La Liga TV Rights: Is There Any Hope For Change? Part 1

Spain’s Primera Division is one of the best leagues in football. The technical, possession-based style of play is the most influential of the current era. At least three of the top five players in the world play in La Liga.

However, there are many problems that prevent La Liga from being perfect and most stem from the same self-inflicted, correctable source—TV rights.

The most common criticism is that La Liga has become a ‘two-horse race’ where only Real Madrid and Barcelona have any shot at winning the league title.

At the heart of this is La Liga’s outdated TV distribution rights system.  This setup breeds enormous disparity between the top two clubs and the rest of the league.

Over the next week, Counter-Attacking Football will look at the current TV distribution setup and decide how possible change is.

Part 1 will explain how the current system works and point out it flaws. It will show readers how important TV distribution is for the league and why it is the greatest problem in La Liga.

Part 1 will provide the background for Part 2, which will come out next week.

That edition will then go over recent developments from the last few months. It will also try to answer the question fans most want to hear: is there any hope for change?

Is the rest of La Liga ‘doomed’ to the Europa League? Photo: India.tv

La Liga’s  Biggest Weakness

Ask any fan of another league why La Liga is not the best and almost every answer will be the same—there is no competition in Spain.

While this criticism is a bit inaccurate since there is enormous compeitition throughout La Liga, the criticism is misstated rather than incorrect.

What these critics mean is that there is no competition for the title in Spain. At the start of any season, we know that either Real Madrid or Barcelona will win the league. The last time another team won the league was in the 2003-2004 season when Valencia finished first.

Since that season, the gap between Spain Big Two and the third place team has gotten much worse. In fact, the gap has become greater almost every season since 2008 while the point total won by the top team has gotten great—as is seen below.

Gap between 1st and 3rd place in La Liga (Point Total for Each)

2005-2006: 13 (82-69)
2006-2007: 5 (76-71)
2007-2008: 18 (85-67)
2008-2009: 17 (87-70)
2009-2010: 28 (99-71)
2010-2011: 25 (96-71)
2011-2012: 39 (100-61)

This imbalance at the top causes many fans to be turned off from Spain’s Primera division and leads to a loss of respect for the rest of the league outside of Barcelona and Real Madrid.

TV rights are not the only reason for this inequality, but it is the biggest.

Barcelona and Real Madrid are global brands. They are two of the greatest clubs of all time and the two most successful in Spain by a wide margin. They are also two of the most valuable valuable and highest earning clubs in football.

The reason for this is revenue. That revenue comes from trophies and continental participation. These two clubs continue to produce or build enough talent to not only win the league cup trophies, but compete in the Champions League as well.

In that respect, the financial advantages are fair. These clubs have more money because they are earning it on the field. But the problem is deeper than that.

These two clubs are able to continue to win in large part because there is no competition to them in La Liga. Other clubs do not have the financial clout to make large player investments or hold on to the stars they develop in their youth academies.

The main reason for this is the outdated TV rights distribution.

‘Poor’ Real Madrid had to wait four years to win the league. What about Athletic Bilbao? Photo: Daily Mail

TV Revenue: How it is Distributed in La Liga

The details and depth of any league’s TV distribution deals are great. For the sake of this article, I will keep not go into too much detail and will only explain it as needed to understand the problem.

As it stands, La Liga negotiates its TV revenue rights individually by club rather than collectively. Revenue is essentially dependent on earnings based off of viewership and performance.

The current setup gives Real Madrid and Barcelona 35 percent of all TV revenue. The third and fourth-most popular clubs—Valencia and Atletico Madrid—take in 11 percent.

The other roughly 45 percent is shared between the other 16 first division teams. The final figure depends on variables including league position, payments for pay-per-view payments, etc.

In case you missed it, that means that over half of all league revenue goes to just four teams with most of that going to just Real Madrid and Barcelona. This allows two teams to operate on an annual budget of at least triple that of any other team.

Real Madrid and Barcelona bring in on around $150 million a year in domestic rights. That does not include what they bring in from Champions League performances. What they bring in and no one else does, I might add.

The next highest earner is Valencia with less than $60 million brought in.

Looking at just one season, a Champions League team making barely a third of Spain’s second place team is bad, but understandable. But when that happens every season for years on end, it becomes impossible for other teams to compete.

The sad thing is that this is not the ‘old’ system. This was how the teams finalized the collective bargaining agreement that was signed just last August. This was what caused the league to start a week late due to strikes.

For La Liga, THIS is Progress

But is it really?

The new deal is still not truly bargained collectively. Instead, TV deals are still negotiated by individual teams. One new example of that is newly rich Malaga.

Malaga, who are under new ownership and finished fourth in the league last year, are currently trying to match Valencia and Atletico Madrid by earning 11 percent, but that may or may not happen.

The gap is so great now that it may be too late to ever have disparity in La Liga.

There is no realistic chance for any new club to win the league under this current deal. Real Madrid and Barcelona have too much prestige, too much revenue, and too much talent to be overcome.

No lower-table team has any shot of even making the top four without a new owner and influx of cash—the kind that Malaga recently received.

Barcelona tries to give off the image that their youth academy is the main reason for their success. While La Masia and its products are undoubtedly a huge reason Barcelona is widely regarded as the best team in the world, it is not the only reason.

Being able to buy players like David Villa, Zlatan Ibrahimovic, Cesc Fabregas, Alexis Sanchez, and Jordi Alba is more than a slight advantage.

Furthermore, Barcelona is not the only club with a great youth system. Athletic Bilbao, Atletico Madrid, Valencia, and Real Sociedad are just a few clubs who continuously churn out talented players.

The difference between those clubs and Barcelona is that these other teams cannot afford to hold on to that talent. They are forced to sell and maximize profits in order to compete or, in most cases, stay afloat financially.

This comes back to revenue. If those clubs were earning a larger share of TV revenue, that would provide a huge influx of capital that could go toward keeping a team together.

The inequality in the league was ever so slightly lessened by this new deal, but not really. All the gap did was close to reflect how much less of an advantage the big two need.

Even if the difference in revenue distribution percentages was closed, the rest of the league would be competing with two teams that not not only are stronger now, but two teams that are SO much stronger and financially stable that it would take many years to catch up to them.

So again, it may be too late for La Liga.

Malaga CF: La Liga’s best hope for change? Photo: Day Life

Why Should the Big Two Share?

This is a valid question. After all, it is Real Madrid and Barcelona who attract fans and make money for the league.

People in almost every country in the world are wearing Cristiano Ronaldo and Lionel Messi jerseys, not those of Malaga or Sevilla. Analysts spend hours and weeks building up el Clasico, not the Sevilla Derby. These are the two clubs people want to see in the Champions League final, not Atletico Madrid and Valencia.

So why should they give more to the league? In short, because not doing so is signing their own death warrant, not just that of La Liga.

Yes, La Liga needs these two clubs more than they need the league. But that relationship is still symbiotic. Without more competition, the excitement and style of play in La Liga will not be enough to bring in new fans. It may not even be enough to keep fans.

These two clubs need to realize that league survival is imperative for their own success. In order to survive, La Liga must also improve.

The biggest improvement the league can make is to make the rest of the league better. More competition for the title means more competition throughout Europe. If there are more teams able to win La Liga, there are more teams able to win the Champions League.

Conclusion

Having Real Madrid and Barcelona in the semifinals of Europe’s greatest competition is great for the league. But having three teams would be better.

Having more Spanish teams in the quarterfinals would bring in more revenue for the league via European TV distribution. It would also win more fans to more teams and the entire league. And what do fans bring in? More money.

If the league makes more money, every club makes more money.

So in the end, the Big Two would only be helping themselves in the long run by sharing more revenue and strengthening the rest of the league. That means breaking up La Liga’s duopoly.

Quite simply, the only way to break up Spain’s duopoly is a better TV revenue distribution agreement. The first step would be for clubs to realize that collective bargaining is not the same thing as collective earning.

For the sake of La Liga fans everywhere, I hope change comes sooner rather than later. But can it? Tune in next week to find out.


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9 comments for “La Liga TV Rights: Is There Any Hope For Change? Part 1

  1. Daniel
    July 6, 2012 at 4:40 pm

    Great stuff Michael.

    I could not agree with you more. TV revenue, and sharing it as equally as possible, is the only way to organically make a league better. La Liga will have Real Madrid and Barca as two of the best teams even with revenue sharing. That said making teams 3-17 better year in and year out makes all the games that Barca and Madrid are not in much better to watch and thus makes more money for every team including Barca and Madrid.

  2. July 6, 2012 at 7:47 pm

    Thanks so much for commenting, Dan. Very much appreciated.

    I agree with you. Take the EPL, for example. There are lots of problems with league disparity in England, but it is despite the TV rights rather than because of them. New, foreign ownership is causing an imbalance at the top of the league, but recent history shows how much more competition there is in the league due to having collective revenue sharing.

    There is a growing gap, but the better protection of England’s lower-table clubs at least makes that league slightly more balanced despite clubs like Chelsea and Man City making the disparity greater.

    You said it perfectly, making teams 3-17 better makes them more enjoyable and, therefore, more profitable. As exciting as La Liga fans may find games between those ‘other’ teams, it is hard to draw in viewers to watch 18 teams that we all know have NO chance of winning the league and very little chance of even beating one of the big two.

    I think you also make a great point that Real Madrid and Barcelona will still be two of Europe’s best teams even if they gave up some TV revenue. Their continental performances and global prestige have ensured that they will compete with Europe’s best for the foreseeable future.

    With that being said, surely they can afford to give a little more back to the league?

    Thanks again, Dan. Solid points!

    • Mohamed Al-Hendy
      July 7, 2012 at 12:51 am

      Agree with both of you! It almost sucks that Spain’s teams manage to do so well in Europe despite their limited resources. Valencia, Atletico Madrid, Villarreal, Sevilla have experienced success in Europe recently, and Malaga could experience some success next year. That boosts La Liga’s ranking, keeping La Liga as the top UEFA league/in the top two, and thus discouraging any change in TV revenue.

      Hopefully we’ll hear of at least some good news in part two of this. I’m counting on you Michael haha.

      • July 8, 2012 at 3:44 pm

        “It almost sucks that Spain’s teams manage to do so well in Europe despite their limited resources.”
        -Great point! At least it’s ‘only’ the Europa League. The worst thing for the non-big two Spanish teams would be to do really well in the Champions League as that would sort of prove that no changes are needed. Like you said, there is already confirmation of that by them just doing as well as they are.

        It is really a testament to how good those teams are and how much talent there is in La Liga that these teams even do as well as they do now.

        As for good news, we’ll see, but I’m not too hopeful unfortunately…

  3. Matthew Buening
    July 7, 2012 at 2:06 am

    Fantastic article Michael. I’m glad someone is writing about this and you did a really good job of boiling down some complex stuff.

    You hit the nail on the head. If the league wants to grow and stay afloat on the whole, the TV deal needs to change so that the rest of the clubs can avoid selling off their most valuable assets (their players) to other leagues just to keep from going under.

    However, Real Madrid and Barcelona look like they are not willing to do so for two reasons. A.) Apparent greed and B.) considering their massive debt, if the TV deals change too much they could lose a sizable amount of revenue which they feel could damage them. (Which it would.) Unfortunately in the politics of La Liga, Real and Barca just hold too much power. In negotiations it’s Real, Barca, and a bunch of other guys. I expect them to fight the change tooth and nail.

    They can likely afford it, but they won’t want to risk it in my opinion even though they should for the betterment of La Liga.

    • July 8, 2012 at 3:53 pm

      Thanks so much, Matthew. I must say, this topic is very complex so it is hard to discuss it without getting into too much detail and losing readers, but also giving enough detail to explain the situation and express knowledge of the subject. Thanks for the compliments.

      Like you said, this is about more than just growing and improving. La Liga needs these changes just to survive. More and more clubs are going into administration and too many ‘big’ clubs are in enormous debt—to the point of making them unable to keep up with continental competition.

      Sadly, your points about Real Madrid and Barcelona are what my main points will be in the next piece. All the changes the clubs say they are willing to make leave something to be desired. Besides, saying they will support more equality and actually doing that are two different things.

      But I will leave of what I think will happen. There are some signs of change and hope, but how much and how quickly ideas will be realized are the questions.

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