May 7 (Bloomberg) -- It was a rough time for Javier Tebas to take over as president of the Spanish Professional Soccer League. Real Madrid and Barcelona lost to German rivals in the Champions League semifinals last week, fueling speculation that Spanish dominance of global soccer is slipping.
Behind the disappointing performance of Spain’s two star teams is a league whose clubs carried a combined 752 million euros ($985 million) of debt last year. With the country’s economy mired in recession, fewer Spaniards can afford the higher ticket prices and more expensive broadcast rates that Tebas attributed to a value-added tax, which last year rose to 21 percent from 18 percent.
“We’ve put into place a goal for 2020 that the league will have paid off its taxes to the state,” Tebas, who took office April 26, said in an interview in Miami. “We’ve eaten a lot of cake, we’re fat, and if we try to do a diet in 24 hours we’ll die. We’ve put on 55 kilos and we’re running a marathon in 2020, so now we have to lose some weight.”
Tebas said the economic plan, especially for smaller teams overshadowed by Real Madrid and Barcelona, is to reduce debt and interest payments so that clubs can invest in talent on the field.
In November, Spain’s tax agency confiscated income from several soccer clubs as it chased almost $1 billion of debts from teams in the country’s top two divisions. A tax agency official said at the time it recouped 132.9 million euros of debt from teams since the start of 2012.
In April 2012, the European Commission said it was examining whether Spanish clubs are improperly receiving state aid under agreements that delay tax payments. Atletico Madrid is paying 15 million euros a year of a 115 million-euro tax debt, Chief Executive Officer Miguel Angel Gil said in an interview at the time.
Tebas said the league hasn’t received any government assistance in two seasons and that teams have reduced their debt by almost 10 percent.
Tebas said he looking to the English Premier League and the German Bundesliga for ways to improve stadium attendance, global appeal and broadcasting agreements. Unlike the Premier League, which shares its television rights among its teams, Spanish clubs sell their broadcast rights on an individual basis.
The Premier League next season begins a 3.02 billion-pound ($4.7 billion) three-year domestic rights deal that will be split among its 20 teams.
In Spain, Barcelona and Real Madrid get about half of the country’s annual television income. The U.K.’s Guardian newspaper reported last month that Real Madrid made 140 million euros from television last year, while smaller club Granada earned just 12 million euros.
“What is true is that at the global level the Bundesliga and the Premier League are doing great work, and not just from a sports perspective,” Tebas said. “That’s what we’re reflecting on in our league, and it’s moving very quickly and we’re paying attention to what’s going on.”
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