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Thursday, March 15, 2012

So will German taxpayers have to fork out for Messi and Ronaldo?

So the eurozone crisis has made it to the one place where it is guaranteed to hit home - the sports pages. The main page of the sports section in yesterday's Bild ran with the headline, "Will German taxpayers eventually have to fork out for Messi and Ronaldo?"

The fear, said Bild, is that the Spanish government is about to authorise a 'debt amnesty' for Spain's professional football clubs - including Barcelona and Real Madrid. A "crazy idea", said the paper, as forfeiting money owed to the Spanish government by various football clubs, could further increase the country's already pretty scary deficit. This should worry readers of the sports section, the paper continued, as should Spain hit the iceberg and be forced to seek a Greece-style rescue package, then German taxpayers would effectively, albeit indirectly, be bailing out Barça and Real.

Far-fetched? Most certainly, but the story caught our attention for four reasons:
  • Over at Open Europe, we have developed a slight obsession with Bild (the best barometer of German public opinion)
  • That Germany's largest-selling newspaper includes, in its sports section, a line on the recent discussions over Spain's deficit targets shows that the euro crisis is now as much of a household issue as they come

  • If Madrid was to cancel all or part of the money that Spanish football clubs owe it, that could actually leave a hole in Spain's public finances, given the size of the balance sheets of some of these clubs (which are notoriously over-leveraged).
  • Closer to home (which at OE includes Newcastle, Wisla Krakow and Napoli), the move could, shock horror, also give Spanish football clubs an additional advantage over European clubs
As expected, after a bit of fact-checking and cross-checking with the Spanish press, it turns out that Bild's story is largely a matter of 'lost in translation'. Here's what we've got:
  • Following a parliamentary question by Caridad García, an MP from the Izquierda Unida (United Left) party, the Spanish government has recently revealed that Spain's professional football clubs owe an impressive €759 million to the country's Tax Agency - of which almost €490 million is owed by clubs in the Primera División (the Spanish Premier League).

  • Asked how the Spanish government was planning to address the issue, Sports Minister Miguel Cardenal said that a plan is currently being put together to "make this debt disappear (hacer desaparecer esta deuda, in Spanish) within a reasonable time frame". Now, we suspect that this is where misunderstanding arose.

  • Though subject to dispute, Don Miguel may simply have meant that, in a way or another, football clubs will have to pay their debt quickly, or face sanctions, such as loss of points in the league table, forced relegation, and so forth. During the same interview, he made clear that "football clubs' debt will be paid by football clubs". Again this morning, he insisted that "no debt will be forgiven" for Spanish football clubs.
In other words, Bayern Munich and Borussia Dortmund's fans can sleep peacefully. They are not going to foot the bill for The Flea and CR7's multi-million wages...


Rik said...

I donot believe that Bild is that far from the truth. Several Spanish clubs are at marketvalue minus debts under water (and some of them pretty deep).
These are likely the teams that also have problems with paying tax.
Maybe some of them can find/have a rich uncle but other ones will to survive probably need cash from say the municipality.

Dave the realist said...

I have just remembered an old saying( with regard to Greece): The weakest link breaks the chain. Wake up Germans, and everybody. This whole idea of the EU, or FU, as I prefer to call it, is a failed project of the New World Order

Benjamin Thomas Sutpen said...

I disagree that Bild is the best barometer of German public opinion. Bild drives campaigns against or for certain issues. Sometimes with success, sometimes without. Their headlines matter of course but they are not to be taken as representative of German public opinion but rather of a certain group of the German public. Note that their sale numbers have been decreasing steadily. Does Bild matter? Of course, but don't overplay its importance and pretend that it stands for the German public. It has its own agenda which doesn't necessarily reflect what the German majority wants.

Open Europe blog team said...

Thanks for your comments

@ Benjamin, good points. As with all media, particularly tabloid ones, the media outlet's agenda and public opinion are mutually re-inforcing, and it's not always easy to identify what follows what. It's of course true that Bild doesn't represent or reflect the range of opinions on Europe that exists in Germany. But given it's circulation, it taps into a huge constituency - that was our main point.

Benjamin Thomas Sutpen said...