European Commissioner for Competition Joaquin Almunia addresses the media, at the European Commission headquarters in Brussels, Wednesday, Dec. 18 2013. The European Union on Wednesday opened legal proceedings into whether Real Madrid, Barcelona and five other Spanish clubs get an unfair edge from illegal state aid. (AP Photo/Yves Logghe)
December 18, 2013 - 6:37 AM
BRUSSELS - The European Union announced a probe Wednesday targeting Real Madrid, Barcelona and five other top Spanish soccer clubs that it says may have received possible illegal state aid.
The EU also said it might widen its investigation to include soccer teams' outstanding tax debts to the Spanish government, which total in the hundreds of millions.
EU Competition Commissioner Joaquin Almunia said clubs should use sound financial management rather than live "at the expense of the taxpayer."
Almunia's office is responsible for making sure that businesses across the 28-country EU face a level playing field — including multi-billion, immensely popular soccer industry. The probe is intended to see if teams like Barcelona and Real Madrid have been unfairly relying on state aid to face other clubs in Spain's top flight La Liga league and European teams like Bayern Munich in the UEFA Champions League.
Beyond the top two teams, the probe is also investigating Valencia, Hercules, Elche, Athletic Bilbao and Osasuna.
The Spanish government, which knew the probe was coming, has already said there was nothing illegal about the aid that the clubs received.
"Sometimes probes are opened and closed without any consequences," Spanish Economy Minister Luis de Guindos said Wednesday.
The objections the EU was looking into centred on how Spanish clubs and local authorities handled fiscal issues such as loan guarantees, land swaps or construction funding.
The EU ombudsman's services said a complainant in the case said the state aid totals several billion euros, adding that the Commissioner had been considering the issue for years before announcing Wednesday's opening of proceedings.
More importantly, Almunia also said he might look beyond the specific case raised Wednesday.
"I have also read about the questions on the high debts of the (soccer) football clubs to the economics ministry," Almunia said.
In April, Spain's Sports Council said Spanish soccer clubs owed the government 670 million euros ($874 million) in taxes.
La Liga is one of the toughest professional soccer leagues in the world and any EU decision could have a deep impact on its future. The probe may take several months and any decision could then be challenged at the EU's highest court in Luxembourg.
Debt-ridden Spain has been struggling financially for years since it faced a real estate implosion several years ago. Many Spanish league soccer clubs — like many other types of Spanish businesses — already face severe financial difficulties. A decision to force them to return state aid money could make their problems even more acute.
In the case of Valencia and its neighbouring teams Elche and Hercules, state guarantees for over 100 million euros (nearly $140 million) in loans over the past four years have been seen as essential for the clubs' survival.
Yet such aid, doled out to some but not all, may have been skewing the fairness of the league.
"The Commission has concerns that these measures provide significant advantages to the beneficiary clubs to the detriment of the clubs which have to operate without such support," the Commission said in a statement.
The Spanish league said in a statement that it "wants to publicly show its unconditional and absolute support for the clubs and affiliated managing institutions in general and those under investigation in particular."
In the case of Real Madrid, the Commissioner said it "appears to have benefited from a very advantageous real property swap" with the city.
The land was re-evaluated at 22.7 million euros in 2011 instead of an earlier estimated value of 595,000 euros in 1998.
The EU Commission said Real Madrid, Barcelona, Athletic Bilbao and Osasuna may also have profited from corporate tax privileges not granted to other clubs.
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Joseph Wilson contributed from Barcelona
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News from © The Associated Press, 2013