8 February ~ Valencia are sitting comfortably near the top of La Liga, playing exciting football and blessed with some of Europe's best attacking players. So it is easy to forget that, just this time last year, they were facing financial ruin. In 2006, the club's president Juan Soler announced plans to build a new stadium, the Nou Mestalla, on local wasteland. The club was to go on using their existing venue until construction was complete, when the old ground would be sold. Additional funding would be provided by bank loans (paid back by the sale of broadcasting rights and sponsorship), annual qualification for the Champions League and, eventually, through money generated by the Nou Mestalla.

Within two years, practically everything that could go wrong did. Firstly, the collapse of the Spanish property market made it very difficult for Valencia to sell either their existing stadium or training ground. Secondly, the team started to lose. Having banked heavily on the fact that Valencia would qualify for the Champions League every year – with little margin for error – they failed. This meant a heavy loss of annual revenue and, therefore, a hefty dent in the club's operational budget.

Soler seemed to think that selling assets to raise and save money would be defeatist. The team had to win, so he spent huge amounts of money on the squad. During his five years in charge, Soler spent over €180 million (£158m) on players such as Ever Banega, Nikola Zigic, Manuel Fernandes, Renan, Timo Hildebrand and Hedwiges Maduro, the majority of whom were unsuccessful.

Then, when that didn't work, Soler turned to the management. He fired the coach, Claudio Ranieri, and hired a new one in Quique Sánchez Flores who was quickly replaced by Ronald Koeman. But after public feuding that resulted in the sale of stalwarts Santiago Cañizares, Miguel Angulo and team captain David Albelda, Koeman himself was sacked and replaced by Unai Emery, who is still in charge. Severance pay alone for these three coaches cost the club a reported €30m.

By February 2009, the debt had risen to over €500m. The club conceded that they were unable to pay their players and work on the new stadium had to be suspended. Soler was forced to stand down as president although he effectively remained in power as majority shareholder and owner.

A chaotic leadership re-shuffle followed, with a succession of leading club figureheads taking turns to be in temporary charge. Finally, with the threat of bankruptcy upon them, Valencia were offered a lifeline in a €74m emergency loan from Bancaja, a local bank, ultimately funded by the regional government, to which Valencia were already in significant debt.

With this, the club appointed a new president in Manuel Llorente whose modest plan to save the club involved a rights issue of new shares offered to existing shareholders. The sale of shares started slowly until a group of fans – known as Fundacio Valencia – made an offer to buy the club. The organisation purchased all of the remaining newly-issued shares – approximately €26m worth – eventually taking over the club with an ownership of 72 per cent. Valencia were officially saved.

Since then, things have dramatically improved. Last month, they reached an agreement with the group commissioned to build the Nou Mestalla to resume work on the stadium. Should things go to plan, this would mean completion by 2011.

In relation to the team, the calculated risks taken by Valencia to keep star players such as David Silva and David Villa have also so far paid off. That said, with both players expected to command transfer fees in advance of €45m, it is surely only a matter of time before at least one of them is sold.

As of this moment, Valencia are in a very strong position. Qualification for next season's Champions League is likely, they have some very good young players and a highly rated coach in Unai Emery. Sensible transfer activity over the next year should ensure Valencia are moving to a new stadium as one of Europe's most progressive clubs. If they do, in a way it will all have been down to Juan Soler. Isidore Lewis

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