Relegation could see Mallorca dissolved

Real Mallorca revealed some optimistic figures for the future state of finance for the club as they announce that will be debt free by the end of the season – but with one issue: relegation could see the club dissolved. The details:

• As of 1st July 2010, the club was £61.1 million in debt. The club, as of today, is in £11.8 million worth of debt.
• The club owed the state £27.1 million but now owe £22 million. They have, however, signed an agreement with the Treasury that they will not pay this £22 million back for another 10 years but when any transfer are made, 20% of the fee will go to the Treasury to pay the debt off.
• The club only has 14 objections by creditors. This means deals with creditors are close to completion and the team could be out of administration by February 2012.
• Between February 2012 and February 2022 the club will pay its debt at a rate of £3.73 million. This means no hidden bank charges.
• For the 2010/2011 financial year, the club are expecting to finish with a profit of £280,000.

Whilst the above points are all positive for the club, it is more than equalled out in the potential negatives.

• There is no second chance. If Mallorca fails to meet its obligations at some point in the next ten years it will be dissolved.
• The economic viability of the club very much relies on being in the first division. It currently receives £13.6 million in TV revenue, but if relegated to Segunda División it will drop to £1.7 million.
• From next season, the league will loan all relegated clubs £7.6 million but this has to be paid back within 3 years.
• If the club is relegated, it will have to bounce straight back up or be taken over by someone willing to invest money to stand any chance of surviving dissolution.

In the short term, the club’s future is guaranteed. But the long term future is very much in the balance and depends by either results on the pitch, or new investment. Extra pressure for Laudrup, then.