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29/09/2016

State aid for Spanish football clubs was ‘illegal’, Vestager says

Euro & Finance

State aid for Spanish football clubs was ‘illegal’, Vestager says

Real Madrid and FC Barcelona have both fallen foul of the rules on state aid.

[l30_/Flickr]

Some of Spain’s top football teams – including Real Madrid and FC Barcelona – will have to pay back illegal public aid worth up to €70 million as it represented “an unfair advantage” versus other teams, the Commission said on Monday (4 July).

Commissioner for Competition, Margrethe Vestager, warned that “using tax payers’ money to finance professional football clubs can create unfair competition.” Given that professional football is a commercial activity with significant money involved”, public money backing these teams must comply with fair competition rules, she added.

The clubs involved in the illegal state aid cases are FC Barcelona, Real Madrid, Valencia, Athletic Bilbao, Atlético Osasuna, Elche and Hercules.

The decision followed a two-and-a-half year investigation which was launched under Vestager’s predecessor, the Spanish commissioner Joaquín Almunia.

Brussels will investigate Barça, Real Madrid over illegal state aid

The European Commission will begin disciplinary action against seven Spanish clubs including Real Madrid and Barcelona over possible illegal state aid, EU Commissioner for Competition Joaquin Almunia said on Wednesday. 

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The EU executive investigated three different cases in which Spanish national and regional authorities supported these clubs.

The first case concerned fiscal benefits given to Real Madrid, FC Barcelona, Athletic Bilbao and Atletico Osasuna.

These teams paid 5% less in taxes compared to other teams, as they were considered non-profit organisations instead of limited liability companies like the rest of the clubs.

In this case, Commission officials estimate that the amounts to be paid back to the tax authorities would not be more than €5 million per club.

In a second investigation, the Commission determined that the local authorities in Madrid overvalued by €18.4 million a land transfer with Real Madrid. Therefore the club will have to pay back this sum to the authorities.

Finally, the state-owned Valencia Institute of Finance granted soft loans to Valencia (2009 and 2010), Hércules (2010) and Elche (2013). These clubs were in financial difficulties in those years. The Commission pointed out that these loans on more favourable terms were not linked to any restructuring plan or compensatory measures to offset the distortion created by the subsidy.

In total, the seven clubs will have to pay back between €50 and €70 million.

Almunia counter-attacks in high-profile Spanish football tax case

Joaquín Almunia, the Spanish Commissioner in charge of policing the EU’s antitrust rules, has denied accusations of a conflict of interest in the handling of an investigation into unfair tax breaks worth billions of euros given to Spanish football clubs, including Real Madrid and Barcelona.

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Meanwhile, the Commission closed the investigation on five Dutch clubs (FC Den Bosch, MVV Maastricht, NEC Nijmegen, Willem II Tilburg, and PSV Eindhoven) as it considered that the public funding  did not involve illegal state aid.

A Commission spokesperson confirmed that there are no other formal investigations ongoing in other leagues.

Background

According to the Commission, public interventions in favour of market players that carry out economic activities can be considered free of State aid within the meaning of EU rules when they are made on terms that a private operator would have accepted under market conditions (the market economy investor principle – MEIP). If the MEIP is not respected, the public interventions constitute State aid within the meaning of the EU rules (Article 107 of the Treaty on the Functioning of the European Union – TFEU), because they confer an economic advantage on the beneficiary that its competitors do not have. The Commission then assesses whether such aid is compatible with the common EU rules that allow certain categories of aid.