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Coronavirus Pandemic: Its economic effects on sport in Spain

By Juan De Dios Crespo, Sports Lawyer, Ruiz-Huerta & Crespo, Lawyer, Valencia, Spain As in almost all countries of the world, Spain has also decided to stop all and every competition, at amateur or professional level, as from 14 March 2020, with the Spanish Government publishing a Royal Decree 463/2020, declaring a “state of alarm” (one step beyond a “state of emergency”), for a period of 15 calendar days. This situation has been extended until 26 April and should continue for some weeks more. Thus, among other issues, all and every event, competition, sporting facilities, etc. were closed and/or suspended. Previously, the Spanish FA (for amateur football) on 11 March and LaLiga (for the professional one) on 12 March had decided to suspend their competitions. Thus, from those days, sport in Spain was on hold and with no prospects of being resumed soon. In fact, our country is one of the most affected worldwide by Covid-19 and, despite the fact that the number of deaths is decreasing daily and the recovered people is the highest in the world, we still face a clear challenge: is sport (and football, in particular) going to resume soon ? On the 12 April, the club Real Sociedad from San Sebastián, declared that its players will return to training, on a one per one basis as from the following week, but the General Council of Sport (a kind of Ministry of Sport in Spain) immediately forbade it. So, it is clear that the Government is not willing to restart anything without a minimum of security for the sportsmen and women. The General Council of Sport has agreed that footballers of the professional league could be tested in order to start the training in May but some voices (footballers included) say that those tests should be reserved to the Health systems members (doctors, nurses, etc.) and not to footballers. So, is football going to finally resume or not? This is not any more a matter of sport or money but of shyness as footballers do not want to be pointed out as being “remarkable or unique” over other citizens. Here is the current situation and with all the competitions put on hold, what are the economic consequences? Regarding football, which is the most popular sport and an economic motor in Spain (1.4% of the Gross Internal Product), the effects of Covid-19 could be a terrible mess, as the President of LaLiga, Javier Tebas, put it clearly, mentioning the audio visual rights of the competition: “if you do not broadcast the signal, you won’t be able to get money, that’s clear. We have 25 per cent of the season to play and the entire budget will have to be reviewed. That is the damage that can occur if the competition is not finished.” So, if the TV rights amount to more or less 1,500 million euro, that 25% is a 375 million euro loss. But, of course, everybody wants to resume the championship even if it has to be played in summertime and behind closed doors. However, are the TV rights holders going to pay the same for a competition that might be played in a hurry, during holidays? This is impossible to answer right now. May be more viewers are going to watch sports as they have been deprived during months, or summer could still be difficult to enjoy if there are not bars, restaurants and other places open for all, opening the path for more football to be watched ? On the other side, and in order to prevent losses, the Spanish football clubs have already started to use either legal tools or friendly agreements to reduce the salaries of their employees. Our country permits the employers to use an ‘ERTE’ (Temporary Employment Regulation File ), which allows the clubs (and any other company, as it is not strictly a sport regulation) to put their employees on an unemployed situation, which will reduce their salaries to 70%, which will be paid by the State. Of course, we are not talking about the full amount of the salary and one player with monthly 200,000 euros will not be paid 70% of such sum by the State, but merely between 1,000 and 1,400 euros (depending if he is childless of not). So, the gain for the club is the cut of 30%. There are clubs like Barcelona, Espanyol, Atlético de Madrid, Alavés and Osasuna, in the first division, that have chosen this way, with another 10 in the second tier, and more than 40 in the third one. As for women’s football, 5 in the first division have decided to take this legal way. Other clubs, on the contrary, have decided to amicably agree a reduction of the salaries, but there is not a common path and some (I am not going to name them as those are private agreements) have made a 20% discount if the competition is not resumed and a 10% if it is; others have been less strict and made a 10 % discount if not resuming and a mere 1% if it is. Those figures are only two of the known ones but more could diverge from 40% to 10% and with several possibilities: resuming or not, within closed doors or with public, etc. Besides this, what about the fans’ situation? The clubs would have to refund their season ticket holders with the percentage of lost matches, as it seems crystal clear that the competition will resume behind closed doors. A loss that it is important as Spanish clubs have a high percentage of those holders, and, of course, the remaining free seats will also be empty and no cash will come in too. Two of the most visited museums in Spain are the FC Barcelona and Real Madrid ones, with a loss of around 1.2 million euros per month as they are closed, as are all other museums in the country. Finally, sponsors are already set to cut their payments or, at least, to reduce them, due to the lack of impact of their product as they are not displayed either on the shirts, the training camps or the stadia.  We cannot yet know what are and will be the economic consequences for the football income. As for the rest of sports, almost all (but for basketball) depend on the State involvement and the money they give them, but that money comes mostly from football: TV rights and the “Quiniela” (the weekly pool) which uses the name of the clubs. So, the effects of the coronavirus pandemic are disastrous, both from a sporting and an economic point of view, and the problem is that it will certainly affect next season too! Juan de Dios Crespo may be contacted by e-mail at ‘This email address is being protected from spambots. You need JavaScript enabled to view it.

 
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Prof. Guglielmo Maisto
Maisto e Associati, Milano

Dr. Dick Molenaar
All Arts Tax Advisors, Rotterdam

 

Mr. Kevin Offer
Hardwick & Morris LLP, London

Mr. Mario Tenore
Maisto e Associati, Milano

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