Real Madrid, Barcelona Among Seven Spanish Clubs Facing Illegal Aid Investigation
Real Madrid and Barcelona, the world's "richest football clubs by revenues, are among seven Spanish teams facing an EU investigation into possible state aid violations that could cost the squads several billion euros," according to Fontanella-Khan & Johnson of the FINANCIAL TIMES. European officials said that the European Commission will launch an "in-depth probe on Wednesday into allegations that the Spanish teams unfairly enjoyed government assistance since the 1990s." A complaint made to the EU's antitrust body in '09 by "investors in various EU clubs claimed that the clubs in Spain received several billion euros worth of improper tax breaks and loans from the Spanish government." Spain's government was "forced to seek" a €100B ($137.5B) "rescue package" from int'l lenders to save its worried banking sector. Under EU law, if investigators "determine that the clubs received illegal state aid they will be forced to pay back the financial assistance to the Spanish government." The other five clubs to be investigated are Osasuna, Athletic Bilbao, Valencia and Elche, which play in Spain’s top league, and "Hercules, which is in the second division" (FT, 12/17). EUROPEAN VOICE's Nicholas Hirst reported "this follows a recommendation" by the European Ombudsman "strongly criticising the Commission for taking too long to take a decision on the complaint." Although the Commission "initially examined the complaint, asking the Spanish government to respond to the allegations and to answer specific questions," the Ombudsman said that no further action was taken by the Commission after March '11. The complainants "subsequently contacted the Ombudsman" in Dec. '11. They "alleged that the lack of action" could be due to EU Competition Commissioner Joaquin Almunia being a "fan of one of the clubs in question and also a minister in the Spanish government that decided the tax advantages" (EUROPEAN VOICE, 12/17).
SPANISH GOVERNMENT BEHIND CLUBS: THE JOURNAL reported "in concrete terms, the complainant says that the Spanish clubs in question are able to exploit their state subsidised resources to compete unfairly in buying the best players." Madrid "appeared concerned about the consequences of the Brussels decision," but Spanish Foreign Minister Jose Manuel Garcia-Margallo said that the government would "defend the clubs to the end." Garcia-Margallo: "As far as I know there was nothing illegal. But I am concerned about the prejudice that the clubs may suffer" (THE JOURNAL, 12/17). BLOOMBERG's Duff & White reported EU regulators can "require companies to pay back government aid that gave them an unfair advantage over rivals, including tax exemptions." The EU also will look into "whether Real Madrid and Athletic Bilbao received state aid in property transactions linked to their stadiums, and whether Valencia, Hercules and Elche unlawfully received loans from local authorities" (BLOOMBERG, 12/17).
CARDENAL REQUESTS CLARIFICATION: Spanish Superior Sports Council President Miguel Cardenal "has called on the European Commission to clarify allegations seven clubs including Barcelona and Real Madrid face." Cardenal said that is "important that perspective is maintained through the EC's coming actions." Cardenal: "We are talking about entities, and we have recent data, that have paid over €170 million last year. I wish that the commissioner [Joaquin Almunia], when talking of European aid, does not paint the picture incorrectly. I will point out that the taxation support from Spanish teams is much more burdensome, markedly higher than their German counterparts, the British and the French, with the law that they are planning, and even the Italians" (FOOTBALL ESPANA, 12/17).
BILBAO REACTS: MARCA reported Athletic Bilbao President Josu Urrutia said that his club "has historically followed the rules and still does." Urrutia said that he "would not, under any circumstances, support the club becoming an anonymous sporting society [SAD]." Urrutia added that he "still has not received official communication from the EU." He said that he has heard "only what has been published in the media" (MARCA, 12/17).
BARCELONA ISSUES DENIAL: The EFE reported FC Barcelona spokesperson Toni Freixa said that the club "believes the investigation that the EU will open this week against the club has no 'legal foundation.'" Freixa said, "We have never received public aid" (EFE, 12/16).