The European Union has now delivered its verdict through a resolution against Real Madrid and ordered the government to recover the €18.4 million.
The verdict is about the three parallel investigations that were conducted in 2013 by the European Commission to look into the financial dealings of the clubs in question.
In a report published in the Wall Street Journal by Natalia Drozdiak, it was found that over the course of the investigations, the Commission had found that clubs such as Real Madrid, FC Barcelona, Athletic Club Bilbao and Osasuna gained from tax privileges granted to them since 1990.
As a result, these clubs enjoyed a 5% tax waiver, which when calculated over 24 years, results in astronomical figures. The profits of such privileges were invested into the team, which in turn led to further successes for the clubs.
The European Commission, though, didn’t just limit the resolution to those charges, it also brought to light the charges of overvaluation of land, which gave Real Madrid an unjustified commercial advantage.
There were further charges of partisan and unfair advantage in matters of loans granted by Valencia Institute of Finance to the football clubs based out of Valencia. These loans were defined as soft loans and were justified as economic assistance to the clubs in order to ensure that local communities dependent on it wouldn’t suffer.
Margrethe Vestager, EU competition commissioner, has now ordered Spain to recoup these soft loans granted to these clubs with Real Madrid facing the ire of the Commissioner first hand.
The Commission’s ruling does take into account the unfair advantage the clubs enjoyed especially in their purchase of other professional players, as pointed out by an investor. The level of recoupment as was ordered by the Commission was detailed in their press release.
Referring to the press release dated 4 July, 2016 on the European Commission website, Commissioner Margrethe Vestager, in charge of competition policy, commented: "Using tax payers' 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."
The European Union is also responsible for balancing of complex commercial, regulatory and competitive interests. It is in the best interest of the other clubs that the ruling given by the Commission is adhered to.
Given the amount involved, one can consider it as a slap on the wrist for a club as big as Real Madrid, but the ruling will ensure that such undue favor will not be meted out to clubs under the banner of “state aid” in the future.
As of now, a fixed time frame has been prescribed by the Commissioner to meet the requirements of the ruling.
Spain will now have to accept this ruling and hope that any subsidies which are granted are in consonance with the European Commission’s anti-trust laws.Published 26 Aug 2016, 17:18 IST