By Tom Parsons
April 4 – Real Madrid will have to wait longer for the EU decision on whether they received illegal state aid surrounding property deals, a decision that could have wider consequences for other clubs in Europe.
Joaquin Almunia and his European Commission competition office have delayed the verdict on an EC investigation into whether Madrid City Council (MCC) and Real Madrid had agreed an overly generous deal to redevelop Bernabeu stadium and develop land at Real’s training ground into a hotel complex and shopping centre.
Claims have also surfaced that several other transactions between the two parties took place between 1996 and 2011 leading to this sweet-heart deal between Real Madrid and MCC.
The investigation centres around agreements made between the council and the club signed in the late 1990s.
The club and council agreed on the sale of land used as Real Madrid’s training ground with the football club to be recompensed half in money and half in land. In 2011 it was realised that some of the land given to Real Madrid, Las Tablas (valued at €421,000 in 1998), was owned by the public and therefore couldn’t be given to Real Madrid.
The council then re-valued the land at €22.7m: a 5,400% rise and agreed to pay the club that figure in compensation. The €22.7m was then waived by the club in return for planning permission to build a roof as well as the land to build the hotel complex and shopping centre.
The deals are said to constitute illegal state aid under article 87 of the Treaty of the European Community. UEFA Financial Fair Play (FFP) regulations certifying that clubs aren’t allow to receive any form of state aid. If found guilty there could be severe FFP implications for Real Madrid.
FFP has been high on UEFA’s agenda with several clubs under investigation for potentially breaching FFP rules. The original deal to take West Ham to the Olympic Stadium was cancelled after complaints were made with the suggestion that funding for the project from Newham Council would have been classified as state aid.
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