Real Madrid and Barça Can Compete in Champions League Despite Revenue Sharing

The issue of FC Barcelona and Real Madrid’s death-grip on the Liga BBVA title and its resulting consequences has been long-standing, divisive, contentious and touchy but one that will not go away unless resolved.

However, now there seems to be increasing inevitability that sooner rather than later something is gonna get done one way or another because the situation has become untenable and cannot and must not be allowed to continue any further to the detriment of the Spanish Primera División as a whole. Because of this situation comparisons to Scottish Premier League abound.

Question that raises itself is that, is this issue a myth or a dark reality that top two clubs are dominating the league and have effectively ripped it in two?

TV Revenues

Is it also a myth or reality that both Barça and Real won’t be able to compete if TV revenue is negotiated collectively and shared equitably?

Well, the answers may not be as starkly clear as one would want them to be and in the end maybe a blend of many variables.

TV revenue issue is the most talked about and competitive imbalance is often wholly attributed to it. There has been some progress in resolving the issue but a deal is yet to be agreed by all.

Barça and Real need to realize that they both need other clubs to make up the league and other clubs should not be held hostage to their dominance as they will not be doing any charity by giving up portion of TV revenues. It should be a symbiotic relationship because Barça and Real need them as much as they need them.

Barça and Real might even ultimately become tactically frail and psychologically vulnerable at competing in Europe become of the weak nature of competition on offer at home.

Bad performances in Europe will also lower the UEFA coefficient of La Liga not to mention financial insolvencies forcing clubs out if Real Mallorca is any example. Predictable and one-side displays will gradually result in losing TV audience fed up with a boring league.

The latest proposal by Real and Barça, to come into effect from 2014-15 season, has met with opposition from six clubs. The percentage of money offered to smaller clubs still too small to comprehensively address the problem and would still be perpetuating the duopoly of Real and Barça.

Some like, Utz Claassen, a shareholder in Real Mallorca, has accepted that latest proposal saying, "In some cases in life, evolution is better than revolution,” though he acknowledges that "in the long term, a more fair and more even distribution of TV revenue is also in the best interests of Real Madrid and Barcelona.”

Málaga CF president Sheikh Abdullah al Thani has also joined in the chorus. "The situation now honestly is not good, regarding the TV rights," he said. "It's not good for the clubs, because only the two big teams are leading the whole issue. We wish to have the same system as they have in England, because it's much fairer."

In November, Fernando Roig, Villarreal president also throw in his weight behind the issue when he was quoted, "In general, a distribution (of TV revenue) that continues to promote a 'league of two' made up of Madrid and Barça must be rejected…We won't be competitive and our football will lose value in terms of television."

President of Sevilla Jose Maria del Nido, perhaps the most vehement proponent of a balanced distribution and prominent figure of six club pack, was recently quoted saying, "In the last five years the percentage of league titles going to the big two was 100 and in future years there will be no chance for any of the other clubs to aspire to competing for the title with Real Madrid or Barcelona.

"This is something that just does not happen in our European neighbors…With this proposed system of sharing money, the title is already sold for the next 10 years.”

The “Big Two” want to keep the lion’s share of the exploits but rebel club’s counter proposal of equal sharing of 40 percent revenue and rest 60 percent to be divided as per final league standings and TV audience is more reasonable and a long-term solution but is short on support from majority of the clubs in Primera and Segunda, who are already sold on Real and Barça’s offer.

For one, Current system makes it difficult for other clubs to get good TV deals, shirt and commercial sponsorships, high stadium attendances, branding, increase merchandise sales and overseas marketing.

So what happens is that smaller clubs stay small. Their stadia do not get filled often losing them precious part of little money that they hope to earn. Players leave due to title droughts and lower wages for higher salaries and brighter silverware prospects elsewhere. It has become a self-perpetuating cycle where rich get richer and poor get poorer.

If a just and equitable solution is not reached and smaller clubs settle for meager peanuts thrown their way then a decline overtime is not out of the question and few years down the road the dispute will raise its ugly head again. Lack of competition will eat into La Liga’s foreign fan base thus becoming unattractive for lucrative TV deals.

Jose Maria Gay, a football finance expert at Barcelona University, has already sounded an ominous warning to this effect. "The clubs who have joined the accord with the big two are signing away their ability to grow and surrendering the league to the two most powerful clubs."

Revenue as a medium of success?

The selfish focal point of Real and Barça is that decrease in TV revenue will hamper ability of both to compete in Europe, i.e. UEFA Champions League. That reasoning, if we can call it that, is partially false.

Over the last many years, it has been clearly demonstrated that having world’s biggest revenue in soccer doesn’t guarantee success on the field.

This year Inter Milan won and its total revenue is €196.5 million for the qualification based on previous season of 2008-09 which is almost half that of Real Madrid (first at €401.4 million in Deloitte’s money league table) and FC Barcelona (second at €365.9 million). Bayern Munich came runner-up with €289.5 millions in revenue. Lyon made the semis with only €139.6 million in revenue.

Last year, Barcelona won the Champions League with the help of 2007-08’s income of €324.8 million. But Arsenal made the semis with just €264 million, Chelsea with €268.9 million and Real made €365.8 million.

In 2008, Manchester United won having €315.2 in revenue for 2006-07, while runner-up Chelsea made €283million compared to Real €351 and Barça €290.1 million. Liverpool was a semifinalist with €198.9 million.

For 2007 European season, AC Milan won having made 238.7 in the last season. Liverpool, the runner-up, made only 176. Real that year earned 292.2 and Barcelona, 259.1 million. Chelsea also made the semis with 221 million.

In 2006’s Champions League, Barça was crowned winner with 207.9 million, Arsenal runner-up with 171.3 million. Lowly Villarreal also reached semifinal in an astonishing achievement for a small town club, which doesn’t even make the top-20 list of Deloitte to this day.

Where was Real during these years with all the riches of the world? Bad management perhaps also a factor for Real, but something is fundamentally wrong with this argument.

Clearly there are more factors to a successful formula than just money.