It’s been a long wait, but they’re finally here!
On Monday, the European Commission released its decisions regarding State aid to seven Spanish professional football clubs (Real Madrid on two occasions) and five Dutch professional football clubs. The decisions mark the end of the formal
investigations, which were opened in 2013. The Commission decided as follows:
no State aid to PSV Eindhoven (1); compatible aid to the Dutch clubs FC Den
Bosch, MVV Maastricht, NEC Nijmegen and Willem II (2); and incompatible aid granted
to the Spanish football clubs Real Madrid, FC Barcelona, Valencia CF, Athletic
Bilbao, Atlético Osasuna, Elche and Hércules (3).
The recovery decisions in particular are truly historic.
The rules on State aid have existed since the foundation of the European
Economic Community in 1958, but it is the very first time
that professional football clubs have been ordered to repay aid received from
(local) public authorities.
In a way, these decisions complete a development set in motion with the Walrave
and Koch ruling of 1974, where
the CJEU held that professional sporting activity, and therefore also football,
is subject to EU law. The landmark Bosman case of 1995 proved to be of great significance as
regards free movement of (professional) athletes and the Meca-Medina case of 2006 settled that EU competition rules were
equally applicable to the regulatory activity of sport. The fact that the first
ever State aid recovery decision concerns major clubs like Real Madrid, FC
Barcelona and Valencia, give the decisions extra bite. Therefore, this blog
post will focus primarily on the negative/recovery decisions,
their consequences and the legal remedies available to the parties involved.
On 18 May 2016, the day the first part
of this blog was published, the Commission said in response
to the Hungarian MEP Péter Niedermüller’s question, that it
had “not specifically monitored the tax relief (…) but would consider doing so.
The Commission cannot prejudge the steps that it might take following such
monitoring. However, the Commission thanks (Niedermüller) for drawing its
attention to the report of Transparency International.”
With the actual implementation in Hungary appearing to
deviate from the original objectives and conditions of the aid scheme, as discussed
in part 1 of this blog, a possible monitoring exercise by the Commission of the
Hungarian tax benefit scheme seems appropriate. The question remains, however,
whether the Commission follows up on the intent of monitoring, or whether the
intent should be regarded as empty words. This second part of the blog will outline
the rules on reviewing and monitoring (existing) aid, both substantively and
procedurally. It will determine,
alia, whether the State aid rules impose an obligation upon the Commission
to act and, if so, in what way. More...
benefit scheme in the Hungarian sport sector decision of 9 November 2011 marked a turning point as
regards the Commission’s decisional practice in the field of State aid and
sport. Between this date and early 2014, the Commission reached a total of ten decisions
on State aid to sport infrastructure and opened four formal investigations into
alleged State aid to professional football clubs like Real Madrid
and Valencia CF.
As a result of the experience gained from the decision making, it was decided
to include a Section on State aid to sport infrastructure in the 2014 General Block Exemption Regulation. Moreover, many people, including myself, held that
Commission scrutiny in this sector would serve to achieve better accountability
and transparency in sport governance.
Yet, a recent report by
Transparency International (TI), published in October 2015, raises questions about the efficiency of State aid enforcement in
the sport sector. The report analyzes the results and effects of the Hungarian tax benefit scheme and
financing system suffers from transparency issues and corruption risks. (…) The
lack of transparency poses a serious risk of collusion between politics and
business which leads to opaque lobbying. This might be a reason for the
disproportionateness found in the distribution of the subsidies, which is most
apparent in the case of (football) and (the football club) Felcsút.”
In other words, according to TI, selective economic
advantages from public resources are being granted to professional football
clubs, irrespective of the tax benefit scheme greenlighted by the Commission
or, in fact, because of the tax
benefit scheme. More...
There has been a lot
of Commission interest in potential state aid to professional football
clubs in various Member States. The huge
sums of money involved are arguably an important factor in this interest and
conversely, is perhaps the reason why state aid in rugby union is not such a
concern. But whilst the sums of money
may pale into comparison to those of professional football, the implications
for the sport are potentially no less serious.
At the end of the
2012/2013 season, Biarritz Olympique (Biarritz) were relegated from the elite
of French Rugby Union, the Top 14 to the Pro D2. By the skin of their teeth, and as a result
of an injection of cash from the local
council (which amounted
to 400,000€), they were spared administrative relegation to the amateur league
below, the Fédérale 1, which would have occurred as a result of the financial
state of the club.More...
The year 2015 promises to be crucial, and possibly revolutionary, for
State aid in football. The European Commission is taking its time in concluding
its formal investigations into alleged State aid granted to five Dutch clubs
and several Spanish clubs, including Valencia CF and Real Madrid, but the final decisions are due for 2015.
A few months ago, the Commission also received a set of fresh State aid complaints originating from the EU’s newest Member State
Croatia. The complaints were launched by a group of minority shareholders of
the Croatian football club Hajduk Split, who call themselves Naš Hajduk. According to Naš Hajduk, Hajduk Split’s eternal rival, GNK Dinamo
Zagreb, has received more than 30 million Euros in unlawful aid by the city of
Zagreb since 2006.More...
Last week, the French
newspaper Les Echos broke the story that UEFA (or better said its subsidiary)
will be exempted from paying taxes in France on revenues derived from Euro 2016.
At a time when International Sporting Federations, most notably FIFA, are facing
heavy criticisms for their bidding procedures and the special treatment enjoyed by their officials, this tax exemption was not likely to go unnoticed. The French minister
for sport, confronted with an angry public opinion, responded by stating that
tax exemptions are common practice regarding international sporting events. The
former French government agreed to this exemption. In fact, he stressed that without
it “France would never have hosted the competition and the Euro 2016 would
have gone elsewhere”. More...
This is the second part of a blog series on
the Real Madrid State aid case. In
the previous blog on this case, an outline of all the relevant facts was provided
and I analysed the first criterion of Article 107(1) TFEU, namely the criterion
that an advantage must be conferred upon the recipient for the measure to be
considered State aid. Having determined that Real Madrid has indeed benefited
from the land transactions, the alleged aid measure has to be scrutinized under
the other criteria of Article 107(1): the measure must be granted by a Member State
or through State resources; the aid granted must be selective; and it must
distorts or threatens to distort competition. In continuation, this blog will
also analyze whether the alleged aid measure could be justified and declared
compatible with EU law under Article 107(3) TFEU.More...
This is the
first part of a blog series involving the Real
Madrid State aid case.
Apart from being
favoured by many of
Spain’s most important politicians, there have always been suspicions
surrounding the world’s richest football club regarding possible financial aid by the Madrid City Council. Indeed, in
the late 90’s a terrain qualification change by the Madrid City Council proved to
be tremendously favourable to the king’s club. The change allowed Real Madrid
to sell its old training grounds for a huge sum. Though the exact price for the
grounds remains unknown, Real Madrid was suddenly capable of buying players
like Figo and Zidane for record fees. However, the European Commission, even
though agreeing that an advantage was conferred to the club, simply stated that the new
qualification of the terrain in question does not appear to involve any
transfer of resources by the State and could therefore not be regarded as State
aid within the meaning of article 107 TFEU.
between the club and the Council have been a regularity for the last 25
years. A more recent example concerns an
agreement signed on 29 July 2011 (Convenio29-07-2011.pdf (8MB).
After a decade of financial misery,
it appears that Valencia CF’s problems are finally over. The foreign takeover by
Singaporean billionaire Peter Lim will be concluded in the upcoming weeks, and
the construction on the new stadium will resume after five years on hold due to
a lack of money. On 3 June Bankia, the Spanish bank that “saved” Valencia CF in
2009 by providing a loan of €81 million, gave the green light for the takeover. However, appearances can be
The last years has seen the European Commission being put under
increasing pressure to enforce EU State aid law in sport. For example, numerous
Parliamentary questions have been asked by Members of the European Parliament regarding
alleged State aid to sporting clubs. In
reply to this pressure, on 21 March 2012, the European Commission, together
with UEFA, issued a statement. More...