Real Madrid has become the latest leading club to find itself embroiled in the European Commission’s (EC) investigation into illegal state aid in football.
The Spanish Primera Division champion is alleged to have received a favourable deal for land around its Santiago Bernabeu stadium from Madrid City Council, as it seeks to develop a new shopping and hotel complex. British newspaper The Independent on Wednesday reported the dealing between the two parties, dating back to an initial 1996 agreement, constituted illegal state aid under article 87 of the Treaty of the European Community. The council is said to have over-estimated its debt to the club so it could grant Real the prime city-centre land it requires for the new development.
The latest development comes after the EC last month opened an in-depth investigation into allegations of misuse of public funding at five Dutch clubs, including Eredivisie giant PSV Eindhoven. PSV, along with fellow Eredivisie clubs NEC Nijmegen and Willem II Tilburg, were pinpointed by the Commission – along with Eerste Divisie outfits MVV Maastricht and FC Den Bosch. The Commission’s investigation is designed to establish whether the measures taken by the five Dutch municipalities in favour of the clubs comply with EU State aid rules. None of those measures, taken in 2010 and 2011, were notified to the Commission, which said it was alerted by “concerned citizens”. The Commission had said it was also looking at measures in other member states which were brought to its attention and sent a request for information to all member states concerning professional football in October 2012. The Commission’s vice-president in charge of competition policy Joaquín Almunia said at the time: “I strongly believe that professional football clubs should be well managed and not ask for help from the tax-payer when facing financial difficulties. If financial support is nevertheless given, then it should be granted under the EU State aid rules for aid to companies in difficulty.” Commenting on Real’s inclusion in the investigation, Antoine Colombani, a spokesman for competition policy at the EC, told a briefing: “Citizens and companies in several member states have sent information to the Commission alleging state aid to various football clubs. The Commission is examining the situation of Real Madrid as it does with similar allegations that are brought to its attention. The Commission is currently studying the information at its disposal and has not yet decided whether to open a formal investigation.”
The Independent states that the investigation into Real’s deal with the city council centres upon an area of land in the north of the city, Las Tablas. Originally valued at Eur421,000 when it was part of a payment by the council to the club in 1998; the same land was then valued at Eur22.7 million in 2011, a 5,400% rise, when the council decided they had to take it back. Instead of the Eur22.7 million payment, the club is alleged to have been given the land it needed around the Bernabeu. Real told the newspaper that it had not received “any special privileges in its real estate activities since it has always been subject to the then current legislation and has received the same treatment as any other entity.” The club added: “Acting like this, MCC, through the agreement with Real Madrid, has protected the municipal interests, avoiding judicial proceedings that when executed would have foreseeably resulted in an obligation to provide Real Madrid with a higher amount of compensation. The valuation of all the properties have increased due to the time lapse between the different valuation that in some cases exceeds 10 years, the degree of evolution of the urban development process and the evolution of property prices.”