Spanish government closes administration loophole

23 Sep 2011

The Spanish government has moved to alter a controversial law that allowed financially embattled clubs to avoid relegation by going into administration.

The move has been heralded by the Spanish Players’ Union (AFE), which had held up the practice as one of the main grievances behind the strike action that hit the start of the new La Liga season. “This reform…will prevent the undesirable use and abuse of certain instruments of the bankruptcy law and ensure stability and equality in sports competitions,” the government said, according to Reuters.

Racing Santander in July became the latest club to seek protection from creditors, joining a list that at the time included fellow La Liga clubs Real Mallorca and Real Zaragoza as well as all three teams promoted to the first division at the end of last season – Real Betis, Rayo Vallecano and Granada. Spanish law had previously overruled competition regulations that could have led to clubs being relegated for failing to pay their players. The circumventing of the regulations surrounding the bankruptcy process had seen critics state it provided an easy way for struggling clubs to bolster their standing, while preserving their league status.

The bitter dispute between Spanish footballers and the Professional League was finally resolved last month after players finally agreed to call off a damaging strike that delayed the start of the domestic campaign for the first time in 27 years. The AFE struck a deal with the league over wage guarantees and an arrangement to allow stars to break their contracts if they are not paid for three consecutive months. According to the AFE, 200 players across the top two divisions are owed a total of about Eur50 million in unpaid wages. Responding to Thursday’s news, an AFE statement read: “This change has been one of the main demands of the AFE for the past 18 months, achieved by the efforts of all the players. The main change is that any club starting insolvency proceedings will not be able to prevent the application of the rules governing participation in sporting competition.”