The power of foreign owners in European football has been made devastatingly clear in recent weeks.
Last season’s Champions League winners Manchester City are ultimately owned by the Abu Dhabi royal family. Beaten finalists Inter Milan are controlled by a Chinese conglomerate that has borrowed heavily from a US asset management firm.
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The coming summer transfer window will be dominated by clubs spending money coming from outside their home countries. Chelsea’s US investment fund owners are set to spend heavily again. Saudi Arabia’s sovereign wealth fund will want to pour more money into Newcastle United. Paris Saint Germain’s Qatari backers will once more be very active in the market.
Meanwhile, in Spanish football, things will be a lot quieter. Yes, Real Madrid have already spent €103million on Jude Bellingham, and could add another expensive big-name attacker such as Harry Kane or Kylian Mbappe, while Barcelona may or may not find a way to strengthen their squad.
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But no other La Liga club will be splurging millions on new players to excite their fans and potentially emerge as a new challenger for trophies at home or abroad.
This is not because foreign ownership is banned in Spain, or because no outside investors see value in the country. It is because La Liga’s financial rules have been specifically designed to stop clubs’ owners and directors from using their own money to push clubs to spend beyond their means, as La Liga president Javier Tebas tells The Athletic during an interview at the league’s HQ in Madrid.
“We are open to investment, but not like in England, where owners come in to cover the club’s losses and increase the players’ salaries,” Tebas says. “So instead of having six Ferraris, the players have nine. That is not good for financial sustainability, it does not happen in any other industry in the world. What is happening in the Premier League, and with the state-owned clubs, will end up destabilising everyone in the industry.”
There are foreign investors in Spanish football, but on a much smaller scale than in England, France or Italy.
During 2022-23, seven Primera Division clubs had non-Spanish owners — Valencia, Espanyol, Almeria, Mallorca, Elche, Valladolid and Girona. Three more top-flight sides, Atletico Madrid, Sevilla and Cadiz, had minority investors from elsewhere. In the Segunda Division, six clubs had overseas owners, as had third-tier play-off finalists Alcorcon and Castellon.
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These owners and investors come from all over, with Singapore, China, the USA, Mexico, Argentina, Brazil, Saudi Arabia, Qatar and Abu Dhabi all represented. The most high-profile individuals include Peter Lim at Valencia, Ronaldo Nazario at Valladolid and Turki Al-Sheikh at Almeria.
There are also US-based investment funds: 777 Partners have a small percentage of Sevilla’s shares, while Ares Management owns 34 per cent of the company that controls Atletico Madrid.
The final Primera Division table of the 2022-23 campaign did not read well for these teams or their owners. Of the seven foreign-controlled teams, only US-owned Mallorca and City Football Group’s Girona had comfortable seasons, making unlikely challenges for European qualification before eventually finishing in mid-table.
Lim’s Valencia were 16th after surviving relegation mostly thanks to goals from locally-produced youngsters. Al Sheikh’s Almeria were in the drop zone until they were saved by a penalty scored with just three minutes of the season remaining. That left a bottom three of Ronaldo’s Valladolid (18th), Chen Yansheng’s Espanyol (19th) and Christian Bragarnik’s Elche (20th).
This apparent failure of foreign investment has drawn lots of attention within Spain. Fans at Valencia and Espanyol mounted angry protests against very unpopular ownerships. “It can be difficult for foreign owners to understand the culture of the club and the league, not just in Spain,” says one industry source, who like all sources in this article, spoke on the condition of anonymity so as not to jeopardise business relationships.
However, within the clubs themselves, things are not seen as so straightforward. The three clubs just relegated were yo-yo-ing between the divisions even before their current owners took charge. And more than half of all Primera sides begin each season knowing that relegation is a real possibility.
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“Both foreign owners and Spanish owners can do things well, or do things badly,” says a senior Spanish executive at one of the bottom five clubs. “You have to be very good to make a good team, wherever you come from. It has to be football people, with experience and talent.”
There are huge differences in transfer spending among foreign-owned clubs. Lim was hailed as a saviour when he arrived in Valencia in 2013, given his links to Jorge Mendes clients including Cristiano Ronaldo. But that soured as the club relied first on players ‘part-owned’ by Lim’s Meriton investment fund, and more recently on lots of loan deals. Espanyol’s Chinese Rastar Group have spent over €100m on many different players over the last six years but without getting much return.
Since Ronaldo took over Valladolid in 2018, the biggest transfer fee paid has been €4million for Israeli centre-forward Shon Weissman. Elche’s owner Bragarnik is an Argentine agent who has used his personal contacts to make signings. Girona’s links with City Group have brought them players including last season’s top scorer Taty Castellanos. Mallorca broke their club record to sign Vedat Muriqi for €8million last summer, a move that also worked out well.
The relegated clubs are dropping into a Segunda Division where they will find more sides in similar positions. In the past 18 months, Sporting Gijon were bought by Mexico’s Orlegi Sports, Texas-headquartered Blue Crow Sports took over Leganes, London-headquartered Amber Capital took control of Real Zaragoza, and Mexico’s Grupo Pachuca bought a controlling stake in Real Oviedo. All four clubs finished in mid-table during their first seasons under new ownerships.
Last season saw contrasting fortunes for the other three foreign-owned Segunda sides. Chinese-owned Granada were promoted as champions. Albacete made the play-offs under stewardship of Venezuelan-Lebanese owner Georges David Kabchi. Malaga suffered a disastrous relegation to the third tier, with a judge attempting to prise the club from Qatari owner Abdullah Al Thani.
Each of these projects is very different — in the background of the owners, their plans and objectives for the club, and the experience and competency of their stewardship. What they all have in common is that they are subject to very strict rules over how much money they can invest, and how this money must be spent.
Unlike in England and many other countries, no owner can come in and immediately decide to spend millions of his own money hoping for an immediate leap in the team’s competitive level. This is because of the nature of financial controls of which La Liga president Tebas is proud.
Going back decades, all clubs in Spain were — in theory — owned by their fans, but in practice often run as fiefdoms by wealthy and powerful local families. In the early 1990s, the Spanish government tried to impose more control by forcing almost all to become Sociedades Anonimas Deportivas (SAD) – or ‘sports limited companies’. Only Barcelona, Real Madrid, Athletic Bilbao and Osasuna remain owned by their members.
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These conversions to SAD companies did not stop club presidents and directors from spending beyond their means, then going bust without paying their taxes, players or local suppliers. Between 2004 to 2012, more than half of Spain’s professional clubs entered administration to avoid paying all their creditors in full.
Tebas knows this story very well, having come to prominence as a lawyer who helped clubs (or their owners) to manage these administrations. He was elected president of La Liga in 2013 with the backing of the ‘G30’ group of smaller clubs, including Rayo, Betis and Xerez, who he himself had previously worked for during controversial bankruptcies.
On arrival at La Liga HQ in 2013, Tebas established an economic control department that sets a total squad cost limit for each club each season. Unlike UEFA’s Financial Fair Play, these caps are imposed in advance, stopping clubs from spending beyond their means and creating unsustainable debt.
“The thing I am proudest of is making Spanish football sustainable,” Tebas tells The Athletic. “Before, the clubs did not pay their taxes, or their players, or their suppliers; they went into liquidation and left everyone unpaid, it was shameful for the clubs and their fans. Now La Liga is financially sustainable — clubs only pay in salaries what they can raise in revenue. I am proud of what we have achieved in that, not imposed on us from outside, but with the clubs, working hard.”
One impact of the financial controls has been a change in the profile of investors coming into Spanish football. The previous lack of oversight attracted infamous figures including Ahsan Ali Syed at Racing Santander and Dimitri Piterman at Alaves, through to Al Thani at Malaga and Lim at Valencia. Those now taking over a La Liga club generally see these strict limits as an advantage for long-term growth.
La Liga’s financial controls also means a more predictable and level playing field for investors who reckon they can bring a competitive advantage and use the resources permitted more smartly. Former Houston Astros CEO Jeff Luhnow led the Blue Crow group who took over second-tier Leganes in the summer of 2022, with a plan to use their knowledge of statistics and scouting to gain edges over rivals.
“I really like the moves the league has made to institute financial control, true financial control, as opposed to sort of lip service,” Luhnow told The Athletic last summer. “It allows you to compete on other factors besides how wealthy is your owner, and how willing is your owner to lose money to help your team get better.”
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The rules do act as a break on anybody looking to buy rapid success, as happened in England over the past 20 years at Chelsea, Manchester City and now Newcastle. Only 30 per cent of money invested by new owners of La Liga clubs can be spent on players, the rest must go to infrastructure such as stadiums, training grounds, youth systems and international marketing.
All the club executives and industry sources who spoke to The Athletic accept that Tebas’ reforms sorted out the historical financial mess. But some also argue the strict rules are now holding back the majority of Spanish clubs from growing as fast as they could otherwise, whether through investing personal money to buy players, or using industry contacts to do commercial or sponsorship deals that are outside what La Liga deems fair market value.
“The way it is structured, I could not bring Neymar here, even if he came for free,” Real Zaragoza president Raul Sanllehi (once of Arsenal and Barcelona) told The Athletic last year.
Some say this holds back La Liga clubs from competing with peers from other countries, either in European competition or the transfer market. Sevilla’s seventh Europa League success last month, having eliminated Glazer-owned Manchester United along the way, is taken by many as an exception that proves the rule.
More club executives and directors point to how especially Premier League clubs such as Aston Villa, Brighton or West Ham (never mind Newcastle or Chelsea) can easily come and take players from pretty much any club outside Spain’s top three.
“I understand La Liga’s precaution, because Spanish football was in ruins years back, and they have corrected that,” says an executive at a club just relegated from the Primera. “But they have also taken away strength compared to other leagues.”
“American and other investors are not looking at La Liga because of the limits on how much they can invest,” says another executive with experience of working with US and Middle East investors in European football.
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Tebas does not accept that the spending rules are a hindrance to Spanish football’s progress, arguing that the Premier League or state-owned club model of huge personal investment is just not the right path to long-term success for La Liga.
“The clubs are protected by the rules we give them,” he says. “It is not that Javier Tebas decides what a club can do. The rules have been approved by the clubs to protect themselves. We go along adapting to the circumstances so that clubs can continue into the future.”
Some have seen the issues at Barcelona in recent years as evidence of the rules not working well — past directors agreed huge transfer fees and bumper salaries that they were later unable to pay, leading the club to rack up debts of more than €1billion.
Tebas’ view is that Barca’s situation shows that the rules do work. Strict austerity was imposed, forcing the club’s current directors to take measures to ensure they kept the lights on at Camp Nou.
“Barca had big losses, the financial controls activated and they are working,” Tebas says. “They have had to sell many players, not been able to sign others, and will have to keep selling players. But they have not gone bankrupt, have paid their taxes and their players. Their case is much more well known, but lots of other clubs also were not able to sign players too. It is not like in England when an owner just comes and puts in loads of money.”
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Significant money has poured into Spanish football from overseas in recent years, but not from individual club owners. In 2021, La Liga accepted nearly €2billion from the CVC Capital Partners fund, in return for a share of the league’s TV revenues over the next 25 years.
This CVC money comes with very strict instructions where only 30 per cent could be spent on transfer fees or player salaries, the rest must be invested in infrastructure projects approved by La Liga’s staff. Again, the focus is on protecting the clubs and growing sustainably, rather than any boom and bust cycle of spending on players, Tebas says.
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“We have a model of investing in infrastructure, with CVC, where 70 per cent of the €2 billion goes to improving the stadiums, training grounds, international branding, digital plans,” he says. “A year and a bit into this, we are very happy with this model, which will bear fruit in three years, not overnight. The clubs are very convinced about it.”
Most of the executives and directors at foreign-owned clubs consulted by The Athletic were indeed in favour of the CVC deal. Socio-owned Madrid, Barcelona and Athletic Bilbao have remained outside, and even taken La Liga to court to get the deal overturned (although Barca recently changed their stance on that).
Some within the industry say the CVC arrangement is popular with current owners because it will increase their club’s value and they can sell for a better price within a few years. Others would prefer the spending restrictions to be relaxed because it would make their clubs more attractive to, say, US hedge funds or Middle East state investment vehicles.
Atletico, Valencia and Sevilla are all widely seen as potentially on the market if the offer is big enough. The SAD structure makes a sales process more complex, and Spain is the only one of Europe’s top five leagues with zero clubs with publicly traded shares. The chaotic nature of some clubs, with lots of competing groups of shareholders and families, can also be an issue, as 777 have found at Sevilla.
An executive at one of the clubs relegated from Primera this season says that, from his experience of working in Spanish football in recent years, there are many institutional issues besides La Liga’s financial controls that would make outside investors think twice.
“If somebody like the investors who have bought clubs in England really wanted to buy a Spanish team, nothing could stop them,” he says. “But there is too much uncertainty, institutional problems, the Super League, political fights, legal cases, refereeing scandals.”
Outside the CVC project, however, Madrid and Barca have already started to take on foreign investment themselves through the deals with US funds that have financed the redevelopments of the Bernabeu and Camp Nou. Barca’s lever pulling last summer also made them more financially vulnerable for the future, and led some socios to worry that the club’s member-owned model is under threat long term.
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“That is something for FC Barcelona themselves,” Tebas says. “Under Spanish law each club can decide its own model, so this would be a decision for Barcelona, for its socios.”
One issue that bothers foreign investors is the unequal distribution of TV revenues. In 2021-22, the most recent season for which figures are public, Madrid and Barca both received €160m, Sevilla got €87m, Betis €66m, Rayo, Elche and Mallorca all about €46m.
This contrasts with the more equal sharing out in the Premier League, where the highest-earning club receives 1.8 times the amount received by the lowest-earning club. Tebas argues that the centralisation of TV rights achieved in 2015 against fierce opposition from Madrid president Florentino Perez has made the Spanish playing field more level than it was.
“Florentino was pushed over by a tsunami of clubs, small, medium-sized, and some bigger ones, who knew the system had to be changed,” Tebas says. “Florentino still says he feels badly treated by the Spanish league, that he receives little to be able to compete with the Premier League teams.”
Not everyone within Spanish football agrees that the current status quo is the best possible situation. “I think the sharing-out can be improved a lot more,” says an executive at one foreign-owned club. “As it is, the rest of us are condemned to suffer every year.”
Some then see allowing investors at other clubs as a way to counterbalance the financial power of the big two. “Why not let the (Saudi) Almeria owner put in millions and challenge to win the La Liga title?” asks another club executive.
Tebas remains fully confident that the rules and regulations are for the good of Spanish football, and does not appear worried at all that his league is missing out on the hundreds of millions that are being invested in other leagues such as England, France and Italy.
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“I had dinner with the owner of a big French club, not PSG, who said he had invested €600 million in his club,” Tebas says. “I said you’ve not invested that money, you’ve destroyed it, you will never get it back. To overcome the many challenges that are coming, you need to be strong, with clear rules, and good support from the teams. I do not see the other leagues as being that strong, considering the challenges they will face.”
(Top photo: Oscar J. Barroso / AFP7 via Getty Images)
