Madrid in state aid investigation

Real Madrid are reportedly under investigation from the European Commission for receiving illegal state aid from city authorities.

The Independent allege that Los Blancos reached a ‘favourable deal’ with the Madrid city council over the purchase of land surrounding the Santiago Bernabeu, which the club are looking at redeveloping as part of a planned expansion of the ground.

It is reported that the EC are overdue a decision on the deal that, going back to a 1996 agreement between the club and council, is alleged to ‘constitute illegal state aid under article 87 of the Treaty of the European Community’.

Specifically, it is seen that the council overestimated a debt to the football club in concluding negotiations to give Madrid the land in and around their stadium.

UEFA’s Financial Fair Play regulations have come into effect and may also be brought into this issue, as they forbid clubs receiving state aid.

The Independent say that the investigation centres on a plot of land to the north of the city, Las Tablas, which was valued at €421,000 when handed from the city to the club as part of a payment in 1998 and that was then valued in 2011 at €22.7m, when the council purchased it back.

That repurchase of the land at Las Tablas was apparently funded with Madrid then being given the land around the Bernabeu, required for future development, which includes a planned shopping mall and hotel complex.

Madrid are quoted in response to these allegations as saying they have not received “any special privileges in its real estate activities since it has always been subject to the then current legislation and has received the same treatment as any other entity.

“Acting like this, Madrid City Council, through the agreement with Real Madrid, has protected the municipal interests, avoiding judicial proceedings that when executed would have foreseeably resulted in an obligation to provide Real Madrid with a higher amount of compensation.

“The valuation of all the properties have increased due to the time lapse between the different valuation that in some cases exceeds 10 years, the degree of evolution of the urban development process and the evolution of property prices.”

Tags EC European Commission FFP Florentino Perez Madrid City Council Santiago Bernabeu UEFA