Barcelona and Real Madrid Among Spanish Clubs in European Dock over Favouritism

Guillem BalagueFeatured ColumnistDecember 18, 2013

BARCELONA, SPAIN - OCTOBER 26:  Cristiano Ronaldo of Real Madrid CF looks on during the La Liga match between FC Barcelona and Real Madrid CF at Camp Nou stadium on October 26, 2013 in Barcelona, Spain.  (Photo by Denis Doyle/Getty Images)
Denis Doyle/Getty Images

Spanish football is in trouble. Big time. And this time it has nothing to do with anything that is happening on the pitch.

Seven clubs, including two of the richest in the world, Barcelona and Real Madrid, are facing an investigation from the European Commission for a variety of reasons, but primarily over the suspicion that, in the past, they received preferential treatment from the government and public administrations that gave them an unfair advantage over the competition, according to Marca.

BILBAO, SPAIN - DECEMBER 01:  Ander iturraspe (L) of Athletic Club is shown a yellow card for a challenge on Neymar of FC Barcelona during the La Liga match between Athletic Club and FC Barcelona at San Mames Stadium on December 1, 2013 in Bilbao, Spain.
David Ramos/Getty Images

It is about time that this was tackled.

Also facing inquiry are Osasuna, Athletic Bilbao, Valencia, Elche and Hercules. The Spanish government has been given a month to answer the allegations. Should they fail to do so, the clubs in question will be forced to repay any illegal benefits they may be adjudged to have received.

Brussels is making three accusations. Firstly, that Real, Barcelona, Osasuna and Athletic did not convert themselves into public-limited sports companies as all other La Liga clubs were required by a law passed in 1990, thereby allowing them to enjoy a more favourable tax situation as they ostensibly set up as non-profit-making organisations.

The second complaint concerns three clubs based in the Valencia region which received €118 million (£99.6 million by today's exchange rates) in loans from the local government led by conservative politician Francisco Camps, in one of his last acts before stepping down from office amid allegations of wholesale corruption.

These were loans financed by the Valencia Finance Institute and were not repaid, and they left the regional government no choice other than to absorb the majority of the clubs’ shares at the expense of the taxpayer.

Thirdly, there is the accusation of a land deal that saw Real Madrid hand over 80 percent of the land on which the former training ground stood to the city authorities in exchange for permission granted to construction giant ACS—a company headed by Real president Florentino Perez. ACS built the four skyscrapers that now tower over the Madrid skyline, plus land on which the club’s present training ground at Valdebebas now stands. 

Florentino Perez's business dealings are under some scrutiny
Florentino Perez's business dealings are under some scrutinyGonzalo Arroyo Moreno/Getty Images

It sounds like a good swap, but the accusation from the Commission is that the fees involved might not have been in line with market prices.

However, Spain’s minister of foreign affairs Jose Manuel Garcia-Margallo immediately began a spirited defence of all the clubs—claiming to Marca that "the government will fight until the end in defence of the Spanish clubs, who also form part of the Spanish brand.” He will know better than most that this investigation could just be the opening salvo in Brussels’ attack on Spanish football.

The last available figures (September 30, 2012) showed that Spanish football clubs owed a staggering €750 million in back taxes and €600 million to the social security system. A suggestion by the Spanish secretary for sport, Miguel Cardenal, that these charges should be waived were, not surprisingly, was greeted with outrage.

The Spanish government has a month to rebut Brussels' accusations, and the man they will have to convince is the European commissioner for competition, Spanish politician Joaquin Almunia. But Almunia has also come under the spotlight. European Union ombudsman Emily O’Reilly effectively accused him of dragging his heels on the matter and urged him to address the issue sooner rather than later.

For the record, Almunia was born in Bilbao and is a lifelong Athletic fan member. He was also public administrations minister in the government of former prime minister Felipe Gonzalez when the 1990 Sports Law was passed.

This week, Almunia said that any insinuation of a conflict of interest on his part was "unacceptable."

Spanish clubs: Prove you have not done anything wrong or pay the money back.