Valencia - On The Road To Recovery?

Despite losing to Sevilla last weekend, Valencia have made a very promising start to this season, most evidently when they led reigning champions Barcelona twice before securing an unexpected draw. On the one hand, this should not be too much of a surprise, as Valencia have finished third in La Liga in each of the past two seasons, though admittedly they were a hefty 25 points behind Pep Guardiola’s superlative team last year. On the other hand, this represents a hugely impressive achievement for Los Che after all the upheaval they have faced both on and off the pitch.

In order to reduce their large debts, they have been forced to sell many of their best players, losing four members of Spain’s victorious 2010 World Cup squad in the last two summers. Last year the heart of the team was ripped out when the departures of David Villa to Barcelona, David Silva to Manchester City and Carlos Marchena raised over €70 million, while this year it was the turn of skilful midfielder Juan Mata, who moved to Chelsea for €27 million.

Nevertheless, club president Manuel Llorente has defiantly proclaimed, “You can always sell star players and remain competitive”, which has proved to be the case at Valencia. The team has been rejuvenated with the addition of young talents like Sergio Canales, on loan from Real Madrid, and Pablo Piatti from Almeria, while they have managed to retain the promising Pablo Hernández and Éver Banega. They have also astutely strengthened the defence by acquiring Adil Rami from French champions Lille and Spanish U-21 international Víctor Ruiz from Napoli.

"Ever "Ready" Banega"

The highly rated, young manager Unai Emery has played a pivotal role in the team’s ability to reinvent itself every season. After guiding unheralded Almeria to a first ever promotion and then eighth place in La Liga, he was recruited by Valencia in 2008. Regarded as a master tactician, Emery has worked minor miracles with the resources available and is now in his fourth season, which might not sound much, but only two other Valencia coaches have lasted as long. He has even been spoken of as a possible successor to Vicente del Bosque, when the Spain coach steps down.

Valencia’s fans are infamously among the most demanding in Spain, having become accustomed to a lot of success over the years, both domestically (6 La Liga titles, 7 Copa del Rey trophies) and internationally (1 Cup Winners’ Cup, 1 UEFA Cup and 2 Fairs Cups). It’s not all ancient history either, as Valencia enjoyed four glorious years between 2000 and 2004 when they reached the Champions League final two years in a row under Argentine Héctor Cúper, first losing 3-0 to Real Madrid in 2000, then being defeated on penalties after a 1-1 draw with Bayern Munich in 2001, before Rafa Benítez guided them to two La Liga titles and a UEFA Cup victory against Marseille.

However, that’s when the problems started with Benítez resigning after arguments over control of new signings, when the manager famously complained, “I was hoping for a sofa and they bought me a lamp.” Former manager Claudio Ranieri proved the old adage that you should never go back, as his return lasted less than a season. Although his replacement Quique Sánchez Flores guided Valencia to third and fourth places, his reign was characterised by constant infighting with Sporting Director Armadeo Carboni, which ended with both men leaving the club within few months of each other in 2007.

"Roberto Soldado - the fighting spirit of a soldier"

At the time that Flores was fired, Valencia were just four points off the top of the table, but his replacement, Ronald Koeman from PSV Eindhoven, was a disastrous choice. Not only did he fall out with three of the club’s most popular players (captain David Albelda, goalkeeper Santiago Cañizares and veteran midfielder Miguel Angulo), but the team was perilously close to the relegation zone when he was dismissed, before finally reaching safety in 2008.

Whatever happened on the pitch was nothing to the financial challenges facing Valencia as they encountered a series of incompetent presidents that took the club to the brink of extinction. First up was the rotund figure of Juan Soler, who became president in 2004 with a grand plan, “We’re going to be the envy of Spain.”

However, his delusions of grandeur were built on shaky foundations, almost literally, as the ambitious project to sell the old Mestalla stadium and replace it with the state-of-the-art, revenue generating Nou Mestalla collapsed, as the Spanish property bubble burst at exactly the wrong time.

"Pablo Piatti - one of the young guns"

That might have been outside Soler’s control, but the vast sums splashed out on mediocre players (e.g. Manuel Fernandes, bought for €18 million, sold for €2 million, and Nikola Žigić, bought for €14 million, sold for €7 million) and the constant changes in management (costing over €30 million in severance payments) were certainly down to him. His attempts to “live the dream” resulted in no major trophies, exacerbated by failure to qualify for the Champions League, and massive debts.

Soler briefly brought in Juan Villalonga, the charismatic former chief executive of telecoms giant Telefónica, as a consultant, but he only lasted a couple of weeks before exiting stage left with a large fee for his “expert advice.”

Step forward, Vicente Soriano, the club’s former vice-president, promising €500 million of new investment from a company called Dalport Investments that would clear the club’s debts and enable them to build the new stadium. It sounded too good to be true – and it was. The mysterious backers, whose company logo was revealed to be copied from a children’s colouring book (yes, really), failed to deliver and Valencia faced a serious liquidity problem.

"Silva and Villa - old friends"

Construction work at the new stadium ceased, as bills from the builders were not settled, while the players were not paid for two months. As Emery said, “We have reached rock bottom.” They only managed to get through this with the help of a €50 million loan from a group of local businesses, called Fomento Urbano de Castellon.

The club’s main creditor, the local bank Bancaja, had seen enough and took a seat on the board, imposing a policy of austerity on Valencia and inviting Manuel Llorente to be the new president. He then made a very smart move by launching a share issue that raised €18.5 million from around 26,000 supporters, which demonstrated the strength of feeling for the football club. This “emotional blackmail” helped persuade the regional government to guarantee a €74 million loan from Bancaja that enabled the Valencia Fundació to take a 72.5% stake in the club, which provided much-needed stability.

It was a close run thing, as Llorente admitted, “We have saved a very difficult and worrying situation. Without the intervention of the regional government, we would have defaulted on our payments or been relegated to the Segunda B (third tier of Spanish football).”

However, Valencia are by no means out of the woods yet, as they still carry a vast amount of debt. Soler’s excesses increased this from around €100 million when he took over to a crippling €550 million in 2009. Although this was reduced to €471 million in June 2010, it is still extremely high, only surpassed in Spain by Real Madrid €660 million and Barcelona €549 million, and those two clubs benefit from much higher revenue and greater borrowing capacity. In fact, Valencia’s annual revenue of €102 million means that their debt cover is only 0.22, which is the weakest in La Liga.

The other particularly worrying aspect for Valencia is that a large amount of this debt is from bank loans with €249 million owed to Banaja – and most of that (€229 million) is short-term, so payable within a year. Apart from the standard trade creditors, accruals and provisions, Valencia also owe a large amount (€58 million) to other football clubs for transfer fees, while €31 million of the loan from local businesses remains.

In fairness, since the last accounts were published, Llorente announced last October that the debt had come down to €400 million, while it has been reported, though not confirmed, that it is now down to €370 million. Either way, the club will continue to be burdened with considerable debt until they find a buyer for the old Mestalla.

Following the €92 million capital increase, Valencia’s balance sheet actually appears reasonably strong with €55 million of net assets, despite the huge liabilities. However, this is a bit misleading, as much of the club’s capital is tied up, either in fixed assets (€281 million), mainly due to investment in the new stadium, or in the squad (€71 million). Although the players would be worth much more in the real world, estimated at €165 million by the respected Transfermarkt website, this value could only be realised by selling players. In fact, a study by Deloitte last year concluded that the company shares had “no economic value.”

The Mestalla holds 55,000 supporters, but it has seen better days, so in some ways it was understandable that Valencia embarked on their plan to build a new 75,000 capacity stadium, especially as the local authorities gifted them a plot of land less than two miles from the city centre. The problem was that they had not arranged their funding, believing that they would be able to finance the construction by selling their old stadium. Indeed, they were apparently close to a sale for €320 million, before the market tanked, leading the buyer to drop his offer to €240 million, which was rejected, even though it would have wiped out the club’s bank debts.

In hindsight, this was almost certainly a mistake. As Soriano wryly put it, selling land is not easy “in the largest real estate crisis in history.” Work on the new arena, modeled on a Spanish bullring, commenced in August 2007, but was suspended in February 2009. Valencia have already invested €150 million in the development, but still require a similar amount to complete it. So, now the club finds itself in the bizarre situation of owning two stadiums – one they have not managed to sell and one they cannot afford to finish building.

Another major factor behind Valencia’s spiraling debt levels was the cash splurged on new players with net spend of €133 million in the four years up to 2008. Some of the purchases can only be described as a waste of money, such as €25 million for the inconsistent winger Joaquín, recently sold to Malaga for just €4 million, or nearly €40 million on a bunch of Italian misfits (Francesco Tavano, Marco Di Vaio, Stefano Fiore and Bernard Corradi), though in fairness the latter duo from Lazio were to compensate for unpaid transfer fees for Gaizka Mendieta.

However, the days of big spending have long gone and in the last four years Valencia have generated net sales proceeds of €76 million. As vice-president Javier Gomez admitted, “Before, we had a plan that was based purely on selling the land. Now we need to seek alternatives. We need to win back credibility with the financial institutions.”

That was a precursor to the sales of Villa and Silva (and others) in the 2010 summer window, when gross sales of €84 million meant that Valencia topped the European list of selling clubs. The need to sell was reiterated by Llorente, “Our key objective is economic viability and that means we are obliged to take responsible decisions, one of which is to sell our best players.”

Valencia had gambled on living beyond their means in a desperate attempt to keep up with Real Madrid and Barcelona, but it hasn’t quite worked out like that, as can be seen when comparing the activity of Spain’s leading clubs in the last four years. In that period, Madrid’s net spend was an incredible €312 million, while Barcelona’s net outlay was high by any other standards at €165 million, thus increasing the gap between the big two and the chasing pack.

In fairness, other clubs have also not spent a great deal, but nobody has sold like Valencia, who now also face the emerging threat of Qatari funded Malaga, who have spent €85 million (almost all in the last two seasons). Meanwhile, Valencia have had to shop at the cheaper end of the market (relatively speaking) or enter into innovative deals, such as the two-year loan arrangement for Canales, where they pay Real Madrid €1 million a year with an option to buy for €12 million (though Madrid can then buy the player back for €18 million).

The reality is that Valencia have no money to spend on new players, unless they sell first. Even then, a good proportion of any sales proceeds will go towards reducing debts. Little wonder that even former goalkeeping hero Cañizares saw the sale of top talents as inevitable, “Those players should be at big clubs – like Valencia once was.”

Given Valencia’s financial difficulties, you might expect that the profit and loss account would be a disaster zone, but, on the face, of it the bottom line does not look too bad with the club reporting profits before tax in three of the last six years, including a healthy €18 million in 2009/10. However, that does not tell the whole story, as the results have been significantly influenced by profits on player sales and other exceptional items.

If we take last year as an example, Valencia reported EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation) of €9 million, though €30 million of non-cash expenses (player amortisation and depreciation) produced an operating loss of €21 million. Net interest payable of €15 million widened the loss to €36 million before €54 million profits on player sales swung this back to a profit before tax of €18 million.

To be fair, this reliance on player sales is far from uncommon in Spain, as shown by a study of La Liga finances by Professor Jose Maria Gay de Liébena from the University of Barcelona, which revealed that only four clubs made operating profits in the 2009/10 season: Real Madrid, Tenerife, Sporting Gijon and Atletico Madrid. The total operating loss for clubs in La Liga of €213 million was reduced to a combined €93 million loss before tax after once-off items of €192 million had been added and net interest of €73 million deducted.

At this point, I should note that not all clubs had published their 2009/10 accounts when the University of Barcelona performed their review, so they included 2008/09 figures for five clubs (Sporting Gijon, Almeria, Athletic Bilbao, Malaga and Mallorca), while nothing was available for Xerez. Even so, the conclusions are unlikely to be much different when more recent results are available.

We can see that Valencia’s 2009/10 profit before tax of €18 million was only surpassed by Real Madrid’s €31 million, but we have to once again note that their profit on player sales of €54 million was more than any other club. This has very much been the order of the day for Valencia in the past few year. In fact, if profit on player sales and other exceptional items were to be excluded, then Valencia would have reported substantial losses in each of the past six years: 2005 €40 million, 2006 €70 million, 2007 €25 million, 2008 €55 million, 2009 €68 million and 2010 €36 million. That would give a combined loss of nearly €300 million in six years.

Apart from player sales, Valencia’s accounts list profits made from land sales, though it is not clear whether these have actually been realised. In particular, 2006 includes €161 million revenue for the “urban exploitation of the Mas de Porxinos development”, while 2008 features €90 million revenue for the sale of “the first plot of the Mestalla stadium.”

Actually, very little detail is provided in the earlier accounts on the split of the exceptional items between player sales and other activities, but that does not really matter for the purpose of this point, which is that Valencia clearly make large losses at an operating level, amounting to €234 million over the last six years. Admittedly, €186 million of that is due to non cash flow expenses like player amortisation, but this reflects the club’s investment in the playing squad, which is a fairly normal activity for a football club. Even excluding these items, total cash losses in this period added up to €48 million.

On the bright side, when Valencia manage to generate more than €100 million revenue in a year, then they are profitable at the cash (EBITDA) level, but the problem is that they still need to find cash to buy new players and to pay hefty interest charges.

That’s the other aspect of Valencia’s debt that places them at a competitive disadvantage in La Liga, namely that the amount of interest that they have to pay is much more than other leading clubs. Over the last four years, they have had to pay a total of €54 million interest, compared to €39 million at Barcelona, €37 million at Atletico Madrid and €22 million at Real Madrid.

In terms of revenue, Valencia are in a delicate position. The good news is that their 2009/10 income of €102 million placed them fourth highest in Spain at about the same level as Sevilla and only €23 million behind Atletico Madrid, whose position was influenced by Champions League money. In fact, Valencia are one of only five clubs in La Liga that earn more than €100 million revenue, with the remaining clubs considerably behind them with the next highest being Villarreal €59 million and Athletic Bilbao €56 million. Valencia’s revenue is also good enough to put them in 25th position in Deloitte’s European Money League, ahead of clubs like Benfica, Everton, Werder Bremen and Napoli.

The problem is that the big two in Spain, namely Real Madrid and Barcelona receive around four times as much revenue as Valencia with €439 million and €398 million respectively. In other words, they earn €300 million more a season – every season. Financially, they are not just leading the race in Spain, they’re almost out of sight. As money tends to lead to success in sport, an old quote from the boxing promoter Don King could be paraphrased when assessing the chances of any team other than Madrid or Barcelona winning La Liga, “They have two chances: slim and none. And slim just left town.”

And it’s getting worse, as the revenue gap to the “competition” in Spain is actually growing. In 2007, Valencia’s revenue of €108 million was “only” €182 million less than Barcelona’s €290 million, but the shortfall has now risen to €296 million. In that period, Valencia’s revenue has slightly declined, while Barcelona’s has grown by 37% and Real Madrid’s by 25%.

OK, Atletico Madrid and Sevilla have both made great strides in growing their revenue in percentage terms, but the absolute size of the monetary disparity to the big two has increased even with these clubs. From this perspective, the Spanish league is not a fair fight, but is a foregone conclusion before the season kicks-off, unless one of the big two spectacularly implodes.

Like most other clubs, Valencia’s revenue growth has been largely dependent on television, as can be seen in 2010 when the €19 million increase was almost entirely attributed to this revenue stream with the new domestic deal rising by €11 million and the Europa League distribution €4 million higher. Media is up to 46% of Valencia’s revenue and will account for an even larger proportion when Champions League money is taken into consideration.

Match day income has been essentially flat, staying within a €27-29 million range over the last four years, while commercial income has actually fallen from its peak of €25 million in 2008 to €23 million. It should be noted that other income can have an impact on Valencia’s figures, e.g. €8.5 million in 2008.

Valencia are the third best-supported club in Spain with an average attendance in 2010/11 of 41,300, only behind Barcelona 80,400 and Real Madrid 68,300. In 2009/10 this produced match day revenue of €28 million, which was the 19th highest in Europe, just below Manchester City. That’s not bad at all, but (stop me if you’ve heard this one before) pales into insignificance compared to Real Madrid’s €144 million (5 times as much) and Barcelona’s €98 million (3.5 times as much).

Although Valencia’s efforts to move to a new stadium have been fairly comical, this vast difference does help to explain the rationale for the project. In the meantime, this revenue is dependent on the number of matches played, i.e. progress in the cup competitions, and the pricing strategy. In fact, many season ticket prices were lowered for the 2011/12 season in recognition of the financial hardship being encountered by many supporters, so revenue will fall €1.1 million unless another 2,500 tickets are sold.

Despite the increase in television revenue in 2010, Valencia’s €42 million is a fraction of the €140 million that Real Madrid and Barcelona each receive, though it is the same as Atletico Madrid and a fair bit more than Villarreal and Sevilla (€25 million). Unlike all the other major European leagues which employ a form of collective selling, Spanish clubs uniquely market their broadcast rights on an individual basis, so Real Madrid and Barcelona on their own receive around half of the total TV money in La Liga or 12 times as much as the €12 million given to the last clubs on the list (Malaga, Sporting Gijon, Tenerife and Xerez).

This produces the most uneven playing field in Europe and compares unfavourably to the 1.5 multiple in the Premier League between first and last clubs. Looked at another way, Valencia, who finished third in the Spanish league, received less money than West Ham, the team that finished bottom of the Premier League.

This is why the majority of Spanish clubs have been pushing to move the current revenue distribution model towards a collective structure. Tentative agreement has been reached whereby Madrid and Barcelona’s share would be reduced to 34% (still more than a third), but the plan also assumes that Valencia and Atletico Madrid have their share cut from 6.5% to 5.5% each. As most clubs have contracts in place until 2013 or 2014, the new system will only be introduced in 2015.

"Adil Rami meets El Presidente"

Effectively, Valencia have opted to maintain the status quo by denying other clubs the chance to compete with them, while maintaining the inequality with the two Spanish leviathans. Espanyol director Joan Collet did not disguise his bitterness, “If I was an Atletico or Valencia fan, I would be furious, because by signing this, they have admitted they are fighting for third at best.”

On the face of it, the new deal will reduce Valencia’s TV revenue, but there is optimism that the total deal will grow from the current €600 million to €800-900 million, so they could end up taking a smaller slice of a larger pie. This does not seem completely unfeasible, given that the television revenue in La Liga is currently lower than the Premier League, Serie A and Ligue 1.

The current English deal is worth around €1.3 billion a year, which is more than twice as much as the €0.6 billion received by La Liga, the main reason for the difference being the hefty €575 million that the Premier League receives for foreign rights, around four times as much as their Spanish counterparts. If this area could be addressed, taking the total deal up to €900 million, then Valencia’s share would increase €8 million to €50 million.

Valencia’s television revenue for 2009/10 included €4.7 million for reaching the Europa League quarter-finals, where they were unluckily defeated by Atletico Madrid, which was a sizeable increase on the €0.4 million received for the previous season’s UEFA Cup.

However, the big money in Europe comes from participation in the Champions League, and Valencia earned €24.1 million in 2010/11 for reaching the last 16. Assuming that their other revenue streams remain unchanged, this would increase their total revenue by 20% to around €121 million. When commenting on the club’s debt reduction, president Llorente emphasised “how important it is for us to play in the Champions League”, because the majority of the money used to repay loans “came from earnings in that competition.”

Although there has been a lot of discussion about the huge gap between the big two and the rest of the clubs in Spain in TV revenue, it has seemingly gone unnoticed that it is very much the same story on the commercial front. Valencia’s revenue here of €23 million is perfectly respectable (4th highest in Spain), but is around €100 million less than Real Madrid and Barcelona.

Again, the situation appears to be getting worse, as no fewer than six La Liga clubs started this season without a shirt sponsor, including Atletico Madrid, Sevilla, Villarreal and indeed Valencia, who in the Barcelona match actually sported their Twitter handle on their shirts. For the last two years, Valencia were sponsored by online gambling company Unibet, who reportedly paid them €6 million a season for the privilege, though some of that was used to pay the wages of certain foreign players. Before that, the relationship with Valencia Experience ended in tears, as the club started legal proceedings for non-payment.

There is better news with the kit supplier deal, as Joma have signed a five-year deal running until 2016, which is reputedly worth €4 million a year. They replaced Kappa, who were paying just under €2 million a year, while the previous long-term relationship with Nike brought in €1.5 million a season.

The revenue theme is repeated in the costs, where Valencia’s 2009/10 wage bill of €73 million was only lower than the big two – but it was significantly lower, with Barcelona spending €235 million (inflated by performance-related bonus payments) and Real Madrid €192 million.

Even so, Los Che have been consistently above UEFA’s recommended maximum wages to turnover limit of 70% in the last few years, even though their wage bill has been essentially flat. This is in stark contrast to many other clubs, who have seen their wage bills surge in the same period.

In fact, after a board meeting last September, Llorente said that the 2010/11 financials would show total operating expenses falling by €18 million from €92 million in 2009/10 to €74 million. Most of this was attributed to a substantial fall in wages, which Llorente quantified as 21% compared to the €74.5 million paid out in 2008/09, implying an amazing €15.6 million decrease to €58.9 million. Although this is a dramatic reduction, it does only bring Valencia to a similar level as Atletico Madrid €62 million and Sevilla €61 million.

The club’s austerity policy has seen it reduce salaries, including the president’s, and cut jobs, including the post of sporting director Fernando Gomez. This is the other (financial) benefit of selling top players, as losing the high salaries of the likes of Villa, Silva and Mata helps reduce the overall wage bill. This helps explain why Valencia were willing to let players like Joaquín and Fernandes leave so cheaply. Indeed, Joaquin was only offered an extension to his contract at €2 million, which was €1 million lower than his previous agreement, while Malaga are apparently paying him €4 million.

The other major player cost is amortisation, which fell slightly last year to €29 million, not much more than it was in 2005. For the non-accountants, I should explain that amortisation is the annual cost of writing-down a player’s purchase price, e.g. Rami was signed for €6 million on a four-year contract, but his transfer is only reflected in the profit and loss account via amortisation, which is booked evenly over the life of his contract, i.e. €1.5 million a year (€6 million divided by four years).

Given the limited activity in the transfer market, you might expect player amortisation to fall further, but this is not necessarily the case, as it depends on how much amortisation remained on the players that departed. In any case, if it does rise, it is unlikely to be by very much.

"Sergio Canales - loan star"

Valencia’s financial future is partly down to their own actions, but is also linked to external factors not under their control. Spanish football is struggling under the burden of debt, which has reached €3.4 billion for the 20 clubs in La Liga. Indeed, no fewer than six clubs in Spain’s top division are currently in administration: Racing Santander, Real Mallorca, Real Zaragoza and all three promoted clubs (Real Betis, Rayo Vallecano and Granada).

Consequently, the beginning of this season was delayed by a players’ strike over unpaid wages. The figures are frightening with 200 players owed a total of €50 million, up from €12 million owed to 100 players the previous year. The Spanish Football League (LFP) is now taking action with a proposal to implement rules designed to curb the clubs’ excessive spending. As its president Jose Luis Astiazaran commented, “We are not immune from the wider economy.”

Valencia’s own strategy was clearly outlined by vice-president Javier Gomez a couple of years ago, “The club is in a very delicate situation. It has to control spending, grow income and sell assets.”

"Pablo Hernandez - can do it at the highest level"

As we have seen, they have certainly taken steps to control spending by slashing the wage bill and other operating expenses, but, as any business will tell you, growing income is far more difficult. In the short-term, the only realistic opportunity is regular qualification for the lucrative Champions League, which, in fairness, Valencia have achieved for the last two seasons.

This raises the spectre of UEFA’s Financial Fair Play rules that force clubs to live within their means if they wish to compete in Europe. This is going to be touch and go for Valencia unless they continue to qualify for Europe, so this becomes a bit of a circular argument. The last reported operating loss was €21 million, but this should largely be eradicated this season by savings that the club announced. However, Valencia then have to find €15 million for interest payments, leading to an annual loss of a similar amount.

This could be covered by Champions League money – or continuing the policy of profitably selling players. Llorente endorsed this view a few months ago, “The sale of players is no longer necessary to balance the budget… because of the money we are getting from the Champions League.” Since that statement, Mata has been sold to Chelsea, but this could equally have been a sporting decision as a financial one.

"David Albelda - loves a tackle"

What will help all clubs is that UEFA’s break-even calculation allows certain costs to be excluded, such as youth academy, depreciation and interest on infrastructure like a stadium, so Valencia should theoretically be fine. However, the allowable losses (acceptable deviations) are only an aggregate €5 million for 3 years if the losses are not covered by an owner, as opposed to €45 million if they are covered. As Valencia do not have a wealthy benefactor, that could potentially be an issue.

Of course, the major concern for Valencia remains the stadium. Earlier this year the club extended the Bancaja mortgage for a year beyond its June 2011 expiration date to give them more time to find a buyer for the Mestalla. This is a calculated gamble, costing €15 million of interest, as it was reported that the bank had been willing to clear the €240 million debt in exchange for the land. Llorente still believes that he can get at least €300 million, though this seems fairly optimistic, given the state of the real estate market.

The bank could still offer the same deal next year, but Valencia would then need to take out a new loan to fund the completion of the Nou Mestalla. Last year Llorente estimated that the club would need a further €126 million (and 22 months of work), but the press has reported that some areas of the new stadium are already damaged beyond repair, so this sum could easily rise to €150-200 million.

"More songs about buildings and fools"

Although Valencia have said that they would be open to a ground share with Levante, this does not seem to be a realistic option, as their neighbours do not have enough money to share the construction costs, which is a pre-requisite for any agreement.

Nevertheless, it may still be the right decision to push ahead, because Valencia could potentially end up with lower debt, albeit still too high for a club of their magnitude, but at least they would have a new stadium that should generate more revenue.

Whatever happens, it would be unrealistic to expect Valencia to do any better than they have in the past couple of seasons, especially after Llorente has adopted a far more level-headed approach to the transfer market than his chaotic predecessors. Finishing third behind Barcelona and Real Madrid is nothing to be ashamed of. In fact, given all of the financial pressures that have forced Valencia to continually sell their best players, it’s a great achievement that is deserving of much praise.