the
first positions.
RESULTS
-20,000,000
020,000,000
40,000,00060,000,000
80,000,000100,000,000120,000,000
140,000,000160,000,000
180,000,000
Increase of turnover (€) 2005-2000
RESULTS Turnover (€) 2005
Turnover (€) 2000
Increase of turnover (€) 2005-2000
REAL MADRID 275,653,000 111,770,197 163,882,803BARCELONA 207,872,000 101,408,754 106,463,246SEVILLA CF 38,886,631 16,632,397 22,254,234VILLARREAL CF 29,336,617 7,287,248 22,049,369VALENCIA CF 87,489,751 65,923,954 21,565,797REAL BETIS BALOMPIE 20,102,828 544,186 19,558,642DEPORTIVO DE LA CORUÑA 48,803,627 31,376,432 17,427,195GETAFE CF 15,180,964 1,457,448 13,723,516RCD ESPAÑOL 30,311,229 17,643,383 12,667,846ALBACETE BALOMPIE 14,894,591 3,042,480 11,852,111REAL SOCIEDAD 25,012,832 18,961,193 6,051,639MALAGA CF 19,725,139 13,791,329 5,933,810REAL MURCIA 4,526,008 964,883 3,561,125RACING DE SANTANDER 14,997,176 11,472,708 3,524,468ZARAGOZA 21,404,697 18,124,446 3,280,251RECREATIVO DE HUELVA 4,943,393 2,229,340 2,714,053NUMANCIA DE SORIA 10,541,326 9,209,495 1,331,831SPORTING DE GIJON 5,392,248 4,218,624 1,173,624CORDOBA 4,421,422 3,440,704 980,718UD SALAMANCA 2,805,814 3,006,359 -200,545ALAVES 7,113,842 13,129,975 -6,016,133CELTA DE VIGO 15,491,979 23,031,427 -7,539,448
RESULTS
-120,000,000
-100,000,000
-80,000,000
-60,000,000
-40,000,000
-20,000,000
0
20,000,000
40,000,000
60,000,000
Increase of equity (€) 2005-2000
RESULTS Equity
funding (€) 2005
Equity funding (€)
2000
Increase of equity (€)
2005-2000REAL MADRID 86,281,000 30,267,306 56,013,694RCD ESPAÑOL 26,931,127 -15,023,818 41,954,945REAL MURCIA 5,574,625 -2,165,477 7,740,102DEPORTIVO DE LA CORUÑA 15,223,550 10,071,454 5,152,096ALAVES 6,320,902 3,231,240 3,089,662VILLARREAL CF 772,445 687,185 85,260GETAFE CF -48,159 -46,122 -2,037CORDOBA -2,971,870 -2,863,955 -107,915NUMANCIA DE SORIA -1,355,370 -982,649 -372,721RECREATIVO DE HUELVA 8,906,540 9,698,544 -792,004CELTA DE VIGO 6,252,036 7,335,022 -1,082,986ALBACETE BALOMPIE -1,451,390 342,096 -1,793,486REAL BETIS BALOMPIE 24,984,625 27,793,907 -2,809,282MALAGA CF -1,503,235 1,341,483 -2,844,718SEVILLA CF -3,411,706 1,540,767 -4,952,473REAL SOCIEDAD -2,695,831 5,205,889 -7,901,720UD SALAMANCA -18,586,096 2,212,668 -20,798,764RACING DE SANTANDER -21,062,087 4,865,451 -25,927,538ZARAGOZA -20,536,485 5,678,195 -26,214,680VALENCIA CF -9,158,020 17,814,828 -26,972,848SPORTING DE GIJON -47,562,739 -7,010,524 -40,552,215BARCELONA -37,094,000 75,195,984 -112,289,984
CONCLUSIONS Taking these outcomes we can conclude that the
financial situation of Spanish football is getting worse
and becoming dangerous. Clubs with higher potential to achieve revenues as
Real Madrid and Barcelona have a better wages to
turnover ratio. Smaller clubs have to spend a higher proportion of
their revenues on wages to be competitive but it
means that their financial results are worse. It will be necessary to set some salary cap if we want
that football survive.
