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Real Madrid and Barcelona's Dominance: A Financial Look Into La Liga

Florentino Pérez, Real Madrid's president
Florentino Pérez, Real Madrid's president

This article was written in response to a piece on BarcaBlaugranes, SBNation's FC Barcelona blog. Check out the whole debate by reading both articles and let us know how you feel!

While it has always been understood that Real Madrid and FC Barcelona are the two teams fighting for la Liga, the past two years have been truly historic.

In 09/10, 28 points separated Barcelona from the team that finished third, Valencia. Real Madrid finished second that year, 25 points ahead of the ches. That difference was not a coincidence, as both Madrid and Barcelona finished last season with a margin of more than 20 points with respect to the third-place finisher--Valencia again.

To be favored is one thing, but winning it by such a margin is something entirely different.

In other European Leagues, the competition is always harder, with at least three teams fighting for the title until the last couple of weeks. Last year, Arsenal fell in the last five games of the season, but there was no question that they were contenders with 2/3 of the Premier League completed.

In the Bundesliga there have been some surprising champions, like Borussia Dortmund last season, Wolfsburg in 08/09 or Stuttgart in 06/07. Bayern Münich is always the most feared team in the country, but other teams can get in the mix and can surely beat them. They were the third best team in the league last season (Leverkusen finished second) and they had to beat Zurich to even be in this year's Champions League.

As you can see, Spain's league is totally different. You could argue that it has always been this way--but you would not be right. Atletico Madrid and Valencia were always in the fight, and Barcelona and Madrid did not always finish first and second, with Bilbao, Deportivo Coruña, Mallorca and even Real Sociedad competing directly against Real or Barcelona for those spots.

The disparity in TV revenues has changed our league dramatically. Here's a comparative table in which you can see the different amounts of money European teams get for their TV rights.

In this table, you can see the differences between the top teams in all the European leagues. The last row indicates how much money the last-place team gets in revenue from each league.

Liga BBVA Premier League Serie A Bundesliga Ligue 1
R.Madrid: 140M€ Man.U: 64M€ Juventus: 77M€ Bayern: 28M€ Marseille: 50M€
FC Barcelona: 140M€ Chelsea: 59M€ AC Milan: 70M€ Schalke: 25M€ Lyon: 46M€
Levante: 12M€ Wolverhampton: 40M€ Bari: 27M€ Hoffenheim: 13M€

Avignon: 13M€

The differences are just astronomical. It's true that Levante gets almost the same amount of money as Avignon and Hoffenheim, but in the Bundesliga and Ligue 1 the difference between the lesser teams and the top ones are minimal compared to what we see in Spain.

The Bundesliga is the example to follow. Their league has improved amazingly in the last few years--we saw Schalke beat Valencia pretty badly last Champions League, for example--and they will get one more Champions League seed this season, while Serie A will see their seeds decrease to three. In the Premier League, you see there's only a 24M€ difference between the top team and the last one in TV revenue.

If the difference between the teams was less significant here in Spain, maybe Valencia could have kept David Villa, David Silva and Juan Mata. Villarreal would still have Santi Cazorla and the other teams could improve their squads.

There has been some mismanagement in the Spanish Liga--e.g. Valencia wanting to build a new and totally unnecessary stadium or Atletico Madrid making terrible signings--but if they are not managing their teams well and they don't have a good amount of money, then they cannot afford even one mistake.

Madrid still carried on with the Kaká signing and Barcelona could afford the waste of money that was Ibrahimovic, but Valencia is still paying for Joaquín (25M€) and Manuel Fernandes (18M€).

If Madrid and Barcelona improve their teams every summer and their rivals are forced to sell their stars with every mistake they make, the discrepancy will get bigger every season. I really think Madrid and Barcelona will finally get 100 points this season, and the third-place squad--could it be Valencia again?--will probably finish 30 points away from the top.

This distribution of TV revenue is probably going to stay this way until the end of this season. If la Liga finishes as it has been, and as everyone is expecting right now, I think the teams and the TV companies will re-negotiate. They need to find a balance that satisfies the teams that generate more money (Barça and Madrid) and the rest.

Let's hope they can reach an agreement so la Liga can be competitive again!

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