La Liga and world football giants Real Madrid and Barcelona were both issued fines yesterday by Spain’s Competition Commission (CNMC) for infringements regarding the clubs’ TV broadcasting rights deals, specifically that they were signed for 4 years which exceeded the 3-year limit set forth in a 2010 regulation, Bloomberg reported.
The broadcasting rights deals were made with broadcasting company Mediapro, which was issued a fine as well, to the tune of €6.6 million ($8.8 million). Real Madrid has been ordered to pay a €3.9 million fine, and Barcelona a €3.6 million fine in accordance with the size and value of each of the clubs’ respective broadcasting rights deals with Mediapro and size of the businesses. Two other Spanish clubs, Sevilla and Racing Santander were also issued fines as part of this action from the CNMC for the same infraction, in the amount of €900,000 and €30,000 respectively.
Both Barcelona and Mediapro have stated that they intend to appeal the fines given by the CNMC in the Spanish National Court, saying that a subsequent law provided that 4-year broadcasting rights deals were permitted. According to a statement made by Barcelona, which was quoted in a New Straits Times article, the fines will need to be paid or underwritten prior to the hearing for the appeal, which will have a negative economic impact on the club this season. However, the statement added that should the appeal ruling be favorable for the club, all money would be paid back to the club.
Unlike other major European leagues, like the Barclays Premier League, TV rights deals are not subject to collective bargaining – rather the clubs handle their respective contracts on an individual basis. Barcelona and Real Madrid in recent years have dominated the TV broadcasting market in Spain, commanding approximately 47% of the broadcasting revenue in the 2012-13 season, according to an article from WorldSoccerTalk. The top two teams in Premier League last season for broadcasting revenue, Manchester United and Manchester City, accounted for only 12%, approximately.
Much has been made of this discrepancy recently, and rightfully so. Real Madrid and Barcelona have dominated the Spanish table for years and deserve the kind of broadcasting revenue congruent with their performance and importance to the league – but not nearly to the degree that currently exists. Both teams agreed to lower their share of the total league broadcasting revenue down to 30% by 2015, however, will that be enough?
The gap between the highest earning club and the lowest earning club in broadcasting revenue for the 2012-13 season in the Premier League (Manchester United vs Queens Park Rangers) is about €21 million ($28.4 million). The same comparison for Real Madrid and Barcelona (both tied at €140 million) vs Granada in the Spanish top flight La Liga is €128 million ($173.2 million). The median broadcasting revenue earned in 2012-13 in La Liga was €13.7 million ($18.5 million), and 46.8 in the Premier league. Manchester United earned approximately €60.8 million ($82.3 million), which is 1.3 times the median. Real Madrid and Barcelona on the other hand, earned about €140 million ($189.5 million) each last season, which is 10.2 times the median of the league.
This discrepancy is the fundamental issue with the system currently in place in La Liga. Barcelona or Real Madrid have won the Spanish title every year for the last decade, not to mention numerous years in the league’s history. That kind of dominance in a free-for-all, individual club broadcasting deal environment means that broadcasting companies will be chasing one of two teams, instead of chasing an entire league.
About half of the La Liga’s revenue comes from broadcasting, and half of the broadcasting revenue comes from two of the twenty teams (10%). This is a very volatile recipe and is neither sustainable long-term nor is it strategic for La Liga’s growth and development. La Liga dropped from the second richest league in the world to the third last year, and was passed by the surging German Bundesliga. If the league does not want to fall yet another spot on that list, it needs to address its broadcasting rights strategy – more than just working with Barcelona and Real Madrid to bring them down to a 30% share of the revenue.