Cash-strapped Valencia gets some relief

Spanish first division side Valencia has received a loan of 50 million euros and plans a capital increase to help it over a financial crisis threatening the club.

Valencia’s chief executive Javier Gomez made the announcement to players on Friday.

The two-time Champions League finalists suspended payments to players in February and stopped work on a new stadium amid a total debt which Spanish news reports have put at around 450 million euros (600 million dollars).

“It’s positive and major news for everyone,” striker David Villa, the top scorer at Euro 2008 which was won by Spain, said of the loan.

“We only have 10 matches, and what we can do to help the club economically is to qualify for the Champions League,” he said.

The loan will give some breathing space to the club, whose financial problems have been exacerbated by a drop in form in which they have just one win from their last seven matches.

Valencia, based in Spain’s third-largest city, have been eliminated from this season’s UEFA Cup and the Spanish Cup and are in sixth place in the Primera Liga, five points from the fourth place that would see them qualify for the Champions League.

Spain is home to two of the world’s richest clubs, Real Madrid and Barcelona, which benefit from generous sponsorship contracts and lucrative deals from television broadcast rights.

But many other clubs like Valencia are struggling to face up to soaring wages and transfer fees as revenues decline.

The club had hoped to sell land around its 55,000-seat Mestalla stadium to finance the building of a new 75,000-capacity ground with an estimated cost of 200 million euros.

But last year Spain entered a steep recession as the cheap credit which had fuelled a decade-long real estate boom dried up due to the global financial crisis, making it hard for Valencia to sell the land.