The promotion of Basque Country minnows SD Eibar to the top flight of Spanish football is one of the great sporting stories of the year. However, the achievements of the club, and 38-year-old Coach Gaizka Garitano, have been slightly overshadowed by the recent news that they may face demotion back to the third tier of Spanish football if they do not raise €1.7m by August 6.
A campaign has been launched, backed by high profile former player Xabi Alonso, and many journalists, including the Guardian’s Sid Lowe, have been highlighting their plight and urging football fans around the globe to purchase shares in the club to help raise the necessary capital.
There have been claims that they are being punished for being a small well-run club with no debt, so let’s take a deeper look at the situation and ask a couple of questions:
Why do they have to pay this amount of money?
How did they end up in this situation?
Could they have avoided it?
Will they be able to resolve it?
As you have probably read by now, they have to pay the money because of a rule that was introduced by the LFP (Spanish FA) 15 years ago. The rule states that every team in the Segunda Liga has to have capital equal to 25% of the average expenses of all the teams in the Second Division – excluding the two clubs with the biggest outgoings and the two clubs with the smallest outgoings.
It has been well publicized that Eibar have the smallest budget in the league, so in theory they should also have the lowest wage bill – but this is not the case. In fact, there are at least seven teams in the league that have lower wage bills than the €2.7m spent by the Basque side last season including Hercules, Alaves, Numancia, Recreativo, Real Jaen and SD Ponferradina, with Alcorcon, Girona and Tenerife all operating at a similar level. Overall, Eibar’s wage-to-turnover ratio of 70.5% is the second highest in the league.
The fact that they have no debt to service means that they can afford to pay these wages but they are not the only low-budget team in the league with low levels of debt. Of the 11 teams with budgets of €5m or less, seven of them have very little or zero debt.
So how did Eibar end up in this situation? After all, they knew it was coming. This rule has been in place since 1999 and every team is aware of the consequences of non-compliance. Why did they not budget for it?
Their budget of just under €4m is the lowest in the league by €50,000, just below Cordoba. If they also had the lowest wage bill (currently Hercules at €1.5), they would have had an extra €1.2m in the bank and would have been close to fulfilling the capital requirement. Unfortunately, that strategy would have probably got them relegated straight back to Segunda B.
Much of their wage bill has been taken up by the loan fees of players from the top flight such as Berchiche, Eizmendi, Jota, Morales, Rivas and Garcia, and these deals have certainly helped them in their quest for promotion. The decision to keep a high wage bill seems to be a calculated gamble that has paid off with the ultimate prize.
Last summer, both Lugo and Mirandes had to find similar amounts of money because of another technicality, as covered in a previous article. Both clubs had similar budgets to Eibar but because they did not achieve promotion to La Liga, they did not enjoy the same media coverage. The year before, a similar fate befell Alcorcon and Guadalajara, with the latter eventually being demoted for alleged financial irregularities (pending appeal – decision due June 10).
The positive news is that SD Eibar should easily raise the capital before the deadline. The coverage of this case has thrust them into the spotlight and fans around the world are snapping up the chance to buy a piece of Spanish football history. Sponsors will also be attracted by the prospect of La Liga coverage and once the money is raised, SD Eibar will be able to look forward to all the financial benefits that top flight football delivers.
The irony of the situation is that the new LFP rules now make the Segunda league a much more even playing field as the bigger teams are actually forced to reduce their outgoings and wage bills to avoid debt accumulation. While this gives teams like Eibar a fighting chance, it also means that there are strict guidelines for all clubs, with no exceptions.
The club’s accountants would have been aware of this impending financial sting, and could have reduced their outgoings, but instead, they took the decision to try and consolidate their Segunda status, just as Lugo and Mirandes did last year. They were always going to have to find the €1.7m, even without promotion, but the €20m+ revenue they will recieve next season will certainly soften the blow.
After August 6, SD Eibar will take their rightful place in La Liga and they will have a whole new set of fans cheering them on.
Eskozia la brava!