EU orders Spanish football clubs to pay back millions in state aid

The European Union on Monday ordered seven Spanish football clubs, including national champions Barcelona, to pay back millions of euros in state aid, finding that the support gave them an unfair competitive advantage over other clubs.

Spanish football clubs have been a dominant force in Europe for decades, with three of them - Real Madrid, Barcelona and Atletico Madrid - qualifying for the knock-out stages of last year's lucrative Champions League. Real won the tournament, making it the third year in a row that a Spanish team took the top spot in the tournament of Europe's best clubs.

The EU's executive, the European Commission, found that Real, Barcelona, Athletic Bilbao and Atletico Osasuna benefited from undue tax breaks for more than 20 years, while Valencia, Hercules and Elche were given state guarantees to obtain loans on favourable terms when they were struggling financially.

The commission also found that a property which should have been transferred to Real by the city of Madrid was overvalued. This allowed the club to receive more compensation than it should have when the land transfer did not take place.

"Professional football is a commercial activity with significant money involved and public money must comply with fair competition rules," EU Competition Commissioner Margrethe Vestager said in a statement. "The subsidies we investigated in these cases did not."

The commission estimated that Spain should recover up to 5 million euros (5.6 million dollars) from Real Madrid, Barcelona, Athletic Bilbao and Atletico Osasuna for the exemption that allowed them to pay a corporate tax rate of 25 per cent, instead of the usual 30 per cent, since 1990.

Spanish authorities will have to determine the precise amounts that need to be paid back by each football club.

The Real land transfer gave that club an undue advantage of 18.4 million euros, while Valencia, Hercules and Elche should pay back advantages of 20.4 million euros, 6.1 million euros and 3.7 million euros respectively for the state guarantees, the commission said.

The Brussels institution took a different stand Monday on state aid that had been granted to Dutch football clubs, finding that those support measures complied with the EU's strict competition rules.

Den Bosch, MVV Maastricht, Nijmegen and Willem II Tilburg had to implement restructuring plans in exchange for the aid and undertook measures such as cutting players' wages and reducing their number of employees to limit competition distortions, the commission said.

It also examined a land transaction involving PSV Eindhoven, but found that this did not involve state aid since the transaction was in line with market values.

"In the Dutch cases, we found that the measures respected state aid rules and did not distort competition," Vestager said.

"Professional football clubs are businesses and the commission needs to make sure that the economic competition between clubs is not distorted by state subsidies for a select few," she added.

EU rules forbid state aid that unduly affects competition. The commission has justified the investigations into the football clubs by arguing that they carry out economic activities in the EU.

Last update: Mon, 04/07/2016 - 13:54
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