Elche are amongst seven La Liga clubs that have been ordered by the European Commission to give back millions of euros in national and regional government support in a ruling that threatens the cash-strapped Segunda division club’s very existence. The Ilicitanos are in the EU’s line of fire along with Real Madrid and Barcelona, who are all said to have benefited from soft loans, tax breaks and property deals from the government over the past 26 years.
Under EU law, governments may not distort competition through their provision of state aid to commercial enterprises. Margrethe Vestager, the EU competition commissioner, demanded the beginning of repayments on Monday.
“Using taxpayers’ money to finance professional football clubs can create unfair competition,” Vestager said in a statement. “Professional football is a commercial activity with significant money involved and public money must comply with fair competition rules.”
Real Madrid are to be forced to pay back €18.4million of state support from a complex land deal which was issued from a local authority in the Spanish capital. It relates to a series of controversial land deals in the 1990s which included Real Madrid transferring part of their old training ground to city officials as part of the redevelopment of Madrid. In return, Real were handed other plots of land around the city to help them develop – some of which have reportedly been revalued to the financial advantage of the club.
Real, Barcelona, Athletic Bilbao and Osasuna benefitted from a lower corporate tax rate for more than 20 years. They paid 25 per cent rather than the 30 per cent common for sports firms and all four are being forced to pay back €5million.
Elche, Alicante-based Hercules, Valencia are also being forced to return the money the Valencian regional government’s Institute of Finance handed them due to the European Commission ruling. At the time, those clubs were in financial difficulties. The public guarantee allowed the clubs to obtain the loans on more favourable terms. As the clubs paid no adequate remuneration for the guarantees, this gave them an economic advantage over other clubs, who have to raise money without state backing.
The Ilicitanos have been told they owe three point seven million euros, whilst Hercules owe just over six million, and Valencia have been landed with a massive bill of over 20 million euros.