European Commission under fire over €22m Real Madrid illegal state aid deal

Real Madrid alleged to have colluded with city council over price of land around Bernabeu
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Pressure grew yesterday on the European Commission to reach a decision on their investigation over whether Real Madrid received illegal state aid in a land deal that will let them significantly improve the Bernabeu stadium's profitability.

The EC competition office confirmed The Independent's report that the Spanish club is subject to an investigation into a property deal with Madrid city council in which a piece of land acquired by the club for €421,000 was subsequently sold back to the council for €22.7m.

Instead of the payment, Real received land around the Bernabeu on which they plan to build a hotel and shopping mall complex as well as putting a roof on the stadium with lucrative naming rights.

Antoine Colombani, a spokesman for the EC competition office said: "The Commission is indeed examining the situation of Real Madrid as it does with similar allegations brought to its attention." He said the investigation is at a "preliminary" stage but it has been open since December 2011. After a complaint is made there is a two-month deadline for it to be dismissed, after which it becomes an investigation. The commission then has a year to reach a decision, in this case by February 2013. That timetable has now been exceeded by two months. Colombani said no decision had been made by competition commissioner Joaquin Almunia on whether there would be a "formal" investigation. Yet there is no two-track investigation process under EC guidelines.

The Independent has also learned that the EC is yet to reach a decision on another case involving the European Ombudsman. It relates to Spanish government legislation in June 1992 that all football clubs must become PLCs – with the exception of Real Madrid, Barcelona, Osasuna and Athletic Bilbao.

The exemption of these four clubs has conferred on them corporation tax advantages, and offered a degree of asset protection rights if the clubs seek to assert them.

It also means the clubs are able to have affiliate professional basketball teams. Both Real Madrid and Barcelona have basketball teams in the sport's Euroleague and hope one day to take advantage of NBA European expansion.

Valencia, who opposed the imposition of their PLC status, were debt free in the early 1990s. Now the club is effectively bankrupt and has been the subject of an illegal state aid investigation by the commission.