Spanish giants Barcelona and Real Madrid face state aid charge

The Spanish giants' advantages amount to several billion euros, according to the European ombudsman

Real Madrid and Barcelona are among the seven Spanish clubs the European Commission will charge with alleged state aid today, after a damning indictment of the EC's handling of the case by its independent regulator.

The EC's decision finally to push ahead with the investigation, first revealed in April by The Independent, came less than a day after the European ombudsman, an independent adjudicator with some power over European institutions, gave notice that it would go public on its frustration at the snail's-pace inquiry.

The ombudsman day made the announcement nonetheless, attacking the EC for having "failed to act" for more than four years of "bad administration" over the complaint of alleged illegal state aid to Spanish clubs. The Independent revealed in April that Real Madrid was under investigation for alleged state aid over a land deal with Madrid city council.

In August, this newspaper also revealed that the EC was looking at the tax status of Real Madrid, Barcelona, Athletic Bilbao and Osasuna, who were exempted in 1990 from Spanish government legislation that required not-for-profit sports clubs to become public limited companies.

Emily O'Reilly, the ombudsman, launched a veiled attack on the European competitions commissioner, Joaquin Almunia, an avowed Bilbao fan. In a statement, the office of the ombudsman, based in Strasbourg, said that "to the European public it can look like a conflict of interest given the commissioner's strong links to one of the football clubs in question".

She added: "According to the complainant, these advantages [gained through illegal state aid] amount to several billion euros. He also noted that Spain is granting these tax advantages even as it requests hundreds of billions of euros from Eurozone taxpayers."

Almunia is expected to outline today the three cases against the seven clubs, who also include Valencia and Elche, in Spain's top division, and Hercules, in the second division, at a press conference in Brussels. There is also an investigation into the financing of Bilbao's San Mames Barria Stadium. The clubs will have three months to respond before the EC will be expected to uphold a decision.

The prospect of being found guilty would have far-reaching implications. Under the terms of the land deal with Madrid city council, Real Madrid could well be forced to pay back money on a land deal related to their efforts to redevelop the area around the Bernabeu Stadium into a shopping mall and hotel complex.

Should the four clubs favoured with not-for-profit, non-plc status be found to have contravened state aid rules, they, including Real Madrid and Barcelona, will be forced to give up their status as member-owned clubs. While that is celebrated around Europe as a utopian model, the fact it is conferred on just four clubs in Spain is a gross inequality.

During the three-month response period, the EC will accept observations on the issue from other interested parties, including English and German football clubs who have often found their best players poached by the two biggest clubs in Spain.

It did not go unnoticed by key figures around the issue that the day the EC was finally pricked into action to investigate alleged advantages conferred on Real Madrid and Barcelona by the national and regional government in Spain coincided with Tottenham's sacking of Andre Villas-Boas. The former manager lost his best player, Gareth Bale, to Madrid for a world-record fee of £85m this summer.

From the Spanish government there was no prospect of backing down in the dispute. The foreign minister, Jose Manuel Garcia-Margallo, said his government was "going to battle until the end to defend Spanish clubs". It has been noted that the EC competitions' office is heavily populated by Spanish nationals, including Almunia.

The commissioner's term in charge runs out at the end of October next year and it is unlikely he will be returned again. It is expected that the case will go all the way to the European Court of Justice. A spokesman for Barcelona said that the club had "never received any type of public aid".

In the dock: Alleged state aid cases

Real Madrid land deal

Dates back to a 1996 land transfer with Madrid city council in which the council overestimated its debt to the club in order that it could give them, in compensation, prime land near the Bernabeu. Real plan to develop the area into a lucrative shopping mall and hotel complex.

Privileged tax status

Real Madrid, Barcelona, Athletic Bilbao and Osasuna were granted exemption from 1990 legislation that all Spanish football clubs must become public limited companies. This granted them advantages under corporation and property tax as well as preserving their not-for-profit status. EC intervention could mean Real and Barça lose their famous membership-owned status.

Regional government aid

Valencia are effectively owned by the Spanish bank Bankia, which owns the debt of the Valencia foundation which nominally controls the troubled club. But that debt is guaranteed by the regional government. Hercules and Elche both took out sizeable bank loans guaranteed by regional government. As a consequence, regional government now effectively has shareholdings in both clubs.

News
peopleActress speaks out against historic sexual assault claims, saying things have 'gone quite far now'

Arts & Entertainment
A stranger calls: Martin Freeman in ‘Fargo’
tvReview: New 10-part series brims with characters and stories

Arts & Entertainment
Shaun Evans as Endeavour interviews a prisoner as he tries to get to the bottom of a police cover up
tvReview: Second series comes to close with startling tale of police corruption and child abuse
Sport
Raheem Sterling and Luis Suarez celebrate during Liverpool's game with Norwich
football Another hurdle is out of the way for Brendan Rodgers' side
VIDEO
Have you tried new the Independent Digital Edition iPad app?
Life & Style
Guests enjoy food and cocktail parings by Chefs Jimmy Bannos, Jimmy Bannos Jr, Daniel Rose and Mindy Segal with mixologists Josh King and Alex Gara at Bounty & Barrel: A Jack Daniel's Single Barrel Dinner Series at Heaven on Seven on April 9, 2014 in Chicago, Illinois.
news Sprinkle Palcohol 'on almost any dish' for 'an extra kick' firm says...
Arts & Entertainment
Charlotte Brontë, the English novelist, poet and the eldest of the three Bronte sisters who lived into adulthood, has been celebrated with a Google Doodle depicting her most famous novel, Jane Eyre.
arts + ents "Reader, they doodled her".

Arts & Entertainment
Schwarzenegger winning Mr. Universe 1969
arts + entsCan you guess the celebrity from these British Pathe News clips?
News
Portrait of Queen Elizabeth-II by David Bailey which has been released to mark her 88th birthday
peoplePortrait released to mark monarch's 88th birthday
Arts & Entertainment
The star of the sitcom ‘Miranda’ is hugely popular with mainstream audiences
TVMiranda Hart lined up for ‘Generation Game’ revival
Life & Style
The writer, Gerda Saunders, with her mother, who also suffered with dementia before her death
healthGerda Saunders on the most formidable effect of her dementia
Arts & Entertainment
Oxegen in Ireland has been axed as promoters decide it is 'no longer viable'
arts + ents Promoters have axed the event as it is 'no longer viable in current form'
News
The troubled star is set to give fans the biggest insight into her life away from the headlines
people Star made the announcement during the final episode of the programme, entitled Lindsay
News
YouTube clocks up more than a billion users a month
mediaEuropean rival Dailymotion certainly thinks so
Arts & Entertainment
The original design with Charles' face clearly visible, which is on display around the capital
arts + ents
Arts & Entertainment
‘Self-Portrait Worshipping Christ’ (c943-57) by St Dunstan
books How British artists perfected the art of the self-portrait
Caption competition
Caption competition
Daily Quiz
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Rubin ‘Hurricane’ Carter: The man who could have been champion of the world - and the Bob Dylan song that immortalised him

The man who could have been champion of the world

Rubin ‘Hurricane’ Carter and the Bob Dylan song that immortalised him
Didn’t she do well?

Didn’t she do well?

Miranda Hart lined up for ‘Generation Game’ revival
The Middle East we must confront in the future will be a Mafiastan ruled by money

The Middle East we must confront in the future will be a Mafiastan ruled by money

In Iraq, mafiosi already run almost the entire oil output of the south of the country
Before they were famous

Before they were famous

Can you guess the celebrity from these British Pathe News clips?
Martin Freeman’s casting in Fargo is genius

Martin Freeman’s casting in Fargo is a stroke of genius

Series is brimming with characters and stories all its own
How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players