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Spain’s Soccer Crisis

Europe May Be Falling Apart, But Not On The Football Field.
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Late last year, the Spanish government changed its tax rules to make it more expensive to be fabulously wealthy. Amid the country’s financial crisis, the boost to a 56 percent personal income tax rate for people earning more than 300,000 Euros a year–about 10 times the national average–should have had populist appeal.

It didn’t. Among the reasons were fears that star soccer players might abandon Spanish teams to play in other countries that take smaller cuts from their wealthy residents’ compensation packages. The soccer-tax issue even inspired a UC Berkeley study. Specifically, the law stoked rumors that Real Madrid’s star Cristiano Ronaldo, whose transfer from England’s Manchester United to the Spanish capitol was the largest sports deal in continental history, was aiming to pull up stakes.

Known as much for his preening as his play, Ronaldo seemed to take particular pride in being the league’s top earner, taking home $400,000 a week to rescue Real from a run of bad results. After the tax hike, Ronaldo’s take-home fell to just under $200,000 weekly.

But six months later, Ronaldo is still in Madrid and Spain is still on the brink of bankruptcy. So it’s natural that many Spaniards and their supporters are hoping to get a boost from tonight’s semifinal in Europe’s soccer championship (“The Euros”) between Spain and Portugal.

After all, Spain’s stock market soared the week after Spain won soccer’s World Cup in 2010. The win apparently helped the “Spain brand.”

There are times when a match is not just a match. Famously, the Soviet Union’s face-off against Hungary in the 1956 Olympic water polo semifinals came a few weeks after Russian tanks rolled into Budapest. Called “The Blood in the Water Match,” it ended with four players forced from the water with gashed faces and torsos, and the pool allegedly pink. (Hungary won.) Last week, as Greece took on Germany in the Euro’s quarterfinals, the European press was full of cutting jokes (“What do you call a German goal against Greece? Interest.”).

But the players on the field didn’t match the rhetoric. In fact, they reflect the day-to-day reality of today’s economic Europe more than the actual economics reports do. Many players ply their trades outside their countries, and invest their money in yet third nations. (In Spain, many players have end-run the new tax law by doing their banking in Austria.)

Even the national teams are drastically international in spirit. Of the 16 teams that started this elimination tourney three weeks ago, only one, England, was comprised entirely of players affiliated with clubs in their homeland. The Dutch stars played in Spain. A Spanish starter, David Silva, won a recent championship in Manchester. Portugal’s defense plays the rest of the year in Madrid, with Germany’s best midfielder. France’s most dangerous scorer lives and plays in Munich. All of them get their wages laundered wherever they can find the best deal.

So should we cheer for Spain to beat Portugal in the semi tonight, and Germany to beat Italy, leading bankrupt Spain and lordly Germany to a showdown that’s less a football match than a 22-legged metaphor? It would seem not–if only because down on the field, most of the players who would confront each other already work together the rest of the year, and vacation together, and are in every way the picture of the European Community planned 20 years ago. On its sports page, Europe is the borderless, flexible success it seeks to be on the business pages.

So imagine if German Chancellor Angela Merkel surprised everyone and came out in red and yellow, cheering for Spain. It would still make the front page of every paper. If this really is a game of building confidence, if the "Spain Brand" and the "Europe Brand" are what this is about, then that's what we'd need on the field. The bankers, bond traders, and arbitrage types watching the game would see, curiously, not a German, but a European. It might work.