Real Madrid and Barcelona Ordered to Pay Back Millions in Illegal State Aid

Spain’s two biggest clubs have been told to repay considerable sums to the Spanish government, as have Valencia, Athletic Bilbao, Osasuna, Elche and Hercules.

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Jul 4 2016, 2:13pm

EPA Images/Fernando Villar

The European Commission has ordered Real Madrid and Barcelona to repay millions of euros to the Spanish government, after ruling that the two clubs unfairly benefitted from public support measures.

Following three separate investigations into the relationship between Spanish football clubs and the state, the Commission has ruled that the two biggest clubs in La Liga received favourable treatment which was in violation of the rules on EU state aid. The Commission also ruled against Valencia, Athletic Bilbao, Osasuna, Elche and Hercules, all of whom will have to pay back considerable sums.

Margrethe Vestager, the commissioner in charge of competition policy, said: "Using taxpayers' money to finance professional football clubs can create unfair competition. Professional football is a commercial activity with significant money involved, and public money must comply with fair competition rules. The subsidies we investigated in these cases did not."

EPA Images/Toni Albir

The indiscretions investigated include preferable tax arrangements for Real Madrid, Barcelona, Osasuna and Athletic Bilbao, as well as a land transfer between Real Madrid and the City of Madrid in the late '90s that saw the former receive tens of millions of euros. The Commission has now ruled that the land was overvalued by €18.4m, a sum that "gave Real Madrid an unjustified advantage over other clubs, and which it now needs to pay back."

A separate investigation looked into state guarantees for loans given to Valencia, Hercules and Elche. These guarantees "allowed the clubs to obtain loans on more favourable terms and... as the clubs paid no adequate remuneration for the guarantees, this gave them an economic advantage over other clubs."

The Commission estimates that Valencia now owe the taxpayer €20.4m, while Hercules and Elche must pay back €6.1m and €3.7m respectively. Real Madrid, Barcelona, Osasuna and Athletic Bilbao benefitted from a lower corporate tax rate for over 20 years, but will only have to pay back around €5m each.