Playing second fiddle: Real Madrid’s Khedira gets the better of Valencia’s Ruiz . Photo credit: AFP/Getty Images/Dani Pozo
Misery loves company. The government of Valencia, the first region in Spain to ask for bailout money from the central government last year, has added its beloved but financially stretched local soccer team — currently seventh in the top division of Spain’s La Liga — to a growing portfolio of financial basket cases. Appropriately enough, Valencia C.F.’s team uniform is white-elephant shirts and not-in-the-black shorts.
When the team defaulted on interest payments on an €81 million ($108 million) loan from Bankia for a new stadium that the region had guaranteed, regional officials felt they had no alternative but to take control of the club’s finances. The regional government already part owns two lower division local soccer clubs, Elche and Hercules, as well as a hospital at Lliria that it can’t afford to open and the new but unused airport of Castellon.
The regional government says it will try to sell the club, which is the third most successful and supported Spanish team after FC Barcelona and Real Madrid, as soon as possible, although Valencians have spent a decade arguing whether its ownership should be corporate or cooperative like Barca and Real Madrid’s. In the meantime, it is unclear how it will service its newly acquired loan, short of selling yet more of the team’s star players. Striker Roberto Soldado is the most valuable asset on Valencia’s team sheet, worth an estimated €25 million on the transfer market.
The regional government’s own debt is now rated junk. Maybe it could ask the central government to top-up the €2.5 billion in bailout funds Madrid gave it to get though 2012. Or maybe Madrid could just tell Bankia to forget the debt; the Spanish state now owns the financial institution after bailing it out with €20 billion from the euro zone’s rescue funds. Madrid hasn’t shown any evidence of being generous. On Sunday its local team, Real Madrid visited Valencia’s historic Estadio Mestalla for a La Liga match and gave the home team a 5-0 drubbing in front of its own fans. When you’re down on your luck…