surinenglish

Malaga CF to reconsider decision not to file an ERTE following La Liga plea

José María Muñoz at La Rosaleda during the Zaragoza match.
José María Muñoz at La Rosaleda during the Zaragoza match. / Ñito Salas
  • Despite income taking a massive hit during the coronavirus crisis, a temporary lay-off would hamper the administrator's planned restructuring plans going forward

Despite the total paralysis engulfing the world of football because of the coronavirus crisis, Malaga CF had no plans to file an ERTE (a lay-off of staff until normality returns) just yet. According to SUR sources inside the club, an internal restructuring in the near future was to be expected instead. That was until La Liga issued a plea to all clubs in the top two tiers on Friday to file an ERTE due to force majeure.

As one of the clubs most affected by the current economic downturn (given the precarious state of its finances before the global slowdown), the club's judicial administrator, José María Muñoz, must address the gap in the club's books in addition to countering the effects of this global crisis as soon as possible.

Muñoz must do so without a large portion of the expected income for this period. It would appear almost certain that income from ticket sales for the last six home games is now off the table (if the games go ahead, they would likely be behind closed doors). Similar revenue losses will come from the club shops, all of which are closed, while sponsorship will depend on various circumstances such as whether, or how, the season ends and in what financial state the advertisers are left in.

And will season ticket holders have to be reimbursed for the portion of the season they missed? As a situation without precedent, it's not entirely clear.

The largest loss of revenue would be that of broadcasting rights - worth 9.1 million euros a year. This, however, will depend on whether the games actually go ahead and on the deal reached for distribution between LaLiga and the various broadcasters.

Faced with all this uncertainty, Muñoz has had to analyse solutions in the short and medium term and is determined to pass up the option of presenting an ERTE and therefore the opportunity to save a significant sum of money now in return for maintaining plans to restructure the club from top to bottom with other measures.

These may include an ERE (redundancy programme for the collective dismissal of workers). Unlike an ERTE, an ERE doesn't come with conditions regarding the immediate future, which would prevent layoffs from being made in the future. ERTEs are "subject to the commitment of the company to maintain employment for a period of six months from the date of resumption of activity". This means that Malaga would not be able to carry out the above-mentioned restructuring until at least the end of the year.

The decision not to file an ERTE, however, doesn't mean that nothing is being done. The decrease in income still has to be compensated with an immediate reduction in expenses as well.

Different savings

One positive of this coronavirus crisis is the savings that Malaga can make during this time. The club's operating costs represent the biggest expense - almost 11 million. This figure, which covers purchases, travel and other needs, will fall considerably.

The biggest savings, however, will come from reducing the earnings of the players. The eight million euros set aside for this year can be reduced but will rely on negotiations with the players themselves. Like we have seen with many other teams across Europe's major leagues, it is likely that the Malaga players will also agree to a paycut during the period that this paralysis lasts.

One aspect where savings can't be made is on the club's debt. Some 5.1 million euros is still owed to other clubs for player transfers.