Spanish Football Clubs' Finances: Crisis and Player Salaries

This paper shows the current financial situation of Spanish professional football. Different financial ratios are used in order to classify the financial position of the different teams. The study has been split between clubs in First or Second division. We also analyze the relationships between the size of market, team payrolls, and team performance. We demonstrate the financial problems created by the arms race that clubs have started for getting the most talented players for trying to get the best possible sporting outcome. The new Spanish Law for companies in financial distress has implied that nine clubs are technically insolvent and under administration. We have searched for possible explanations of that situation. Nevertheless, our financial variables do not explain the likelihood that a club goes into administration.