In two press releases dated July 4, 2016, the European Commission expressed two different points of view. Initially it validated state aid from several cities to Dutch clubs. Then it concluded that public aid granted by Spain to seven professional football clubs gave these clubs an unfair advantage over other clubs.
EU state aid rules
They apply to public interventions in the market in order to ensure that these do not distort competition by granting a selective advantage to one market participant over another.
The Commission recalls that professional sport is an economic activity, with football clubs engaged in "marketing, merchandising, broadcasting, player transfers, etc., and compete internationally". They thus record a high turnover.
However, European Union (EU) state aid rules ensure that public funding does not distort competition between them. They ensure a level playing field for the majority of professional clubs which must operate without subsidies.
State aid in the Netherlands
Following an in-depth investigation opened in 2013, the European Commission concluded that the aid measures granted by several cities to five Dutch football clubs were in line with European Union aid rules. State.
The Commission has estimated that four clubs (FC Den Bosch, MVV Maastricht, NEC Nijmegen and Willem II Tilburg) have received aid, "but that these complied with EU state aid rules". Furthermore, according to the press release, the operation "land tenure relating to PSV Eindhoven does not constitute aid, as it took place under market conditions".
According to the Commissioner responsible for competition policy: "The granting of subsidies by public authorities entails a risk of distortion of competition. Professional football clubs are businesses and the Commission must ensure that economic competition between them is not distorted by public subsidies granted to the privileged few. In the cases concerning the Netherlands, we found that the measures complied with state aid rules and did not distort competition".
The Commission specifies that the clubs being in financial difficulty, it "assessed the measures in the light of the 2004 guidelines on state aid for rescuing and restructuring firms in difficulty". These guidelines aim to ensure that"rescue and restructuring aid is only granted to companies which have realistic prospects of viability and which take measures to reduce the distortions of competition induced by state aid".
Following its investigation, the Commission found that a realistic restructuring plan had been put in place by the clubs. They thus made a substantial contribution to the cost of their restructuring and agreed to take measures limiting the distortions of competition caused by public funding, such as reducing the number of employees, the number of players under contract and the salaries of players. players.
Find details of state aid in the Commission's press release.
State aid in Spain
After three separate investigations, the European Commission concluded that state aid granted by Spain to seven professional football clubs gave these clubs an unfair advantage over other clubs, in violation of EU rules. EU in the field of State aid.
The Commission therefore deduced that Spain should "rrecover illegal public aid from the seven clubs, namely FC Barcelona, Real Madrid, FC Valencia, Athletic Bilbao, Atlético Osasuna, Elche and Hércules".
For the Commissioner responsible for competition policy: "using taxpayer money to fund professional football clubs can generate unfair competition. Professional football is a commercial activity which involves considerable sums of money and, as such, the granting of public funds must comply with fair competition rules, which is not the case with the subsidies that have been the subject of our surveys".
The first investigation concerned tax privileges in favor of Real Madrid, FC Barcelona, Athletic Bilbao and Atlético Osasuna. The press release recalls that in Spain, "professional football clubs are considered limited liability companies for tax purposes"However, these clubs have been treated."as non-profit organizations, which are subject to a 5% lower profit tax rate than limited liability companies". These four clubs have thus benefited"of this reduced rate for more than twenty years, without any objective justification". In the meantime, Spain has adapted its corporate tax legislation to put an end to this discriminatory treatment from January 2016."To remove any undue advantage perceived in the past, clubs must now remit unpaid taxes. On the basis of the information available, the Commission considers that the sums to be recovered are limited (0-5 million euros per club) but the precise amounts to be returned must be fixed by the Spanish authorities as part of the recovery procedure.".
The second investigation also concerned Real Madrid. The Commission was interested in a land transfer between the Club and the city of Madrid. The investigation determined, "on the basis of an independent study, that the land concerned by the operation had been overvalued by 18,4 million euros. Real Madrid have thus benefited from an unjustified advantage over other clubs, an advantage which the club must now repay.".
Finally, the third investigation concerned the guarantees granted by a public entity within the framework of loans in favor of three clubs in the Valencian Community (FC Valence, Hércules and Elche) when they were experiencing financial difficulties. Thanks to the public guarantee, "these clubs were able to obtain the loans on more favorable terms". As the clubs were not paying adequate compensation for guarantees,"they had an economic advantage over other clubs, which had to raise funds without public support". The Commission concluded that,"in order to re-establish a level playing field vis-à-vis non-subsidized clubs, FC Valence, Hércules and Elche must now reimburse the perceived advantage".
