BRUSSELS: In a ruling which has extended the long arm of the unelected European Commission into football finance, seven Spanish clubs have been ordered to repay between €50m and €70m in ‘unfair state aid’ writes KEIR RADNEDGE.
Three investigations undertaken sincd 2013 by competitions commissioner Margrethe Vestager have targeted Spanish champions Barcelona, European champions Real Madrid, Valencia, Athletic Bilbao, Atletico Osasuna, Elche and Hercules of Alicante.
The clubs are all likely to appeal on the grounds that ensuring due legal process in all cases was the responsibility of national and local government officials.
There is also an issue over the concept of retrospective legislation.
The Spanish government has ben charged with recovering the monies from the clubs.
Vestager said: “Using taxpayers’ money to fund professional football clubs can distort competition. Professional football is a business and must thus comply with the rules of fair competition which, in this case, the investigated subsidies did not meet.”
State aid controls insist that “public interventions in the market do not distort competition by favouring one participant to the detriment of another.”
The first investigation focused on alleged low-impact tax breaks to Real Madrid, Barcelona, Bilbao and Osasuna.
“In Spain,” said the commission, “professional football clubs are considered as private companies for tax purposes companies however, these four clubs were treated as non-profit-making organisations which pay five per cent in tax on profits compared with corporations.
“The four clubs benefited from the lower tax rate for more than 20 years without objective justification.”
Spain amended its tax in laws thus past January to correct he anomaly but the clubs were being ordered to repay monies retrospectively. The sums concerned are thought to be up to a maximum of €5m.
The second investigation concerned a land deal negotiated between Real Madrid and the city council through which the club was able to wipe out massive debts and undertake refinancing.
Here, the commission said: “The investigation found, based on an independent study, that the land affected by the transaction was overvalued at €18.4m. This gave the club an unfair advantage over other clubs.”
Land in Las Tablas was initially sold to the club in 1998 for €488,000. Madrid then sold the land back to the city council in 2011 for €22.7m. Hence the estimated revalued €18.4m difference should be repaid by the club to the city council.
A third investigation concerned guarantees granted by the Valencia Finance Institute for unsecured loans at favourable rates to Valencia, Hercules and Elche.
Vestager stated: “Such state funding was not linked to a restructuring plan with a view to the clubs’ viability and none of them applied compensatory measures to offset the distortion of competition caused by the aid.
“To restore a level playing field by comparison unsubsidised clubs, Valencia, Elche and Hercules must now return the benefit received, amounting to €20.4m in the case of Valencia, to €6.1m in the case of Hercules and €3.7m in the case of Elche.”
The order may upset Elche’s attempts to find new owners while the very existence of Hercules may be threatened since the club are already €18m in debt.