Spanish football clubs to repay tens of millions in illegal state subsidies

Wales News Conference - EURO 2016

Real Madrid, FC Barcelona and five other Spanish football clubs must repay tens of millions of euros in illegal state subsidies, after the EU executive found they had received unfair financial aid from their government.

Real Madrid, the world’s top-earning football club, will have to repay €18.4m (£15.4m), after the European commission judged that an overpriced land deal with local authorities in the Spanish capital was unfairly tilted in the club’s favour. 

Separately, an investigation into five Dutch clubs, including PSV Eindhoven, was closed after the commission said no EU rules had been broken.

The European commission, which is the enforcer of EU law, said football was an economic activity and that it had a duty to ensure a level playing field between sports companies.

“Using taxpayers’ money to finance professional football clubs can create unfair competition,” the EU competition commissioner, Margrethe Vestager, said in a statement. “Professional football is a commercial activity with significant money involved and public money must comply with fair competition rules. The subsidies we investigated in these cases did not.”

The sums involved are small change for the Spanish clubs. Real Madrid and Barcelona earned a combined €1.14bn (£960m) in the 2014-15 season, topping Deloitte’s football money league.

Real Madrid’s bill is less than one-fifth of the €100m transfer fee it was reported to have paid for Gareth Bale, who at Euro 2016 is part of the firstWelsh team to reach the semi-final of a major tournament. Real Madrid’s top goalscorer, Cristiano Ronaldo, who earns $50m in salary and bonuses a year from the club, according to Forbes, could easily pick up the tab.

Valencia, currently ranked mid-table in La Liga, will face the biggest bill: a €20.4m repayment to Spanish government coffers after it was found to have benefited from state loans on favourable terms. Hercules will repay €6.1m and Elche €3.7m for the same reason.

The three clubs had been in financial difficulties; they were awarded loans from the state-owned Valencia Institute of Finance, on favourable terms not available to other clubs. None of them had been obliged to take action to trim their costs, which the commission said had given them an unfair advantage over rivals.

Real Madrid, Barcelona, Athletic Bilbao and Atlético Osasuna will also have to pay sums of up to €5m after they benefited from favourable tax treatment not available to other clubs. The precise sums have still to be worked out by Spanish authorities. Spain has since changed its tax law to phase out this loophole that was incompatible with EU rules.

Separately, the commission announced it was closing an investigation into five Dutch clubs. FC Den Bosch, MVV Maastricht, NEC Nijmegen and Willem II had received state aid from Dutch municipalities after running into financial trouble.

The Brussels investigation concluded that state aid was in line with EU rules, because the clubs had taken action to reorganise their businesses by cutting employees and reducing wages. Similarly a land deal between Dutch municipalities and PSV Eindhoven over the club’s Philips stadium and training ground was judged to be in line with EU rules because the terms would have been acceptable to an investor on the open market.

The decisions announced on Monday follow two and a half years of investigations, launched by the then competition commissioner – and Athletic Bilbao fan – Joaquín Almunia.

A commission spokesman said no other state aid investigations were ongoing. When the commission opened inquiries into Spain it had looked at football clubs in other member states. “At that time we didn’t find other state aid issues which we should be pursuing,” the spokesman said.

He added that competition investigations were conducted on a case-by-case basis. “In this [Spanish] case the facts led to the conclusion that contrary to the Dutch measures the Spanish measures were likely to distort competition.”

Powered by Guardian.co.ukThis article was written by Jennifer Rankin, for theguardian.com on Monday 4th July 2016 14.45 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

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