Is Government financial support for Spanish Clubs offside?

Discussion started by Michael Cunnah , on Tuesday, 24 April 2012 16:22

It is reported that Secretary of State for Sport Miguel Cardenal has revealed that a deal has been reached between the Spanish government and the football league (LFP) to assist clubs in erasing combined tax debts of Eur750 million. This raises at least two major questions;-

1. Is this within the regulations as set down by the UEFA Financial Fair Play rules?

2. Should this be classified as "unfair financial support" as defined by the European Union competition authorities?

I'm sure that UEFA never envisaged that national Governments would provide such tangible support to their own football teams however as such a move will improve the clubs' financial position will they mind? Does the reduction of a debt amount to some sort of creditors' agreement? Would this trigger any particular sanctions by UEFA?

Even if UEFA decides to look the other way and be quietly pleased that Spanish clubs are more solvent surely the EU competition authorities will not be able to ignore Spanish Clubs being favoured in this way. The EU closely monitors financial support, which is given to companies, to ensure that they do not receive unfair help which might distort competition. One of the main roles of the EU is to oversee a competitive market for goods and services, a role which it takes very seriously. As Spanish clubs compete in UEFA competitions against clubs from every other European country, they are clearly in a competitive market and could be deemed to be receiving privileged treatment. Will it be allowed or will the Spanish clubs be ordered to treat their tax creditor like any other i.e. to meet their full obligations?

If the Spanish Government is allowed to make this move, will other Governments follow? Clearly the UK Government is not likely to go down this route and one can only speculate as the feelings of those involved with Rangers FC whose largest creditor is reported to be the UK Government. Perhaps Rangers FC should move to Spain and claim relief from its debt burden?

Ok, this is far fetched, but it does make the point. The question is can the Spanish Government financially support football clubs or have they moved offside?

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Diego Tari,

I'm not an EU Law expert, I've a basic knowledge coming from the University studies.

I think, however, that in order to establish a real "unfair aid" it is necessary to demonstrate an active behaviour coming from a Country rather than a too weak control activity.
Spain could answer, for example, that the fiscal debt was regularly sactioned with fines ans interests.

What astonishes me even more, however, is the fact that this Euro 750 million debt (that has been now negotiated) came out in a Country that until 2010 has allowed the same football clubs to have a favourable taxation regime on the players' salaries.
Spain, in fact, has extended for a long time (I would say since 2002, but i'm not sure) to football players the EU law on "brain incentive", the same that was studied to ease the possibility, ie for scientific researchers, to come back to Europe. The same law highly reduced, for the first 4 years, the impact of social security and taxation on the players' salaries which according to UEFA study in 2009/2010 in average represented 60% of all costs.

It's the combination of the two effectes which is unbelievable: they already had a far lower taxation compared to other EU companies and they still accumulate a so huge debt.

388 days ago

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