Real Madrid and Barcelona charged over unfair state aid

EPA/ARMANDO BABANI

Real Madrid supporters celebrate after the penalty shootout of the UEFA Champions League final between Real Madrid and Atletico Madrid at the Giuseppe Meazza Stadium in Milan, Italy, 28 May 2016. Real won 5-3 on penalties.

Real Madrid and Barcelona charged over unfair state aid


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The European Commission ruled against seven Spanish football clubs, stating that they received unfair advantages from the Spanish State, breaching EU State Aid regulations.

The Commission’s decision came after three different investigations that have been around for a long time. Among the seven clubs, there are Spanish giants Real Madrid and FC Barcelona plus other Spanish powerhouses like Athletic Club de Bilbao and Valencia CF and smaller clubs like Atlético Osasuna, Heracles and Elche.

The first investigation concerns tax privileges of four clubs, Real Madrid, Barcelona, Athletic Club de Bilbao and Atlético Osasuna. These four teams were treated as non-profit organisations, which under Spanish law pay a 5% lower tax rate on profit than limited liability companies, thus operating under a more profitable tax regime than other Spanish clubs. This status has been revoked in January 2016 with new regulations from Spain, however the four clubs enjoyed this special tax situation since 1990.

According to the Commission, the teams should pay back what they didn’t pay in taxes during those years. However, most likely the amount of money will be very low (the Commission estimates between 0 and 5€ million). Exact figures are to be defined by Spain tax authority.

The second case involved only Real Madrid and the City of Madrid over a land transfer that was supposed to happen in 1998. The settlement to compensate for the absence of the transfer was based on a re-evaluation of that land at a value of €22.7 million, instead of the 1998 value of €595 000, thus Real Madrid was given an unfair advantage of 18.4€ million and needs to pay it back.

The third case involves three teams of Valencia metropolitan area, Valencia CF, Heracles and Elche. Between 2009 and 2011 the three teams had financial difficulties and the Valencia Institute of Finance (IVF), a State-owned company, made loans to the three teams on more favourable terms than normal.  This gave the teams an advantage over other teams that had to deal with their own financial shortcomings on their own. Thus, the Commission urged the three teams to repay entirely the loans they received, 20.4€ million for Valencia, 6.1€ million for Hercules and 3.7€ million for Elche.

In the same day, the Commission ruled in favour of five Dutch clubs over the same regulation. The Commission decided that the aid that teams involved (NEC, MVV, Willem II, PSV Eindhoven and FC Den Bosch) received help but in line with State Aid regulations. All the cases involved on the Dutch clubs were about the usage of municipal stadiums and the Commission noted that the plans submitted by the clubs involved were all realistic and with the aim to reduce the advantages created by the State Aid.

All the cases involved on the Dutch clubs were about the usage of municipal stadiums and the Commission noted that the plans submitted by the clubs involved were all realistic and with the aim to reduce the advantages created by the State Aid. PSV Eindhoven was charged over suspects about the acquisition of the city stadium and training facilities, however the Commission noted that the sell was made in line with market prices.

The Spokeperson of the Commission, Ricardo Cardoso, stated that Commission is not following any other cases concerning football clubs.

 

 

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