Real Madrid, Barcelona Probed by EU Over Spanish Subsidies

Real Madrid and Barcelona, soccer’s richest clubs by sales, will be probed by the European Union over Spanish tax breaks that may give them an unfair advantage over rivals.

The European Commission will also investigate Athletic Bilbao and Osasuna over a legal exemption for those four clubs that allows them pay corporate tax rates of 25 percent instead of a standard 30 percent for sport limited companies. Real Madrid will also be probed separately over “a very advantageous” 2011 property swap with the city of Madrid that valued land at 22.7 million euros ($31.2 million) instead of a 1998 estimate of 595,000 euros.

Real Madrid and Barcelona are soccer’s richest clubs by sales, according to Deloitte LLP, with combined annual revenue of about 1 billion euros.

“Professional football clubs should finance their running costs and investments with sound financial management rather than at the expense of the taxpayer,” said Joaquin Almunia, the EU’s antitrust chief.

EU regulators can require companies to pay back government aid that gave them an unfair advantage over rivals, including tax exemptions. The Spanish government “will battle to defend the Spanish clubs, which are part of Spain’s brand,” Foreign Minister Jose Manuel Garcia-Margallo told reporters this week. His comments were confirmed by a Foreign Ministry spokesman who declined to be identified in line with policy.

Other Clubs

Valencia, Hercules and Elche, three clubs in the Spanish region of Valencia, will also be investigated over government-backed loans and guarantees to aid them during financial difficulties. The EU said it doubted that this aid was legal because the subsidies didn’t follow guidelines that require a restructuring plan for rescue aid to companies.

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.

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