Deportivo on the verge of administration

Deportivo La Coruna could be the latest Spanish club to enter administration if reports from last week are to be believed. According to local paper La Voz de Galicia, the Spanish Treasury are sequestering the incomes of the club after Deportivo failed to pay a sum of the €32m debt the club owes. This comes as a result of the crippling financial crisis encompassing Spain as the Treasury begins to take further measures with clubs.

Local media reports suggest that negotiations between the club and the Treasury were carried out last week with club President Augusto Cesar Lendoiro stating that the club intended to avoid administration.

“What we want is to not affect anyone. It isn’t ethical. What we want is to pay the full debt, but with new deadlines. The viability of the club is not in danger. Never. The possible agreement with the Treasury must take place,” said Lendoiro, arguing that, despite administration easing the club’s current crisis, the process of administration isn’t ethical.

At the press conference, Lendoiro released a 10-point statement revealing that Depor wanted to avoid administration and that the income at the club was superior to the outgoings. He also explained that Depor wanted to pay the full debt and were continuing to negotiate with the Treasury with the full debt being paid off in 10 years.

According to him, Depor had paid a whopping €20m to the Treasury already this year following successful promotion from the Segunda division. Yet the windfall failed to make up for the expensive relegation from La Liga which Lendoiro claimed had affected Depor badly.

“We weren’t able to fulfill the payments at Segunda, for this reason the Treasury placed the embargo.” The staggering figure, €99.7m worth of debt in total, was impossible to bring down following relegation. The figure has been hovering around the Riazor since the Champions League days, an era which has crippled the club ever since.

However, Lendoiro’s comments signal his intent to avoid administration despite the obvious punishments should the club fail to pay any future payments. Lendoiro’s resistance either suggests that a club never to have been in administration is more financially lucrative – therefore he is able to sell the club on for a more profitable figure – or that he is unwilling to uncover club accounts that show his financial misgivings and extortionate wages/bonuses, both of which care for his own entities.

Administration works rather differently in Spain than England. In England it is considered an offence and punished with an immediate 10 point penalty whereas in Spain the punishments only come into affect after a season if the debt is still existent. Clubs in administration are allowed to pay off debt at a third of the figure but in Spain the rules have been relaxed to give clubs a greater chance of survival.

The decision to avoid administration is a crazy one, one decided by Lendoiro for his own financial matters. If Depor fail to pay the sums in time then administration will be unavoidable. It gives manager Jose Luis Oltra a greater and more important reason to keep the team afloat in Spanish La Liga this season, despite having the joint worst defensive record in the division. Shot-shy Zaragoza put 5 past the club at the weekend, pushing Depor into the bottom three.

Some further reports have claimed that Oltra’s men have not been paid since the middle of September so that isn’t likely to motivate the players too well. Depor are in good company however as 21 fellow Spanish clubs are in administration including Primera Liga rivals Rayo Vallecano, Granada, Levante, Mallorca, Betis and Zaragoza.

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