In the 2019/20 football season, a time which was plagued by the beginning of the coronavirus pandemic, La Liga’s Economic Control regulations benefited both of the two top divisions in Spain.
Overall, Spain’s top two divisions posted a 77-million-euro net profit in the 2019/20 season, whilst other top leagues such as the Bundesliga 1 and 2 suffered a net loss of 213 million euros.
La Liga was the only one of Europe’s top five major competitions to turn a profit during the 2019/20 season and the Economic Control mechanisms played a vital role in achieving that feat.
But what exactly is La Liga’s Economic Control? Is it similar to the A-League’s salary cap?
La Liga’s Economic Control, launched in 2013, is a regulatory framework that was self-imposed by the La Liga clubs with the clear objective of guaranteeing the sustainability of the competition and of the clubs themselves through financial review.
What makes the control measures different to UEFA’s Financial Fair play is that La Liga’s Economic Control has a preventative nature. The clubs are aware of how much they can spend in advance, allowing them to easily stay within the limits and prevent an accumulation of debt which is unstainable.
These measures differentiate La Liga from the rest of the major five European leagues, when it comes to activity in the transfer market.
When making signings in the market, one of the pillars of Economic Control is noticeably important, that of the Squad Cost Limit (SCL).
The SCL is essentially the amount that each club can spend on their squad. The framework isn’t just concerned with the salaries of these professionals but other factors too, such as image right payments, variable payments, license fees and other remunerations.
Overall, the limit for each club corresponds to this equation: Budgeted non-sporting expenses are subtracted from the budgeted revenues, taking also into account the debt repayments. The remaining sum is the SCL of the club in question.
When a club wants to sign a new player, they send all the documentation to La Liga, who will authorise or reject the registration of the player – based on the rules and on the SCL at the date of the application.
La Liga have a valuation body – who use reports from independent experts and follow the rules set out in the policy framework. They are allowed, at any time, to revise any particular operation. For example – they can revise a deal to ensure that it is in line with current market values and/or economic trends.
This guarantees that all registrations of players by La Liga clubs are in line with Economic Control regulations. Only in this way can it be certain that all of the teams are competing equally and that there is no form of financial doping, ensuring the sustainable growth of La Liga clubs.
Overall, the implementation of these regulations has helped La Liga hold on to a strong financial position since 2013.
From 2014/15 to 2019/20, the combined equity of La Liga clubs rose by 250%, with debt owed to public bodies going down from €650m in 2013 (the majority overdue) to just €23m in 2021 (all up to date).
Also, complaints from players over non-payment have fallen drastically, from €89m worth in 2011 to €1.5m worth in 2021, with most of the current objections stemming from conflicting interpretations of criteria, rather than unsubstantiated failures to pay.
General Manager at Sevilla FC, Jose Maria Cruz, recently summed it up best.
Speaking at the World Football Summit Europe conference, he credited the success of the economic regulations as a major factor in to why the Spanish competition was so well prepared to deal with the effects of a global pandemic.
“We have been very lucky in Spain and in Europe because we were better prepared than in the past,” he said at the World Football Summit Europe conference recently.
“If a pandemic like this had come five years ago, it would have been traumatic for the football industry…the Economic Control from La Liga, that has been functioning very well, has helped us.”
Will other leagues around the world look to adopt a similar type of model? What do you make of the A-League’s current regulations in comparison?