Apart from the poor European performances, I personally really feel that there's been a decline in the quality of the domestic league as well - the small and medium sized teams just don't have the same quality of players as they used to. That said, the league is still unpredictable as ever, with any team being able to beat another on a given day. And there is no fixed "big 4" like in England or big 3 in Italy.
But what's most worrying is the increased amount of structural instability at almost all Spanish clubs nowadays. It would be interesting to see some stats on manager turnover between various leagues, because the situation in Spain has become utterly ridiculous - managers are barely given a few months before being fired, in the hope that the honeymoon effect from the next one will be enough to keep the team up. There's also always a lot of turmoil at board level and in the management areas of clubs. I can't think of any other major league, bar maybe Brazil, that has such consistent problems.
A big part of the problem is the presidents/owners of the clubs. They are impatient, eccentric, clueless about football, and more commonly nowadays, struggling for money. Most of them tend to be business tycoons from real estate or telecoms or whichever sector boomed in the last few years, then they took over clubs as a symbol of power, and now are struggling. The financial situation is really bad right now - La Liga Loca had an article last week about how 5 recently relegated sides are on the brink financially. And in the Primera as well, "big" clubs like Valencia are unable to pay their players wages these past few months.
Those are some of my not-very-well-organised thoughts, obviously a lot of different issues that I've just briefly touched on there. The Spanish league will always have strengths like being a natural first destination in Europe for South American players because of the language/culture, and historically big/successful clubs. But with the current structural and financial crisis, are we witnessing a possibly permanent decline of the league's quality in the medium-to-long-term? Or am I just being a bit too "doom and gloom" after the crap results for the league's teams in Europe this week?