Levante UD’s highly sustainable financial model

Levante UD’s highly sustainable financial model

THE NAMESAKE OF THE BEACH where its first stadium was built, Levante UD is a Spanish football club from the Mediterranean city of Valencia, with over 103 years of history. Although the club has spent only eight years of its extensive history in La Liga’s first division, Levante has boasted legendary players like Johan Cruyff and Predrag Mijatović, and more familiar names such as Lauren, Ian Harte, Savio Bortolini and Arouna Koné in recent years.

A popular club in Spain, it is renowned for having a robust and faithful fan group. Proudly shaped in the shadow of a bigger and richer institution, it shares the city with Valencia, its more illustrious neighbours. In many regards, its image is shaped in the mould of Everton, Manchester City or Espanyol.

Despite not being at the level of Spanish giants Real Madrid or Barcelona, and less internationally known than Atlético, Valencia or Sevilla, Levante has been the centre of attention for its outstanding management model developed in the last three to four years.

Football is the most universal of sports and, of course, highly competitive; if there is a correlation between competitiveness and better management (as a study by The London School of Economics and McKinsey seems to confirm), football clubs should develop innovative, forward-thinking and sustainable management practices. Levante had to come up with a smart and effective managerial model to survive in such a competitive environment as La Liga with scarce resources and a precarious financial situation.

The Granotes are a club whose motto is “Qué grande es ser pequeño” (How great it is to be small). It is an institution that has understood its limitations and learned how to survive in a competitive league; sixth place in 2011-12 season and subsequent Europa League actions in the 2012-13 season. All of this while having the second lowest budget in La Liga; £25 million (a pittance compared to Real Madrid’s £517 million and Barcelona’s £470 million).

In 2008 the club went into administration and called a creditor’s meeting in a Valencia court after asserting a debt of over £65 million. In 2009, current CEO Quico Catalán, then general manager, succeeded in gathering a group of professionals with whom he started to shape the foundations of a plan that would rebuild Levante in a five year project.

People like Manuel Salvador (football director) and Javier Vich (manager director) have been key elements to the most recent Levante success story. Vich, in an interview to local website Love Valencia, said: “It is not a miracle. It is all the fruits of our labours, the result of a strategic plan where everything is under control; everything but those 90 minutes that take place every weekend.”

In 2010, under Luis García Plaza, Levante were promoted to La Liga having lost only one game at home throughout 2009-10. The next season was the best in the Granotas history, achieving a well-deserved 14th place and being considered breakout team in La Liga that year. As a result of this success, Luis García was signed by Getafe and Juan Ignacio Martínez – affectionately nicknamed JIM – the start of the 2011-12 season saw the club register their best start to a La Liga campaign: three draws and seven consecutive victories – including a 1-0 win against Real Madrid said much about the potential of the team.

Levante became a La Liga leader for first time in its history and ended the season in sixth position, qualifying to play Europa League the following campaign. Levante ultimately lost 2-0 to Rubin Kazan in the last-16 having beaten teams like FC Twente and Olympiacos in the previous rounds; a very acceptable European campaign for a team that only three years before was in administration and fighting to avoid going bust.

The success is the ultimate example of good business sense at a time when clubs are living beyond their means and recklessly spending cash. Furthermore, it highlighted that clubs can still grow in La Liga, in spite of Real and Barca’s dominance of television revenue.


I. Philosophy


THE ACADEMY DIRECTOR, David Salavert, described Levante’s model as, “A model for a context” – reminding us that Levante had no other solution than to create its own model and to adapt to a system that works specifically for the Southern club. In an interview with Fútbol Paraentrenadores, Salavert identified the key principles for success; humility, unity, creativity and communication.

Levante are indeed a humble club with limited resources and are not only aware of it and behave accordingly, but have made this circumstance their modus vivendi.

“It is an example of good judgement, serenity and brightness of ideas for the current times in which we live. It is a realistic management style,” points out Sandalio Gomez, president of Centre for Sport Business Management (CSBM) and professor at IESE Navarra University.

When Quico Catalán took over in 2009, he encountered a highly unstable and divided management board. Creating a unit, making managers, players, directors and supporters understand that they are all part of a project with a common goal, has been one of the key guidelines on which the current administration has focused.

The Levante UD Model is ensuring continuity and sustainability in brought to a club where the only parameter not under its control is whether the ball will hit the back of the net.


II. Sport model


AS A RESULT OF THE ADMINISTRATION situation the club was immersed in 2008, a re-structuring of the club’s technical area was needed. A new and more sustainable model took over, where cost cutting decisions and rational expenses prevailed. The “prune-juice effect”, as Lord Sugar called it, owing to the overwhelming amount of money coming into the game but immediately being flushed out, was buried at Levante.

The new model is based on long-term sustainability with a strong focus on growing young talent at the academy, signing affordable players only, and revitalising players who did not succeed at other clubs and selling them for a profit.

There has not only been a cap on wages, but on transfer fees too. The club has had over £7 million surplus on each of the last three years’ transfer windows, having adjusted their spending capability in an astonishing way given the results produced: three years in La Liga and European football.

Manuel Salvador, the club’s director of football, has shown that he can create a competitive squad with very limited resources, making use of creativity, rationality, football knowledge and patience.

Levante are the only club in Spain that, while being in the lower half of the table, has not fired their manager during the season. Salvador always trusts his managers, even in the most difficult of situations. He kept JIM as manager at the end of La Liga first half, even though the team finished last in the table, and he was proven right; Levante ultimately finished La Liga in 14th position.

Another aspect worth highlighting is that there are no interferences from other departments in the sports area. Manuel Salvador and his team are in charge of the football and technical side of the club, and no decisions are made without their approval, no matter how unpopular they may be.


III. Academy


DAVID SALAVERT HAS BEEN the academy director for the last three years at Levante. Since his arrival, he has installed a new structural organization at Buñol training grounds. All youth teams must create a positive image on every level; in football, values and behaviour. It is a mantra that not only applies to the young players, but to the coaches as well – to keep everyone united and focused on achieving one common goal.

The learning process hinges on the age of the players, stressing football technique while they are young, and adding tactical, technical and physical concepts as they scale through the ranks until they become members of the Juvenil team. The aspect most commonly applied across all ages is the formation of values applicable to their lives; competitiveness, self-improvement, overcoming adversity, success management and respect.

All players and coaches are asked to bring their knowledge and past experiences to the decision-making process. At the academy, all opinions are considered and decisions are made in consensus, with the intention to involve all participants.

Players are evaluated on six main criteria: physical, technical, tactical, psychological, personal values and environment. There is individual monitoring to ensure that the theoretical ‘archetype’ of an ideal footballer is created.

In addition to the perfect player template, the coaches are required to be approachable, well qualified, devoted, opinionated, honest and with room for improvement. As Salavert points out in his interview with Love Valencia, it is crucial that the coach feels identified with his team; that it is the team he always dreamed of training.

Salavert does not want to set a goal or deadline for the future, but he dreams of having a Levante coach that came from the academy very soon. Seemingly, there are no limits for the youth system.


IV. Financial model


IT IS A BOOTSTRAPPING MODEL based on cost-cutting, a breakeven budget, clarity of ideas, trust in the model and staff, and a resolve to remain grounded in the face of success.

Tackling debt. From every transfer made, around £750,000 goes to the club directly, while the rest is reserved to pay down debt. The budget is under strict control and no unnecessary expenditures are carried out without justification.

In line with the club’s football direction, the policy to revitalise players and sell them to other clubs for a better price has brought the club direct cash to help reduce its debt. There seems to be perfect coordination between financial and technical areas when it comes to selling players for cash. The club receives money which helps reorganise finances after which it is Manuel Salvador’s task to find a replacement to keep the squad from weakening.

Such was the case for Felipe Caicedo and Arouna Koné. Caicedo was bought from Manchester City for £1 million. One season later, after scoring 13 goals, Caicedo was sold to Lokomotiv Moscow for £8 million. A similar case is Koné’s; the Ivorian came to the club on a free after impressing on loan and was sold a year later to Wigan Athletic for £5 million. Vicente Iborra, whose contract expired in June 2014 with no intention to extend it, was sold to Sevilla for £5.5 million.

Rational finances and brilliant football management have helped Levante reduce their debt 25% since 2009 which is no small feat, as president Quico Catalán explained to Levante Emv.

New sources of income. As with every elite club in the world, one of Levante’ sources of income is its contracts with sponsors. At the moment, Levante UD has signed sponsorship deals with beer maker Amstel, Coca-Cola, Comunitat Valenciana (Valencia Regional Government), Kelme, Volkswagen and Valencia Terra i Mar, as per club’s website.

Similarly, the club receives income from match day (the Stadium Cuitat de Valencia capacity is 26,354 and an averaged attendance of roughly 15,500 spectators), TV rights and merchandising.

Since the very first day they took over the club and focused on its critical finances, Quico Catalán and his team have introduced more discipline and rationality, to operate the club within its means, to promote responsible spending and to ensure the long run viability and sustainability of the club for the sake of the fans.


V. Supporters


LEVANTE FANS RECEIVED the Best Supporter’s Award in the 2010-11 season. They are characterised for being an extremely loyal fan base.

Faithful to the idea of creating a unit, the club forms strong ties with its fans by increasing the club’s presence in social media (over 180,000 likes in Facebook and over 175,000 followers on Twitter @LevanteUD). It is the sixth most popular club on social networks in Spain. By using this method, the club intends to engage players and fans who, consequently, feel more identified with the club and project, while at the same time making the fan’s support more palpable to the players.

The club also has its own TV and radio channel through which the club broadcasts news, activities and stories of interest related to the club and the fans.

The idea of unity and interaction between players and fans is actively promoted by the club. At the end of last season’s first half, Levante were in second to last position with only 15 points. The club organised a drawing competition for supporters’ children and the art work was used to wallpaper the dressing room. There was also a ‘Big Paella’ competition organised to bring together and bond club and supporters.


VI. Technology


LEVANTE HAS PROFESSIONALISED its management system with Sage Murano, a software company that helps manage information ratios and optimise decision-making processes. The application provides financial ratios, payslip and HR solutions, and digitalization of contracts and documents which saves time, space and money. It also includes management solutions for purchases, sales, storage units, and the official club store where all merchandising products are sold and registered.

The software allows for a better interaction with supporters, managing season tickets renewing and ticket sales. Modern and efficient software help to keep up with an innovative and modern way of management.


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LEVANTE’S MANAGEMENT STYLE has caught the attention of sport management schools, some of them as prestigious as Sport Business Management (CSBM) at IESE Navarra University from which members have spent weeks in Valencia interviewing Levante directors, coaches and managers trying to understand how Levante operates. The president Quico Catalán and Javier Vich have even travelled to China at the request of Shaanxi Baorong Chamba.

Levante UD management model has served as an example and symbol of hope for smaller and more modest clubs. Historic institutions with low levels of income and smaller budgets are witnessing proof that a football club can thrive if it promotes humility, clarity of ideas, logic, and discipline.

This is not only a model for football clubs, but also for small companies, families and individuals to emulate. Not every club can sign Messi, Ronaldo or Bale and not every individual can drive a Ferrari or live in a luxury villa. But Levante UD has proven that we can all be happy and successful by remembering our roots and staying true to our means.

By David Bartolome Martinez. Follow @bartolome_david

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