Barcelona and Real face EU inquiry over state aid

Football giants are accused of receiving an unfair advantage. Picture: Getty
Football giants are accused of receiving an unfair advantage. Picture: Getty
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Spanish football giants Real Madrid and Barcelona are being targeted in a European Union inquiry into whether they received illegal state aid.

The EU also said it might widen its investigation to include football teams’ outstanding tax debts to the Spanish government, which total in the hundreds of millions. EU competition commissioner Joaquin Almunia yesterday said clubs should use sound financial management rather than live “at the expense of the taxpayer.”

Mr Almunia’s office is responsible for ensuring that businesses across the EU face a level playing field – including the multibillion football industry. The inquiry is intended to see if teams such as Barcelona and Real Madrid have been unfairly relying on state aid to face other clubs in Spain’s top flight La Liga and European teams in the Uefa Champions League.

The inquiry is also investigating Valencia, Hercules, Elche, Athletic Bilbao and Osasuna. The Spanish government, which knew the investigation was coming, has already said there was nothing illegal about the aid that the clubs received. “Sometimes probes are opened and closed without any consequences,” said Spanish economy minister Luis de Guindos.

The objections the EU is looking at centre on how Spanish clubs and local authorities handled fiscal issues such as loan guarantees, land swaps or construction funding. The EU ombudsman’s services said a complainant claimed the state aid totals several billion euros, adding that the commissioner had been considering the issue for years before announcing yesterday’s opening of proceedings.

More importantly, Mr Almunia also said he might look beyond the specific case raised yesterday. “I have also read about the questions on the high debts of the football clubs to the economics ministry,” he said.

In April, Spain’s Sports Council said football clubs owed the government €670 million in taxes. La Liga is one of the toughest leagues in the world and any EU decision could have a deep impact on its future. The investigation may take several months and any decision could then be challenged at the EU’s highest court in Luxembourg.

Debt-ridden Spain has been struggling financially for years since it faced a property market implosion several years ago. Many football clubs – like many other types of Spanish businesses – face severe financial difficulties. A decision to force them to return state aid could make their problems even more acute.

In the case of Valencia, and neighbouring teams Elche and Hercules, state guarantees for more than €100m in loans over the past four years have been seen as essential for their survival. But this aid may have been skewing the fairness of the league. The commission said it has “concerns that these measures provide significant advantages to the beneficiary clubs to the detriment of the clubs which have to operate without such support”.