Ronaldo gone, Messi leaving? Clasico decline encapsulates La Liga's problems with the Premier League, tax and Covid-19

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Lionel Messi Cristiano Ronaldo Barcelona Real Madrid Clasico GFX
Artwork by Michael Lee-Graham
Neither Barcelona nor Real Madrid are looking particularly strong, on or off the field, going into Saturday's game at Camp Nou - Goal explains why

On Saturday afternoon, Barcelona host Real Madrid in La Liga. It's the Clasico, the biggest game in club football.

Or is it? In the run-up to this weekend's clash in Catalunya, there has been a greater global interest in whether Cristiano Ronaldo will be cleared to face Lionel Messi in next Wednesday's Champions League clash between Juventus and Barca in Turin.

And that, of course, is what the Clasico is meant to be all about: the very best players in the world going head to head.

But can that really be said of the latest instalment at Camp Nou? How many of Saturday's participants could currently be classed among the elite players on the planet?

Of course, Messi will be present – despite his best attempts to leave Catalunya during the summer – and he is the most recent recipient of the Ballon d'Or. It is revealing, though, that not a single other top 10 finisher in last year's vote will line out for either side.

Sure, there will be iconic characters and talented youngsters on both teams but it seems fair to wonder whether the most glamorous annual fixture in football is losing its lustre.

Barcelona, after all, are in the midst of an all-consuming crisis, beset by sporting, institutional and financial problems.

The Catalans could not even afford to sign Memphis Depay – let alone their No.1 target Lautaro Martinez – on transfer deadline day and while bitter rivals Real Madrid are in far better shape, financially speaking, they did not spend a single cent during the summer transfer window.

Indeed, the normally free-spending Florentino Perez has embraced frugality due to current economic crisis caused by Covid-19 and the costly redevelopment of the Santiago Bernabeu. As a result, he has concentrated solely on reducing the club’s wage bill by offloading big names on even bigger wages.

Of course, this unprecedented level of cost-cutting can also be partially attributed to Madrid’s desire to make a move for Kylian Mbappe next summer. However, the fact that so many other clubs are practising prudence in the transfer market has prompted questions about the financial strength of the game in Spain.

After all, La Liga is not just dumping unwanted benchwarmers on the Premier League, first-team regulars are emigrating to England too. Leeds United alone signed two Spain internationals during the summer, Rodrigo and Diego Llorente.

Rodrigo's case is particular, of course. The striker was previously plying his trade at Valencia, a club whose problems predate the pandemic.

Like Madrid, los Che didn’t sign a single player during the summer. Unlike Madrid, though, they sold several starters, including Ferran Torres, Francis Coquelin and, perhaps most gallingly of all for the fans, Dani Parejo.

There are deep-rooted, long-standing issues at Valencia, related to the ownership of Peter Lim. That Rodrigo left Mestalla, then, was hardly a surprise; it was where he went that raised eyebrows.

Rodrigo had been previously linked with Barcelona and Atletico Madrid but he instead ended up joining a newly promoted Premier League team – providing further evidence of a worrying trend from La Liga’s perspective.  

When Spain won the World Cup in 2010, just three members of its 23-strong panel were plying in their trade in England’s top flight. However, La Roja’s latest squad featured nine Premier League players. That number would have been even higher, too, had both Llorente and Thiago Alcantara not been forced to withdraw.

The pull of the Premier League is a problem for La Liga – one that Goal can confirm they’re acutely aware of. They know that they are simply not operating on the same financial plain.

The coronavirus outbreak affected every league in the world but it did not have anything like the same impact on English football's elite clubs. Indeed, the Premier League's combined outlay during the summer transfer window only fell 10 per cent this year, from €1.65 billion to €1.49bn, according to the CIES Football Observatory.

By contrast, Spanish clubs spent just €348 million – a whopping decrease on last year’s expenditure of €1.40bn. No other ‘Big Five’ league suffered anything close to such a dramatic drop.

Top 5 Transfer Spend 2020 GFX

There is an obvious temptation, then, to conclude that La Liga is heading for the kind of fall that Serie A suffered in the noughties. However, there are some key differences.

Italian football had myriad pre-existing problems, ranging from complacency to corruption. The ‘Calciopoli’ refereeing scandal in 2006 tarnished the image of the game, while the global recession of 2008 brutally exposed the perilous finances of many clubs, and the companies and entrepreneurs funding them.

Serie A stadia – the vast majority of which were not owned by the clubs – had also been allowed to decay, while the country’s long-standing hooligan problem had never been adequately addressed. The net result was cash-strapped teams playing in crumbling, near-empty arenas populated almost exclusively by extremist ultras groups.

This did not make for an attractive spectacle for television viewers, meaning Serie A fell miles behind the Premier League in terms of generating revenue from the sale of broadcasting rights. Only now is Serie A starting to restore its reputation as one of the game’s great leagues.

La Liga would be facing a similar spell in the doldrums were it not for the fact that its potential collapse was identified during the tail end of a golden era for the national team.  

The outspoken Javier Tebas has plenty of enemies within football, particularly at Manchester City, but he has undoubtedly overseen several significant structural changes within Spanish football since being appointed as La Liga president in 2013.

Over the last seven years, La Liga has helped Spain’s clubs reduce their debt to the country’s tax authorities by 92% (from €650m to €53m). This is primarily due to the fact that there have been financial restrictions in place – in some form or other – since the start of the 2013-14 campaign.

Unlike UEFA's Financial Fair Play rules, La Liga’s ‘Control Económico’ is strictly enforced. Whereas European clubs are retrospectively punished for having failed to follow FFP regulations, Liga clubs must prove they are implementing what is essentially a salary cap – calculated on a club's income – before they are cleared to participate.

Top 5 Transfers Summmer 2020 La Liga GFX

For example, despite securing promotion in 2015, Elche were relegated to the Segunda Division due to their outstanding debts to the State Tax Administration Agency (AEAT), while Real Valladolid were prevented from fielding three new signings last season until they reduced their wage bill.

In order to counter the threat posed by the pandemic, La Liga also introduced a new rule banning clubs from spending more than 25 per cent of their annual income, which helps to further explain why Spanish sides spent so little during the most recent transfer window.

Of course, such prudence will not prevent a talent drain. Top players will nearly always follow the money, given finance is so tightly entwined with trophies. Chelsea, Man City and Paris Saint-Germain have all become title winners and major players in the transfer market over the past 20 years because of the billionaires behind them.

Barcelona and Real Madrid remain – and are always likely to remain – major draws. Their global appeal is historical and cultural.

For many players, Barca and Madrid remain the ultimate destinations, the pinnacle of the profession, while it is telling that the pair have significantly more social media followers than any other clubs in the world. Popularity counts for a lot in an era in which commercial growth and exploiting new, overseas markets are of the utmost importance to a club’s success.

However, even the Clasico duo are hindered by Spain's tax laws when it comes to wages.

David Beckham Ronaldo Real Madrid La Liga GFX

When it emerged that Messi wanted to leave Camp Nou during the summer, his former agent, Josep Maria Minguella, argued that the Argentine had already agreed to join Inter because, “in Italy, they pay less tax”. He may have been wrong about Messi moving to San Siro, but he was right about the financial benefits of switching to Serie A.

At this stage, so many players and coaches have fallen foul of Spain's tax system that it has becoming a running joke within football.  And there is no denying that it is a factor for players – and, more importantly, agents – when it comes to negotiating moves to La Liga.

As Tebas has previously stated, "Talking about football, tax-wise, we are the worst treated country in the European Union. In England and Italy, there is a better treatment of the income of athletes and that causes a flight of talent to these countries."

Spain once had the same tax benefits for foreign workers as Italy. The 'Ley Beckham' (Beckham Law) played a role in the ‘Galactico’ era, enabling Real to break the transfer fee world record twice in 2009, on Kaka and Cristiano Ronaldo, as part of a €300m spending spree that also saw Karim Benzema and Xabi Alonso arrive at Santiago Bernabeu.

However, that extravagant outlay was not well received in a country in the grips of recession and undoubtedly influenced the Spanish government's decision to exclude footballers from the tax loophole for foreign workers a year later.

Consequently, La Liga is not as attractive a championship as the Premier League or Serie A for someone looking at a transfer from a purely financial perspective.

Kaka Cristiano Ronaldo Real Madrid La Liga GFX

In the United Kingdom, for example, income only has to be declared from when a person arrives in the country, while foreigners do not have to declare on what they earn overseas. In Italy, a footballer pays just €100,000 on income earned abroad – and that flat rate also applies to his family.

Tax may be a boring topic for football fans but it’s hugely important. To illustrate the point, think of a player signing a five-year contract worth €25m per annum and earning a further €50m in image rights, €40m of which is coming from abroad.

In Italy, that player would pay €130.4m in tax, and even less in the UK – just €120.7m, to be precise. However, in Spain, the taxman would be entitled to €215m of his earnings.

For now, though, there is little La Liga can do about the situation, which is why its primary concern at the moment is ensuring clubs are well run and financially stable. The sale of TV rights has been key in this regard – and arguably represents Tebas' greatest success to date.

Before 2015, clubs were free to negotiate their own deals. This meant Barcelona and Madrid – La Liga's two biggest clubs by a considerable distance – earning far more money than their opponents, resulting in a grossly unbalanced championship.

Things have changed, though. The monetary imbalance has not been completely removed, but it has been acknowledged and is now being addressed.

Thanks to the promotional work done by La Liga, the clubs’ TV revenue has tripled, jumping from approximately €600m a year to €1.865bn a year. Crucially, though, Barca and Real's share has dropped significantly.

While the Blaugrana (€166.5m in 2018-19) and the Blancos (€155.3m) are still receiving similar amounts of money to before, every other side’s income has increased dramatically – even tripling in some cases.

Whereas once the team finishing in 16th place would previously pocket just €13m, now they're taking in €40m. Consequently, TV money has now become most Liga teams’ primary source of revenue, accounting for, on average, more than 60 per cent of their income.

Lionel Messi Cristiano Ronaldo Barcelona Real Madrid La Liga GFX

Of course, there is an inherent danger there, of clubs relying too heavily on broadcasting deals. If people stop watching La Liga because they believe the quality has been diluted by a consistent talent drain, the clubs will suffer the economic consequences. After all, fewer international viewers would mean smaller TV deals in the future.

There is no denying that La Liga’s popularity boomed largely because of the Messi-Ronaldo rivalry at the country’s two biggest clubs. The Clasico became must-see TV for nearly a decade, as two living legends took the game to new heights.

The pair also played pivotal roles in Barcelona and Real Madrid’s European success, with the two clubs accounting for all eight of La Liga’s Champions League triumphs over the past 15 years.

However, it is also worth remembering that Sevilla (six) and Atletico Madrid (three) also claimed a staggering nine Europa Leagues during that same period, resulting in four all-Spanish UEFA Super Cup showdowns, which is why La Liga has topped UEFA’s league rankings for the past eight seasons.

It is that strength in depth that Tebas believes will sustain Spanish football through a difficult spell. He has even argued that the potential loss of Messi wouldn’t have an adverse financial effect on La Liga's coffers “because we have already sold the TV rights for the next four seasons.”

Tebas’ argument could soon be put to the test, given the Barcelona captain could well depart when his contract expires at the end of the season, which would be another blow for a league that has lost not only Ronaldo but also Neymar and a host of national team players in recent years.

However, the hope is that new idols will have emerged by the end of the season. Certainly, the early signs are promising. Only this week in Barcelona, two 17-year-olds scored in the same game for the first time in Champions League history, and it is likely that this weekend's Clasico will be illuminated by potential superstars on both sides.

Ansu Fati is likely to start for Barca, while Vinicius Junior has emerged as Real Madrid's most likely match-winner. Pedri, Trincao and Rodrygo could all, realistically, feature as substitutes.

Ansu Fati Vinicius Junior Barcelona Real Madrid La Liga GFX

Obviously, it might not be a vintage Clasico in terms of quality. There is no hiding the fact that both sides have their issues.

Third-placed Madrid go into Saturday’s showdown on the back of a humiliating Champions League loss at home to a Shakhtar Donetsk side decimated by Covid-19, while Barca are presently ninth in the La Liga standings – albeit with a game in hand.

These are two teams quite clearly in transition. But they will recover. Their colossal support will see to that; in a way, they are too big to fail.

However, the issue is not that Barca and Real are weak right now; it's that the majority of La Liga's clubs are getting stronger. Liga leaders Real Sociedad, second-placed Villarreal and sixth-placed Granada all won their Europa League openers this weekend, underlining that the well of talent in Spain runs deep – which is just as well, of course.

Tough times lie ahead. The Premier League's power shows no sign of waning, while Spain's tax rules and stringent financial controls will continue to put its clubs at an advantage in the transfer market.

Furthermore, there is no knowing when the pandemic will end – and how much damage it will do to football's economy.

However, with increasing shares of the TV money, and tighter financial controls helping to curb reckless spending, La Liga's other clubs are now far better placed than they were in 2013 to compete not only in Spain – but also in Europe.

As one source told Goal, La Liga wouldn’t have been able to cope with coronavirus even five years ago. Now, though, it should not only survive – but continue to thrive in the future.

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