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Professional football clubs have to pay back incompatible State aid! Sport clubs nowadays should check contractual relationships with authorities.

The European State Aid law has reached professional football clubs. Following several in-depth investigations, the Commission today has concluded that public support measures granted by Spain to seven professional football clubs gave those clubs an unfair advantage over other clubs in breach of EU State aid rules. As a result, Spain has to recover the illegal State aid amounts from the seven clubs, namely FC Barcelona, Real Madrid, Valencia, Athletic Bilbao, Atlético Osasuna, Elche and Hercules. On the same day the Commission found that four Dutch football clubs (FC Den Bosch, MVV Maastricht, NEC Nijmegen and Willem II, Tilburg) also received aid by the State but that such support is compliant with EU State aid rules.

While European State aid law has attracted huge attention in the area of financing public infrastructure like ports, airports and multi-functional arenas in the past it is now also impacting professional sport clubs and sport infrastructures. It is not only the classical subsidy that concerns the European Commission with respect to a threat of unfair competition. More and more hidden subsidies are attracting the awareness of the Commission. An unlawful State aid could also be granted in a classical contractual relationship with authorities, such like over valuated land transfers, unbalanced marketing or leasing contracts with authorities, specific tax rules etc. Not only professional clubs could be subject to unlawful State aid. Having in mind that huge sport events are grounded on a broad contractual relationship with public authorities, there is always a need to make sure that all business transactions between private sport entities and authorities are conducted at arm length.

Therefore, professional sport clubs and operators have to thoroughly review their contractual relationship with public authorities bearing in mind the background of European State aid law. Granting unlawful aid has crucial consequences as underlying contracts are generally void. Not all engagements of a public authority could be seen as a fundamental win for the sport. State aid Law is competition law and the Commission is about to ensure that authorities do not distort competition by selectively favoring one market participant over another. A level playing field is crucial for clubs who have to operate without subsidies. Hence, State aid law could also be seen as a “tool” for competitors or third parties to prevent authority’s engagement in sports. At the end of the day a sport infrastructure financed with unlawful State aid is constructed on fragile foundations.

Permanent link to this article: http://blogs.dlapiper.com/mediaandsport/2016/07/professional-football-clubs-have-to-pay-back-incompatible-state-aid-sport-clubs-nowadays-should-check-contractual-relationships-with-authorities/