BRANDING

Spain’s image gets another kicking

Brussels’ investigation into alleged illegal state aid to top Spanish clubs, and the government’s swift and heated denial, could further damage the nation's reputation

Prime Minister Mariano Rajoy (top left) celebrates a goal by Spain during the 2012 European Championships.
Prime Minister Mariano Rajoy (top left) celebrates a goal by Spain during the 2012 European Championships.alejandro ruesga

For many people around the world, Spain is the land of flamenco, sun, paella, fiestas and, of course, siestas. But five years into an economic crisis unprecedented in modern times, it has become the land of unemployment, discontent, corruption, and now hunger.

To these perceptions, a mix of truth and cliché, we might also add Spain's sporting triumphs.

The national soccer side won the last World Cup in South Africa, while over the last decade names such as tennis star Rafael Nadal, racing driver Fernando Alonso, motorcyclist Marc Márquez, and swimmer Mireia Belmonte — along with the women's national water polo team and many others — have all earned international recognition in their respective fields. The country's triumphs on the sporting stage have helped boost the Spain brand, even opening new markets and attracting investment.

Sporting success is associated with values such as dedication, leadership, team spirit and fair play, and can sometimes rally a nation, while prompting envy and admiration in others. Politicians and businesses are aware of the positive effect it can have on people, particularly at difficult times, which might explain why Spanish Prime Minister Mariano Rajoy decided to travel to Poland in the summer of 2012 to watch the national side tie 1-1 against Italy in the final match of the group stages of the European Championship, at a time when his country's banking system was on the verge of collapse, and had been forced to ask for a bailout from the European Union.

Few would disagree that the country's sporting achievements are a big asset, says Raúl Peralba of consultant Positioning Systems, and author of a recent book on the Spain brand. "The country's success in soccer in recent years has made some Spanish clubs household names around the world. Real Madrid and Barcelona are now more popular globally than Manchester United or Bayern Munich. Our league is now watched in Latin America, while in China, Spain is synonymous with soccer," he says.

"This is all the result of hard work. We have done a good job of creating a local product with global talent such as Cristiano Ronaldo, Lionel Messi, and others," he adds.

The government will do anything it can to defend our soccer clubs"

The data would seem to corroborate the importance of sporting success in boosting a country's reputation. A recent survey by Spanish think-tank the Real Instituto Elcano, based on interviews with 4,000 people in seven countries (the United States, the United Kingdom, France, Germany, Italy, Mexico, and Brazil) puts it high among the things to take into consideration when assessing a country (7.8 out of 10). Education scored 6.8, politics 5.8, and the economy 5.6.

Furthermore, Spain's two leading soccer sides, Real Madrid and Barcelona, are among the best-known Spanish brands, according to consultancy Interbrand, coming in at 20th and 21st, respectively.

So what happens when evidence emerges that some of Spain's sporting institutions aren't competing on a level playing field? Last week, the European Commission has launched an investigation into seven Spanish soccer clubs, including Barcelona and Real Madrid, after complaints they accepted illegal state aid. Unsurprisingly, Foreign Minister José Manuel García-Margallo has denied any irregularities, even before an investigation has taken place, while at the same time admitting: "It is obvious that the government will do everything it can to defend our soccer clubs, which are also part of the Spain brand."

Brussels will look into whether Real Madrid received state aid in property transactions linked to their stadiums, and whether Valencia, Hercules and Elche unlawfully received loans from local authorities.

Under a 2011 deal, Madrid City Hall granted Real the right to develop land in front of its Santiago Bernabéu stadium. Real, which intends to build a shopping center on the site, has yet to get financing for the project.

The problem here is that the Commission's probe once again raises the ugly specter of corruption, a problem increasingly associated with Spain. In Transparency International's latest global survey, published at the beginning of the month, Spain has fallen 10 places, a decline matched only by those of Gambia, Mali, Guinea and Libya - in fact the only country to fall further was Syria.

The probe raises the specter of corruption, which is increasingly associated with Spain

"We could argue about the quality of these rankings, but the media publish them, and people believe them," says Peralba.

"The problem is that if Brussels decides to link soccer, one of our biggest success stories, with corruption, the public's perception of this problem could multiply exponentially," he warns.

"The investigation into Spanish soccer clubs is bad news for Spain's image, because there is no doubt that our sporting success contributes to the admiration that many other countries feel toward us," says Fernando Prado, director for Latin America and Spain at the Reputation Institute, which specializes in measuring how countries are regarded internationally.

"In so much as our sporting success can be undermined by matters such as tax breaks for soccer clubs, or state aid that they were not entitled to, our credibility has been hit," says Prado, who compares the current situation with the accusations of doping made against Spanish athletes in the French media a few years ago.

"In this case, the accusations come from a prestigious body such as the European Commission," he adds.

In which case, says Prado, perhaps Spain needs to investigate the accusations openly and transparently before leaping to the defense of its soccer clubs. "The first thing that needs to be done is for a full investigation to be carried out to establish whether these accusations have any basis in truth. In the event that there is a case to answer, then we have to recognize this, and punish those responsible," he says.

"The worst thing that can be done in a situation like this is to stick to one's guns at any cost. A good reputation is built on credibility: if our institutions are not seen as credible, then they will not be seen as transmitting positive values, they will not be seen as transparent."

"There can be no reputation without transparency. We learned that from the crisis. The banking sector has been telling everybody about its corporate social responsibility policies for years now, but it turned out that in many cases this was nothing more than marketing, and they are now out of business," says Ramón Jáuregui, who, aside from being a member of Congress for the Socialist Party, is also an expert on corporate social responsibility.

"If Spain's soccer clubs are not seen to be exemplary in every aspect of their running, then it means nothing if they win the Champions League eight times in a row," he says.

"This is what many Swedish companies have done by associating themselves with the idea of respect for the environment," he adds.

Peralba says that dismissing the European Commission's allegations of irregularities out of hand is not a good idea. "The right thing to do would be to recognize our faults and open a public and transparent investigation," he says.

"This would show values such as fair play, and actually strengthen our institutions, and repair any defects in the process. We're talking here about the law of openness; a basic aspect of marketing. Winning an argument by recognizing a fault gives greater credibility to your defense. The problem with the Spanish is that we are visceral in defending what we consider ours, and we don't accept criticism, we can't see our mistakes. It's part of our personality."

He may have a point. There was no way that the US public would have leapt to Lance Armstrong's defense after it was known that he had cheated to win seven Tours de France. The public's response has been the same in France and Italy when sporting idols have been discovered cheating. But Spaniards were divided when cyclist Alberto Contador tested positive for doping, with politicians of all stripes rushing to his defense, even before the Spanish Cycling Federation finished its investigation.

Spain's soccer clubs certainly enjoy privileges that no other sector of the economy does. Many teams are badly managed, and have made mistakes that would have cost them dearly in other countries. Most owe huge amounts in back taxes, and have been given sweetheart deals and extensions denied the rest of society.

Since the crisis kicked in, the government has stepped up the pressure on them to pay what they owe. According to Miguel Cardenal, secretary of state for sport, last year, the country's soccer clubs paid a total of 170 million euros in taxes. But each time a club runs into financial difficulties, the country is split along near-sectarian lines, with one side seeing the issue as a personal vendetta, and the other arguing that soccer sides cannot be immune from the laws that apply to the rest of us.

The European Commission's investigation has just begun, and will last several months. However it ends — whether it is with the clubs having to return public money if Brussels' suspicions are confirmed, or with them being exonerated — the Spain brand will have lost some of its luster.

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