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Mallorca Enters Voluntary Administration

 Mallorca Enters Voluntary AdministrationA dispiriting final matchday left Mallorca forty seconds away from qualifying for the Champions League.  Sevilla manager Antonio Álvarez took a huge gamble late in that match by sending Sevilla youth product Rios Lozano Rodri into the match instead of Luís Fabiano, and Rodri broke the hearts of Los Barralets with an acrobatic goal in the fourth and final minute of stoppage time to defeat Almería 2-3 and finish fourth in La Liga, the final Champions League place.  To watch the drama unfold on the jumbo screen at the ONO Estadi was already hard enough, but the news that the club will enter administration will likely wreck an exciting squad that became one of the pleasant surprises in La Liga this season.

For those who do not know what administration means in this context, here is a brief explanation.  When a football team cannot pay off their outstanding debts, the court will assign “administrators,” mostly accountants, in charge of nearly every aspect of the club, and the accountants’ first order of business includes paying off football-related debts before any other job.  Administration serves as a rescue mechanism so that the club can continue to operate despite their debt owed to players, staff, and creditors.  In America, it is similar to filing for Chapter 11 bankruptcy.

The dirty little secret behind Mallorca’s success this campaign was their massive debt accumulated over the past few seasons.  Whether Champions League money would have eased that burden and prevented them from having to seek voluntary administration will always remain an unanswered question, but their reported €85 million debt grew too large to ignore any further.

According to majority shareholder Mateu Alemany:

“Over the past two years, Mallorca has suffered a very complex economic situation, with serious financial problems and an inability to meet its commitments.  This is a legal instrument that enables Mallorca to see the future in another way: to have a budget structure that has logic and controls debt, to take stringent budgetary measures to bring spending in line with earning capacity.

These are necessary things that open a future of hope that is necessary and has not existed at the club for two years. The bankruptcy law gives us this opportunity and provides a positive expectation for the club. It is a solution, not a problem.

Whatever happens, we start a new stage. It’s exciting because it ensures the viability of this club, which has been in serious danger of disappearing.”

With all of the economics explained, how will administration affect the team for next season?

UEFA president Michel Platini has not held back his criticism of clubs who continue to run their clubs on such poor economic standing and has threatened to exclude teams from UEFA competitions who are forced to enter administration or pile up an enormous debt.  There were more than a few whispers that Mallorca would be one of those clubs shut out of Europe, but Alemany ensured that Mallorca would compete in the UEFA Europa League next season after the Spanish football federation (RFEF) granted Mallorca their UEFA license.

Gregorio Manzano, the man who led Mallorca for the past four and a half seasons, will not return next season because the club cannot afford to meet his technical and financial demands.  In his first spell with the club in the 2002-03 season, he led Mallorca to a decent ninth place finish, but his biggest achievement that season was capturing the Copa del Rey with a 3-0 triumph over Recreativo Huelva with all three goals coming from fairly decent strikers: one from Walter Pandiani and the other two from Samuel Eto’o.  The winner of the Don Balón award for coach of the year in 2008, Manzano will likely receive the award for the second time this season after guiding Mallorca to their best finish in La Liga for nine years.

For a manager to keep his players focused on the pitch when economic turmoil behind the scenes made the club unable to pay the players for a few months, Manzano performed miracles, especially at home, where the seemingly unimposing ONO Estadi transformed into a formidable fortress.  Fifteen wins and one draw out of nineteen matches was an incredible feat, and he had to maintain such a stellar record at home because of their woeful play away from the Balearic Islands.

Whether Mallorca entered administration or not, Manzano was heavily linked to the Sevilla job currently held by caretaker Antonio Álvarez, and with Mallorca having no ability to compensate for Manzano €1.5 million per year salary, Manzano will need to seek a new club.  West Ham United noted their interest in Manzano, although Avram Grant looks set to take over the reins at Upton Park for the recently fired Gianfranco Zola.

As for the squad, many of the top-rated players will likely leave in the summer as well.  For the previous season, the wage bill equaled €34.6 million, and Mallorca will cut that budget considerably.  Alemany noted this impending fire sale when he said, “There will be a philosophy of austerity.  The insolvency will affect the first team squad and those who earn the most.”

Borja Valero, the influential playmaker in the midfield, will go back to his parent club West Bromwich Albion, who will return to the Premier League next season after spending a season in the Coca-Cola Championship.  Earlier in the season, Mallorca wanted to make his loan move permanent, but with the economic realities rushing upon them, Mallorca cannot afford a €5 million+ transfer fee.

Iván Ramis, who was rumored to go to Celtic in the January transfer window, formed a pivotal partnership with Nunes in central defense and held opponents to forty-four goals, the fourth-best defense in La Liga.  Ramis will attract many European teams, and while Mallorca wanted a fee in the neighborhood of €3.5 million when Celtic coveted him in January, Mallorca’s desperation to balance the books means that anything more than €3.5 million will be highly unlikely despite Ramis’ outstanding season.

Felipe Mattioni, the 21-year-old Brazilian right back starlet, will not return, as Maga Esporte, the sporting agency that owns his rights, expects a hefty fee for this promising defender from the Grêmio youth system.

Others might be on the way out, such as Aritz Aduriz, Gonzalo Castro, and Dudu Aouate, so the Mallorca squad that came within one minute of Champions League recognition will be drastically different from the team that will play their first official match of the season in the Europa League qualifiers in August.  Valencia can commiserate with their Mallorcan neighbors, as their debt has coerced them to sell David Villa to FC Barcelona and likely give David Silva to the highest bidder (Real Madrid).  Valencia, however, has the depth to be relevant in European competition in spite of the losses of Villa and Silva, whereas Mallorca does not.

Unless the club has a billionaire owner or has a glorious history, Mallorca’s fate, unfortunately, will become more and more frequent as these smaller clubs try to compete with the Real Madrids and the Barcelonas of the world by overpaying in both transfer fees and wages.  The news that the total debt in La Liga amasses over €3.53 billion with a “b” only furthers the notion that clubs are compelled to overspend in order to stay afloat in the league.  Barcelona, Real Madrid, and Numancia were the only teams to make an operating profit, and Numancia was relegated to the Segunda División last season.

The same seven or eight teams in Europe continue to pursue the most valuable and most talented players in the world, and if the status quo remains, teams like Mallorca, Valencia, and other second-tier teams throughout Europe will eventually become mere breeding grounds for Chelsea, Manchester United, Real Madrid, Barcelona, etc. to pilfer their players when they have matured, much like what Ajax, PSV, and Lyon have become.

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