Elche relegated to Segunda Division but celebrate last-minute survival
They had little over 36 hours to save their club, and in the end, they did so with six hours to spare. It was just after 6 p.m. on Friday when Elche announced that next season they will play in the Segunda Division. The league had confirmed it and outside the stadium, a group of relieved fans let off fireworks, celebrating. The town's mayor, Carlos Gonzalez, who had led the rescue team working against the clock, called it "quite a feat."
A feat? Fireworks? Playing in the second division? For a team that finished 13th in the first?
Well, yes. There was a genuine chance that Elche might have been gone. Gone from the first division, gone from the Segunda Division and possibly even as good as gone, period. Ninety-two years after its founding, a historic club was at risk of going out of business. "We had been on the edge of the abyss," Gonzalez said. Now, they have pulled back.
A day and a half earlier, Juan Peran, the local businessman leading the club's desperate scramble for survival with the mayor, had said: "At big moments you need balls and money. We've got the balls; what we need is the money."
Elche needed €4 million by midnight. If they didn't get it, they would go down, and quite possibly go under.
If they didn't get it, Elche would be relegated to the Segunda Division B, Spain's regionalised third tier, where 80 teams are spread across four divisions, where there's virtually no money and where there's no longer direct promotion back up again. In theory, the Segunda Division B is amateur -- "professional" football, run by the league (the LFP) and not the Federation (the RFEF), formally starts at the second division -- and they call it the "well."
Falling into it is easy enough, climbing out is another matter entirely.
With six hours to spare, the announcement came; Elche had done it. But how did they get there in the first place? Elche did not fall into the well in the end, but they had fallen all right. Last season, they finished 13th in the first division. At one point, with the team in the relegation zone, manager Fran Escriba had seemed resigned to their fate, saying that there was little more he could do. But he did not give up, and nor did his players. And in the end, they were safe with four weeks to spare.
The problem was that the same problems that made their survival so impressive -- institutional instability, players and staff going unpaid, political pressure, suspicion and mismanagement -- also made their survival on the pitch worthless. Less than a week after the season ended, the LFP relegated Elche for not paying their debt with the Spanish taxman.
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Fans protested, and Elche argued they did pay, producing the paperwork to prove it -- albeit they admitted that the payment had been made after the deadline. The ban, Elche said, was disproportionate, unfair on an administration that had inherited a crisis provoked by the former president and his board and risked putting them out of business. They insisted that other clubs also have debts with the Inland Revenue but were punished. They questioned the jurisdiction of the league to decide on debts with the state and asked to see the tax certificates of every other club -- a request that was turned down.
It made little difference. "It's crystal clear -- their relegation is entirely justified," league president Javier Tebas said. The league will allow one debt to be accrued with the taxman, but not a second. Elche were repeat offenders, and their debt had grown.
The argument that Elche should not be punished on the pitch for what happens off it was given short shrift. Had they attended to their debt rather than to their squad, they may not have survived at all.
"Financial doping," some called it, and the decision to apply sporting sanctions for financial mismanagement, while hard for supporters to swallow, is a step in the right direction in a league in which more than 30 teams have been through administration. Now the league is getting serious, the doubt fans have is that the treatment is applied evenly.
A week after the original punishment, Spain's Sports Council confirmed the suspension, and although a judge suspended the sentence pending a full investigation in mid-July, she then confirmed it. Elche were down and Eibar, relegated in 18th place, were reinstated. Elche became the first Spanish team ever to be relegated from the top flight because of financial mismanagement. (In 1995 Sevilla and Celta Vigo were both relegated because of debts to the state but were reinstated, leading to a 22-team first division.)
But that was not the end of it. The crisis ran deeper and the debt, standing at around €38 million, was not just with the taxman. Over nine years as president, Jose Sepulcre saw the debt rocket and the problems multiply. The damage he has done may be irreversible. When the accounts of the club did not add up, the Consejo Superior de Deportes carried out an audit that left doubts over the justification for €2.8m in outgoings. The anti-fraud attorney in Alicante is investigating that while the league admits questions have been raised about a game against Malaga they consider suspicious.
At the start of the season, Elche had three new players on standby because their salary cap had been surpassed. The entire squad and all the staff then agreed to a 12 percent salary decrease to free up the money to sign the incoming talent. But then many of them went without being paid at all. By Christmas, the club was not allowed to sign any more.
At the LFP and the Spanish Footballers' Association, the question asked is: What happened to the €19m TV money? Other clubs were owed money, too. Elche claimed to be up to date with their tax obligations and the squad, but they were not. Money is owed going back two years, and bonuses for survival in 2014-15 had not been paid either.
Players asked, but kept getting put off. Investment was promised but never arrived. The crisis deepened while on the pitch, remarkably, results improved. In February the LFP proposed a ban on Sepulcre from running the club due to financial irregularities. He eventually walked, replaced by Juan Anguix in late April. Things did not really improve and nor did the new administration seem to be doing much to investigate the previous administration.
Talk of American investment brought hope, the "saviour" going by the name of Dean Johnson, but it didn't arrive either. For those who had followed Johnson's past, that was no surprise. In fact, it might have been better that way.
The club ground to a halt. When the players arrived for preseason training this summer, there was no one there to meet them, no doctors to do the usual tests and no coach either. Fran Escriba has joined Getafe, eventually replaced by former Valencia midfielder Ruben Baraja. Players followed Escriba out the door. Pedro Mosquera headed off to Deportivo de La Coruna, having rescinded his contract. "The fans deserve to be in the first division but sadly other factors have prevented that," he said.
So far, 13 players have left. None have arrived. Name a regular starter last season and it's a pretty safe bet that he has gone. The most notable of them is Jonathas de Jesus, who has joined Real Sociedad for €7.2m but Elche made just €600,000 on the deal. They owned 50 percent of his registration so received €3,608,000, from which they had to deduct the €1.5m purchase option they had on that 50-percent stake, €500,000 due to his former club Maya and more than €1m they owed the player.
The money was useful, of course. But his case underlined a key point: the debt that could have cost Elche a second relegation and that puts them on edge of that abyss is the money they owe players.
Mosquera rescinded his contract and walked for free but Elche were grateful to him and others for doing so. He effectively waived more than €500,000 the club owe him. According to figures from the LFP, published in Informacion, more than 30 players are owed money by Elche. Mosquera was the player owed the most, having formally reported his unpaid wages at €535,000 (Elche recognise €232,598), while Miguel-Angel was the player owed the least, on €12,500.
All this time, fans and the players who remain have been stuck in limbo. They didn't know which division the club will be in by the start of the new season. They don't know if there will be a club.
The fear grew. Season ticket sales were, naturally, sluggish, at little more than 2,000 for a club that had over 20,000 last season. Many of the players are on the division's minimum wage, a wage that was already halved the moment they were relegated from the first tier. (Some made formal complaints to the league for that very reason.) If Elche were to be relegated again, the players knew they would become free agents but that was no consolation. There was no guarantee of them finding clubs.
Jonathas was sold but selling players to raise money had been complicated too by the risk of relegation. Buying clubs would rather wait. Others departed on free transfers, in return for removing their denunciations. The club had previously tried to persuade players who are staying to withdraw their formal complaints on a promise to pay later, but few trust that they will ever see the money. Under new management and with the clock ticking, they had a few hours to try again. And that was decisive.
In total, the debt to players stood at €7.8m. Anguix had kept saying that Elche would pay, that Elche would be fine, but there was no solution in sight and time slipped away. Patience wore thin and on Thursday he was forced out after just 92 days in charge -- one for every year in the club's history. The mayor got behind a group of former presidents and local businessmen who then launched a survival campaign with barely 36 hours to go. The situation was critical and there was little time, they said.
"Let's believe again," the slogan ran. Under the new committee, there was trust. There was also the urgency of the moment. An account number was given and fans were encouraged to make contributions. Time was the key. "Now" was the operative word.
They were encouraged to buy their season tickets now, because the club needed the money. If they were going to buy a shirt this season, buy it now, not next week. They were told they could pay the club money now that would be exchanged for shares when a new share issue begins in the future. Or they could just make a donation. Sponsors were implored to pay money now; the club would provide tangible value later. It was all a bit desperate but these were desperate times.
As the campaign was launched, the mayor declared: "We can't let this happen. Elche won't disappear because we have a lot of people behind us and people will respond. This is about more than football."
Mobilisation began, while negotiations intensified behind the scenes, deals sought to achieve a stay of execution. "It has been very tense," said Cesar Nohales, spokesman for the committee that took over with two days to go to rescue the club.
Money came in and there was room to manoeuvre, too. As that €7.8m was the gross wages of those owed money, the amount Elche needed to find could be temporarily reduced. The players' net income (and most players' contracts stipulate salary in net) could be paid immediately, while the tax on those salaries did not need to be paid until the next round of tax returns. That was one of the reasons why the figure they needed to reach was closer to €4m.
The risk there was incurring another, new debt with Inland Revenue, but in the final decisive hours time was the most precious commodity. The deadline to pay that money to the players' union, the AFE, who stand as guarantors on the players' behalf, was Friday night at midnight and the punishment for not paying was automatic relegation to the Segunda Division B (a punishment that's applicable to all teams who do not clear debts with their players by the July 31 deadline, whether they are in the first division or the second). That could mean the end.
So the target was €4m, immediately. Every avenue was explored. Some players agreed to delay the payment, via the AFE, and that flexibility proved fundamental. Denunciations were withdrawn, meaning the AFE and LFP would certify their right to stay in the Segunda Division. It was also reported that the LFP also agreed to give Elche the €10m parachute payment due to all clubs relegated from the first division to the second -- something that had not always been clear given that their relegation had been an administrative one, not a sporting one.
Debts were paid to the taxman and most pressing of all, to the AFE. In total, players agreed to put off around €1m worth of debt. The club talked about having gone back to zero, in terms of the immediate threat, at least. And at 6 o'clock on Friday, the announcement came. Elche will play in the Segunda Division next season.
There will be trouble ahead. Players have departed; that helped reach the figure they were chasing and to reduce expenditure but it may not help them avoid the drop on the pitch. Elche have lost 13 players and will lose more. They need to build a squad now, and quickly. Everyone else has a head start on them. Signings will be restricted, they will only be allowed 18 professional players in the first-team squad and anyone who joins will have to accept the €68,000 minimum wage. Next season will be a struggle, but at least there is a next season.
"August will be hard, September even harder," Nohales admitted. He is right. But for now, that doesn't matter. They had done it, in barely a day and a half. A "feat," indeed. Tomorrow is another day, and the fact that Elche even have a tomorrow is reason to celebrate.
Sid Lowe is a Spain-based columnist and journalist who writes for ESPN FC, the Guardian, FourFourTwo and World Soccer. Follow him on Twitter at @sidlowe.