The Spanish are fond of seeing football through a political prism, with what happens on the field often said to mirror what happens off it. So when Real Madrid and Barcelona conceded eight goals between them in 24 disastrous hours, eventually getting knocked out of the Champions League, the joke was inevitable and came laced with a bitter sting. Under the right-wing Madrid-supporting prime minister José María Azna, the joke runs, Real Madrid won; under the left-wing Barça-supporting José Luis Rodríguez Zapatero, Barcelona won; and under the current incumbent, Mariano Rajoy, the Germans do.

The shift in power is complete and so, too, is Spain's subjugation. Economic and political power was one thing, but now this. No Spanish teams reached the European Cup final and none even got so far as the quarter-final of the Europa League. The Germans, by contrast, have two European Cup finalists, full stadiums, cheap tickets, rude economic health ... they'll even have Pep Guardiola next season. What have Spain got?

The World Cup for a start. To see a decisive shift in results is premature. Spain's national team have, uniquely, won the past three major international competitions. They had two semi‑finalists and three quarter-finalists in the Champions League – Malaga were seconds away from progressing against Dortmund – and it is only a year ago that they had two Champions League semi-finalists and both finalists of the Europa League, Athletic Bilbao facing Atlético Madrid in Bucharest.

Yet it is natural there should be concern, not least because the problems faced by the Spanish game are genuinely serious. Success 12 months ago, particularly in the Europa League, considered a better barometer of a league's strength in depth, disguised significant structural problems, and Real Madrid and Barcelona's failure to reach the final could be seen as circumstantial. Disappointment this year has brought those same problems into focus, for all that injuries and fatigue could be presented as mitigating factors, particularly for those successful members of the Spain team for whom the demands, summer after summer, have been relentless for five years.

Last season, the complaint was that domestic demands had derailed the big two: Madrid and Barcelona, José Mourinho noted, had played a clásico between the semi-final legs. The clásico was moved to prevent a repeat only for the opposite problem to emerge. This year, one of the questions asked after they were knocked out was: are domestic demands enough? Mourinho publicly ceded the league before Christmas and while Madrid and Barcelona kept winning, some said that was no preparation for Europe. The Scottish paradigm emerged again.

Madrid and Barcelona will finish first and second for the eighth time in nine years. In the past three seasons, third-placed Valencia have been closer in points to relegation than the title. One coach confides that many teams no longer bother trying against the big two. In 2009 Messi equalled the all-time scoring record on 34; Ronaldo beat it the season after that with 40, then Messi beat him back on 50. This year Messi may yet surpass that figure. But what for? The league matters, the records too, but Europe is the real test and there they failed.

That dominance is underpinned by an economic imbalance that is a social and economic reality. Madrid and Barcelona account for more than 60% of fans in Spain and are the only clubs that truly generate large incomes. Equality of TV money, so far negotiated individually but soon to be brought into a collective deal, is impossible. But with those two taking €140m (£118m) a year in domestic rights, compared to Atlético and Valencia on €42m and teams at the bottom closer to €15m, there is no chance of competing.

That inability also becomes self-fulfilling. Each year, the best players at Spain's "other" clubs must join Madrid or Barcelona or leave the country. The list of deportees grows: Fernando Llorente will join Fernando Torres, David Silva, Juan Mata, Javi Martínez, Santi Cazorla and Sergio Agüero. Roberto Soldado, Radamel Falcao, Isco, and Alvaro Negredo are also likely to leave. Nor is it just at the highest level. Michu went to Swansea, in part, because no one in Spain could pay £2m for him. A second division player's salary in Spain is at League One levels; in the third tier, the average would be around €30,000 a year. Madrid and Barcelona, by contrast, will spend big again.

In a sense, European elimination is good news. Madrid and Barcelona's dominance contributes to the damaging of Spanish football. Having now been damaged themselves, if indeed that was a reason for their semi-final exits, they might finally realise that something must be done. If anything is to be done, it can only happen with their consent. Javier Tebas, who became president of the league in the midst of the semi-finals, insists that match-fixing, financial security and a collective deal with a redistribution of money are his priorities. He also says that the big two in principle recognise that need. It is not just about competing, it is about surviving. It is not just about Madrid and Barcelona, easy though it is to point the finger of blame their way and vital though it is that they recognise the need to redress the imbalance. Here, the politics-economics-football parallel carries some weight. Football in Spain and Germany is a reflection of their societies and economies. Spanish clubs have overspent and borrowed, not anticipating the crash; some, like Valencia, lost out on property speculations of their own.

Spanish football has amassed a huge debt.Madrid and Barcelona owe €1.17bn but claim that is a debt they can service, unlike the other La Liga clubs who owe €2.19bn between them. A total of €690m is owed to the taxman and, with the economic crisis gripping Spain and the German chancellor, Angela Merkel, turning the screw on Rajoy, that is not a debt they are prepared to waive any more. Since 2004, 19 of 42 first and second division clubs have been through the ley concursal, Spain's equivalent of administration. Administrators have turned up hidden contracts, exorbitant commissions, players going unpaid, and fictitious payments. Clubs were easy game for speculators and shady characters. Now third-party ownership, banned in the Premier League, is common – for some clubs it is the only solution, but it comes at a cost.

Administrators ultimately bring survival through renegotiating of debt and that process is aided by the fact that going into concursal does not come with a footballing penalty (although Tebas is now talking tough). But it means selling their best players and has contributed to average players' wages in Spain becoming the lowest in Europe's five biggest leagues.

Attendances are dropping but ticket prices are not. The timetable of games does not help, with matches spread across 10 different slots between Friday and Monday and dates sometimes not announced until eight days in advance, and nor does the lack of competitiveness. Expensive tickets are bad enough but in country with the least disposable income, it is worse. Unemployment in Spain stands at 27% – more than six million people.

Meanwhile, in Germany, even if Bayern Munich's financial muscle dwarfs the rest, there have been five different champions in 10 years, stadiums are full and the game is accessible to all. With European elimination, that is something that the Spanish have become ever more aware of. But Spanish football does not operate in a vacuum; it operates in Spain. Asked if he was jealous of the German league, as so many here are now, Tebas replied: "I am jealous of their 6% unemployment."