Real Madrid, Barcelona Face EU Probe, Spain Minister Says

Real Madrid and Barcelona, soccer’s richest clubs by sales, are among seven Spanish teams facing a formal probe by the European Union over possible illegal state aid, Spanish Foreign Minister Jose Manuel Garcia-Margallo said.

The European Commission will open an in-depth investigation tomorrow over whether they unlawfully received government subsidies in the form of tax relief, loans and other assistance, Garcia-Margallo told reporters yesterday in Brussels. His comments were confirmed by a Foreign Ministry spokesman who declined to be identified in line with policy.

The Spanish government “will battle to defend the Spanish clubs, which are part of Spain’s brand,” Garcia-Margallo said. Real and Barcelona are soccer’s richest clubs by sales, according to Deloitte LLP, with combined annual revenue of about 1 billion euros ($1.4 billion).

EU regulators can require companies to pay back government aid that gave them an unfair advantage over rivals, including tax exemptions. Antoine Colombani, spokesman for EU Competition Commissioner Joaquin Almunia, told reporters that commissioners would discuss Spanish soccer clubs tomorrow. Almunia has scheduled a Brussels press conference on antitrust and state-aid issues tomorrow.

According to the Foreign Ministry spokesman, Real Madrid, Barcelona, Athletic Bilbao and Osasuna will be investigated for operating under a 1990 Spanish law as member-owned sporting institutions, allowing them some tax breaks that other clubs don’t have.

Real Madrid

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, the ministry spokesman said.

Under a 2011 accord, Madrid’s city hall granted Real the right to develop land in front of its Santiago Bernabeu stadium. Real, which intends to build a shopping center on the site, has yet to get financing for the project.

EU regulators were told by the European Ombudsman, which oversees EU agencies, to decide on investigating state support to the clubs by June 2014, according to a statement today. The ombudsman said the EU failed to take a timely decision and failed to allay suspicions that Almunia was unwilling to start a case involving his favorite club. Investors in a number of European football clubs first complained about tax advantages for Spanish clubs in 2009, the statement said.

Back Taxes

Almunia “considers it unacceptable to suggest that there could be any conflict of interest in this case,” his spokesman said in an e-mail.

Spanish clubs owed 690 million euros in back taxes as of March. Atletico Madrid’s unpaid taxes built up over 13 years to 115 million euros last year, according to the team Chief Executive Officer Miguel Angel Gil.

Five Dutch soccer clubs, including PSV Eindhoven, also are being investigated by the EU over aid from local municipalities, including waiving payments and buying land and training facilities.

To contact the reporters on this story: Alex Duff in Madrid at aduff4@bloomberg.net; Aoife White in Brussels at awhite62@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net

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