The European Commission has opened disciplinary proceedings against Spain for giving illegal State Aid to 7 clubs (Real Madrid, Barcelona, Athletic Bilbao, Osasuna, Valencia, Elche and Hercules). The proceedings could have a significant impact on Spanish football.
There are three areas in which the rules may well have been breached:
Whilst all other clubs were obliged by the Spanish Government, to become public limited companies, Real Madrid, Athletic Bilbao, Barcelona and Osasuna were given state exemption and were permitted to remain as member-owned organisations. This allowed them remain as not-for profit organizations and to gain sizeable tax advantages compared to their rivals.
There is a lesser, but interesting FFP issue surrounding the PLC/membership status. The FFP rules allow clubs to count membership fees as part of their relevant income for the Break Even test (they can be classed as part of 'Gate Receipts'). However, as we all know, any other type of owner injections (eg by a Plc or benefactor) cannot be used to boost the club's relevant income for FFP purposes.
One could argue that this artificially helps the top Spanish clubs. The counter-argument is that perhaps that the membership fees help keep ticket prices down - without the membership income, the club may partly increase the price of match-day tickets to compensate for the lack of membership income.
Swiss Ramble wrote about Barca and Real membership last year:
"Both clubs also benefit from membership fees with Barcelona reporting revenue of nearly €20 million from their 170,000 members. Madrid do not explicitly break out their income, though they do list the fees paid by their 93,000 members, implying revenue of €10 million."
The Real Madrid property deal controversy goes back to 1996. The deal is somewhat complicated but essentially the Madrid council owed 420,000 euros to Real and swapped this debt for a piece of land worth 23m euros.
Regional Government loans
In 2011, the Valencia Regional Government granted 118m euros in loan guarantees to Valencia, Elche and Hercules. All three defaulted and Regional Government has been left holding the baby (owing money to the indebted state bank Bankia). By March 2013, the almost bankrupt Regional Govt had paid out 5m euros in interest on Valencia's debt of 86m euros.
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