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Barcelona and Real Madrid among clubs probed by European Commission

By Al Goodman, CNN
updated 12:22 PM EST, Wed December 18, 2013
Spanish champions Barcelona and their fierce rivals Real Madrid are being investigated by the European Commission.
Spanish champions Barcelona and their fierce rivals Real Madrid are being investigated by the European Commission.
STORY HIGHLIGHTS
  • EC seeks to know if government support gave the clubs an unfair advantage over rivals
  • It announces "in-depth investigation into public funding of certain" clubs
  • Spain's foreign minister says all the operations analyzed complied with Spanish law
  • Inquiries will look at "possible tax privileges," land transfer, state-backed loans

Madrid, Spain (CNN) -- Did Real Madrid, FC Barcelona and five other Spanish football clubs get unfair advantage over their rivals through various government support measures potentially worth millions of dollars?

That's what the European Commission wants to know, and it announced in Brussels, Belgium, on Wednesday an "in-depth investigation into public funding of certain" clubs.

"Professional football clubs should finance their running costs and investments with sound financial management rather than at the expense of the taxpayer," European Commission Vice President Joaquin Almunia said in a prepared statement.

"Member States and public authorities must comply with EU rules on state aid in this sector as in all economic sectors," said Almunia, a Spaniard who is reportedly an avid fan of Spanish football.

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The seven clubs under investigation are Real Madrid, FC Barcelona, Athletic de Bilbao, Osasuna (of Pamplona), Valencia, Hercules (of Alicante) and Elche.

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Spanish Foreign Minister Jose Manuel Garcia-Margallo said Monday that all the operations analyzed were in accord with Spanish law and that he expects the investigation to end once European officials get more information.

Garcia-Margallo on Monday made public the inquiry, two days before Brussels officially announced it.

Spanish media reported that the seven clubs either professed innocence or had no immediate comment.

The EC will first investigate "possible tax privileges for Real Madrid, FC Barcelona, Athletic de Bilbao and Osasuna," Almunia's statement said.

These four clubs are not private companies but instead have key decisions, such as the election of club president, done by their thousands of season-ticket holders.

They were "exempted from the general obligation for professional football clubs to convert into sport limited companies" and currently have a lower tax rate than other clubs, the statement said.

In a separate inquiry, the EC "will assess whether a widely reported land transfer between the City of Madrid and the club Real Madrid involved any state aid in favor of the club," the statement said.

The land swap involved Real Madrid's old training grounds, near its home Bernabeu stadium, which became the site of four office and hotel skyscrapers, while the training ground was moved farther from downtown, near the airport.

"This swap was based on a re-evaluation of a plot of land at a value of 22.7 million euros, instead of its earlier supposed value, in 1998, of 595,000 euros," the EC statement said.

The investigation will also look into state-backed loans of about 110 million euros to three clubs operating in the Valencia region -- Valencia, Hercules and Elche, the statement said.

It will look into whether the alleged activities provided "advantages to specific clubs that carry out economic activities in the EU internal market," the statement said.

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