Brussels increases focus on football finances

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Over the last few months, the European Commission has made a number of moves demonstrating an increased interest in football finances. The latest in a series of developments is the confirmation by the Commission earlier this month that it is investigating allegations that several clubs, including Real Madrid, received unlawful State aid.

To date, the scope of the Commission’s investigation and the exact nature of the complaints is not known. However, it is widely believed that the complaints concerning Real Madrid relate to a deal between the club and the local Madrid municipality concerning land around the Bernabeu stadium. Further details have been released concerning a related investigation into five Dutch clubs, including PSV Eindhoven, which has now reached a more advanced stage.

The majority of the investigations appear to fall into two main categories:

(a) land deals that are favourable to the football clubs; and

(b) other public support for clubs in financial difficulties.

The investigations and increased level of scrutiny from the Commission mean that there is a sharper focus on all of those involved in the financing of football, from the clubs themselves to public bodies and banks. The EU’s State aid rules prohibit public financial assistance to businesses (including football clubs) that they would not receive in the ordinary course of business. This can range from grants and tax exemptions to preferential land deals or debt write-offs. The Commission has broad powers to investigate alleged aid up to 10 years after it has been awarded and to order that any unlawful aid is repaid with interest.

Although many football clubs will be involved in transactions with public bodies which involve no State aid whatsoever, the latest developments do signify a new level of interest from the EU authorities. It is likely that transactions that would not have interested the Commission 10 years ago may now fall within its radar, especially given the intense media coverage of all aspects of the sport. State aid issues will undoubtedly be a key consideration whenever there is any public sector involvement in a football-related issue or whenever a club is undergoing restructuring.

The State aid rules may also provide a useful weapon for some in the industry to challenge what they perceive as unfair advantages granted to their competitors, particularly as the sport enters the era of UEFA’s Financial Fair Play regulations.

This is, of course, not the first time that the EU institutions have played a role in how football is structured. The Bosman ruling of the European Court of Justice fundamentally changed the rules regarding out-ofcontract players and the European Commission was central to the introduction of transfer windows. Furthermore, more recently, the Commission has been studying football transfers and is considering recommendations to take action in this area.

Overall, the European Commission’s interest in football finances is likely to have implications for all in the sector.

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