Spanish Inquest: Banking on it
13:33, 24 Jan 2013
Stop me if you think you've heard this one before. A club breaks into the Champions League. Not only that, but then they go on to exceed all expectations. Giddied, all sense of financial probity goes out the window. Years later, they're still shaking their heads at the almighty mess left behind.
Firstly, it should be pointed out that Valencia are not Leeds. They've never quite gone into freefall, but rather have remained remarkably competitive. Not only that, but they've performed herculean feats in reducing the club's debt- which stood at an eye-watering €500m back in 2008.
In a country coming apart at the seams, they should be lauded for their canny work in undoing past mistakes. But now, they face the worst possible of fates: falling under the control of the regional government.
That may sound like quite a statement. After all, Valencia are famously saddled with two stadia: one can't afford to complete and another they can't sell following the collapse of the country's property market.
Their president — the economist, Manuel Llorente — carries his own share of the blame for what went wrong. But equally, his manoeuvring of the club back to a healthier financial state shouldn't be ignored. The genesis of the current problems can be tracked back to the departure of Rafa Benítez in 2004 following the most successful period in the club's history.
Benítez's war the American pair Hicks & Gillet was presaged by a similar falling-out over control of transfer policy at Valencia. After claiming the league title — his second in three years — along with the UEFA Cup, the manager departed for Anfield.
Having won that little battle at great cost what Valencia permitted next defies all explanation. With wage costs already spiralling out of control, in came Claudio Ranieri. Moderately successful in his first spell at the club, his second spell bordered on farce. Llorente and company effectively handed over the keys to the till; Ranieri embarked on a binge of signing average players for extravagant fees and exorbitant wages who proved difficult to shift on under his successors.
Any list of examples would go on and on, but the outcome was ruinous. At least amongst that sorry list came David Villa in 2005 and with the maturation of David Silva and later Juan Mata there remained the bones of a decent squad and— crucially — saleable assets.
But the other key factor was the arrival of Unai Emery in 2008 as manager following the rancorous reign of Ronald Koeman. Sometimes, you only appreciate a good thing once you've lost it. Valencia's fans are a notoriously intolerant bunch, and Emery like Benítez before him didn't escape the boo boys. His crime? Critics point to some 50 leads squandered in all competitions, or his inability to stay close to Real and Barcelona. But finishing third the last three seasons was as impressive as the resultant Champions League cash was crucial. His contract wasn't renewed last summer, and they've been well off the pace as a result.
About 18 months ago, it was reported that a deal with the local government and banks would see the remaining €250m debt wiped clean — and also allow work to resume on the new stadium. It was never going to be as simple as that. Rather, the regional government guaranteed a loan of €81m from a local bank to ease the club's cash flow crisis. That bank was subsumed into Bankia; a mega-bank laden with toxic assets created by the national government. With Bankia being bailed out to the tune of €20bn last year — and the regional government's bond rating long since relegated to junk status — this week's default on interest payments by the club saw it effectively turned over to Valencian government.
What a cruel fate this could prove. Of all of Spain's 17 autonomous communities, Valencia wins hands down in any race to the bottom for fiscal mismanagement. There's the airport in Castellón, completed but never opened in 2011 — as demand was neither there, nor ever had been. Later it even emerged that its runway, not being of standard dimensions, was worse than useless. This is but one example of a litany of failed vanity, pork barrel projects.
Then there's the composition of the government itself. Ironically a stronghold of the right-wing Partido Popular, who rode back into national government with the promise — more than fulfilled — to push through incredible austerity measures, the Valencian branch has long been a viper's nest of clientelism and corruption. For three years we saw the grinning face of local party chief Francisco Camps entering and exiting court hearings as part of the infamous Gurtel case daily on our televisions. His final vindication in the supreme court proved a pyrrhic victory for just two months after being re-elected again, he resigned his post as president of Valencian community.
The parallels are there. Valencia the club, and Valencia the region both got burned flying too high on a wave of euphoria and idiocy. But while Valencia the club has long since become a model case on how to slash expenses whilst somehow managing to keep producing the goods, the region's record in this area is dire and only moving in one direction. What this means for the club going forward having brought in Ernesto Valverde as manager is anyone's guess, but the prognosis doesn't look good.
Follow Joseph Sexton on Twitter @josephbcn
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