No need for state aid to win the Champions League
Since the year 2000, the Spanish clubs Barcelona and Real Madrid won the Champions League 10 times out of 20. In the same period, the Spanish clubs Sevilla, Atletico Madrid and Valencia recorded a total of 9 wins in the Europa League. Could the success of Spanish football be the result of unlawful state aid? Not according to recent case law of the General Court in Luxembourg.
Fair (enough) play
On 26 February 2019, the General Court annulled the European Commission’s decision of 4 July 2016 in which it was held that four Spanish football clubs (including Barcelona and Real Madrid) had received aid in the form of a corporation tax privilege. The Court observed that, even if the four clubs benefited from a nominal preferential tax rate, the Commission had not shown to the requisite legal standard that this conferred an advantage on these clubs. In particular, the Commission failed to demonstrate that certain characteristics of the tax regime applicable to the other football clubs did not offset the advantage resulting from a lower nominal tax rate.
Guarantee and counterguarantee
On 20 March 2019, the General Court annulled another Commission decision of 4 July 2016 in which it was held that a guarantee granted by the region of Valencia constituted unlawful aid to Hércules Club de Fútbol. According to the Court, the Commission failed to state reasons for its decision because it did not take account of a counter-guarantee that was provided by the main shareholder of Hércules. Such counter-guarantee generally is a relevant factor in assessing the existence and level of aid to the beneficiary of a guarantee, as also acknowledged by the Commission in its Notice on guarantees.
The Royal Treatment
Even more recently, on 22 May 2019, the General Court annulled another Commission decision of 4 July 2016 in which the Commission decided that the Madrid City Council had granted aid to Real Madrid in the context of a land swap agreement. According to the Commission, the Madrid City Council did not act as a ‘market economy operator’ when it agreed to pay an amount of more than EUR 22 million to Real Madrid as compensation for not having been able to transfer a certain plot of land as originally agreed upon between the Council and Real Madrid. According to the Commission, this amount far exceeded the maximum extent of the Council’s legal liability stemming from the failure to comply with its contractual obligations. While the Court dismisses Real Madrid’s challenges of the assessment of the value of the plot as adopted by the Commission, it finds that the Commission (by merely examining the value of the plot) did not take into consideration all the aspects of the transaction at issue and its context. Therefore, the Commission has not proven that the measure at issue conferred an advantage on Real Madrid.
Fair (enough) play?
The Court based its decisions in the above cases on the fact that the Commission did not show to the requisite legal standard that an advantage was conferred. As such, the Court does not rule out the possibility that state aid was granted to the Spanish football clubs.
You will never walk alone
This year the Champions League was won by Liverpool. There seems to be no reason to start another state aid discussion.