Different ball game: lower debt tolerance among other top European leagues

One year after Spain celebrated its World Cup triumph, its national soccer league is beset by debt, mismanagement and bankruptcies. Spain's soccer teams owe around 200 players a total of 50 million euros. The country is not alone in facing debt; most of the European leagues have indebted sides, but the rules in other countries are different. Spain is the exception in allowing clubs to seek protection under solvency laws to avoid bankruptcy and the automatic relegation that goes with it. According to consulting firm Deloitte, the Spanish league's revenues grew more following the 2009-10 season than any other league in Europe - by eight percent to $2.3 billion. However, the main driving forces behind those figures were the two giants of the Spanish game, Real Madrid and Barcelona, who combined to gross $1.2 billion.

In Italy, England, and Germany, there are rules that mean clubs that cannot pay their debt are punished with point deductions, or are excluded from playing altogether. The current owner of Spain's Racing Santander, the Indian magnate Ahsan Ali Syed, was not allowed to buy England's Blackburn Rovers, but had no problem snapping up the Cantabrian side.

ITALY. Don't pay, can't play. If on June 30 a club has not paid all its salaries until the following April, it is excluded from its league. Another club from the same city can take its place, even if it is from a lower division. This is what happened with Napoli, for example, in 2004. The club was unable to meet its outgoings, went into bankruptcy, and in its place, a third-division team called Napoli Soccer stepped in. Italy has a guarantee fund, financed by the soccer federation that covers insolvency. But only up to a certain point, as Leo Grosso, the chairman of the world syndicate of soccer players, points out: "The fund covers a maximum of 200,000 euros. For the first 15 years of its existence it was enough. Over the last four years, the clubs' debts have risen to around one million euros." The crisis has worsened to the point that since 2007, of the 12 sides that have been relegated to Italy's second division, eight have gone bust. "They have left behind them a debt of around ¤30 million, and nobody has any idea how it is going to be paid," says Grosso.

ENGLAND. Nine-point deduction for bankrupt clubs. The English Premier League is the world's wealthiest thanks to the broadcasting rights paid for handsomely by Sky, owned by Rupert Murdoch. But annual revenue of around 2.4 billion euros is not enough to prevent widespread debt among English teams: in total, 510 million euros. The big clubs such as Manchester United, Chelsea, Manchester City and Liverpool, all owned by foreign interests, owe huge sums because of the amount they spend on signings and the wages they pay. But because their income is so enormous, they have no difficulty in borrowing. Not surprisingly, the smaller sides are finding it much harder, and when their finances don't add up, they have no option but to beg in bankruptcy proceedings. This is what happened to Portsmouth in 2010, and for which it was punished with a nine-point deduction that saw it relegated at the end of the season. Crystal Palace also went bankrupt last year and since 2004, Leeds United, Chester, Southampton, Luton Town, Cambridge United and Wrexham have gone down the same route. Bankruptcy means that the club is run by outside administrators appointed by the courts. When a side can no longer meet its outgoings, its players are protected: they are deemed priority creditors, and payment of their salaries is guaranteed.

GERMANY. Licenses depend on balanced books. "Clubs have to show before each season that they have sufficient income to cover their costs (above all those relating to players and staff) and that they are able to meet any unexpected outgoings. If they lack sufficient funding, then they can apply for a loan or a guarantee. If they do not do this, they will be fined, and in some cases may even be relegated to a lower division," says Kay Langendorff, a spokesman for the DFL German Football League. When a club runs up debts, it must present a renegotiation plan on how it plans to pay its creditors. First-division teams are required to reduce it by 10 percent a year, and second-division sides by five percent, says Langendorff. Sometimes a sponsor appears at the eleventh hour, as happened with Schalke, the club where former Real Madrid striker Raúl is playing out his last days. The side was rescued by Russian gas company Gazprom, which guaranteed financing until 2012. No club has ever lost its license since the DFL was set up in 1963, except for clubs coming in from the former German Democratic Republic.