How to level the financial playing field in La Liga

The first thing you usually hear when someone mentions La Liga to you is the response: “oh, well, it’s just Barcelona and Real Madrid competing every year for the title”. And while those two teams are undoubtedly the best in the planet, most football fans would agree that La Liga is not the deepest league. Serie A and the English Premier league have more teams capable of doing well in Europe and going after world class players. Outside of Malaga and the Big Two, we don’t see great players going into other teams. Instead we see players like Juan Mata, David Villa, David Silva, Sergio Aguero and Diego Forlan all leaving either for Barcelona or other teams not in La Liga. Neither Valencia or Villarreal could qualify for the Champions League knockout stages – and Villarreal were catastrophically bad in their group finishing on an unflattering 0 points. Spain develops the best talent but that talent usually either goes on to play for Real Madrid, Barcelona or a team outside of Spain.

The simple solution, people say, is to change the way the T.V revenue is divided. That is a nice thought, but then again, Barcelona and Real Madrid have the biggest fanbases across the world – why should they have to share money with other teams? Why would they want to share the revenue with other teams? The owners of the other 18 teams don’t have the power to force collective sharing of television revenues – and why should Barcelona and Real Madrid let them – should they give them a percentage of merchandise sales as well?

The solution, in my opinion, is not to share revenues. Although that would be ideal, you cannot have revenue sharing between Barcelona and Zaragoza – it is unfair to the owners of Barcelona, a large city with over four million people, to have to share equally with a smaller city that is less popular globally. The solution, instead, is to regulate how the money is spent.

That being said, I am not a fan of Financial Fair Play. In La Liga’s case, it does nothing for the league. Barcelona and Real Madrid don’t lose money, ironically, it is the lower spending teams that do.

I propose that the owners force a luxury tax on the Big Two. It is okay for them to be great businessmen and make as much money as they can through ticket sales, merchandise and any other means they can think of. But it is not okay for them to poach talent and outspend the competition. “Fair Play”, in my world, means equal opportunity – something UEFA doesn’t really understand.

Now, how will the luxury tax work? For those of you who don’t know what a luxury tax is – a great example is Major League Baseball in America. The Yankees and Red Sox are essentially Real Madrid and Barcelona of the league, they buy all the best free agents. However, when the Yankees spend past a certain point – they pay a luxury tax to poorer teams like the Kansas City Royals. Even the poorest of teams are able, under the right management, to help this system help them compete at a decent enough level.

My luxury tax proposed system would be as follows: every team is alloted a base, un-taxed budget that is equal to 80% of the league revenues divided by the 20 clubs. So, for example, if La Liga brings in 2 billion Euros yearly, each team will have an un-taxed budget of 80 million Euros. That figure is what Barcelona spent on Cesc Fabregas and Alexis Sanchez alone! And Real Madrid, well, Cristiano Ronaldo cost more than that entire amount.

When a team goes over the spending limit they are fined by the league. Also, if a team goes over the limit and has in the same season purchased a player from La Liga from another team, they are fined extra for that too. For example, when Barcelona bought David Villa from Valencia for about 40 million Euros, they would be fined an additional 40 million Euros that they would have to divide between all other teams in the league who are under the limit. That would make Real Madrid and Barcelona think twice before poaching players from other teams in their own league. It would also make sure they looked to foreign leagues to bring players in so that the overall strength of the league would increase.

I think a Euro per Euro fine is appropriate for going over the limit. We talk about Financial Fair Play all the time – and what is more fair than this?

This article was a guest post written by Shawn, a blogger on Toronto FC of MLS and international football stories. He is passionate about changing the economic status of International and European football and has many alternatives to UEFA’s Financial Fair Play Rules.

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