Deportivo cuts debt burden by €45m and opens door to raised salary cap

July 5 – La Liga club Deportivo La Coruña has restructured its crippling debt mountain with a €45 million loan-cum-sponsorship with financial institution Abanca.

The loan means that club can immediately discharge over €40 million of debt to the Spanish tax authorities that was suffocating the club and its financial management, and although the club is not clear of debt, it will be able to re-budget for life in La Liga rather than what looked like being a painful descent down Spain’s league structure.

Abanca’s loan is over 15 years and will be part-traded against the naming rights to the Deportivo stadium which will now be renamed Abanca Riazor. No figures were released for the cost of the loan or the financial structure except that there will be a two-year grace period before money starts to be paid back.

Juan Carlos Escotet, president of Abanca, said: “It will provide you (Depor) with the economic muscle to carry out the investments you need and to be competitive. For Abanca, it is an honor, it has the ability to pay and we are convinced that there will be a recovery of credit without any difficulty.

“The structuring of financing, despite good management, would have probably brought the decline to Second and deepen the crisis. There will be fewer excuses. It gives health and viability to the project. The fall will be less likely and I hope the players do not let me down.”

Deportivo had been balanced on a financial knife-edge with more than €91 million of debt owed to various banks and a taxman demanding immediate payment. The restructured debt will not solve all the club’s problems but a descent into the lower leagues would undoubtedly have increased them.

What it will do is allow the club to raise its salary cap and be more competitive in a better managed financial environment.

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