Print this Post

Valencian Football Clubs have to pay back more than EUR 30 million of state aid. Professional sport clubs should be aware of the European State aid rules!

On November 04 the European Commission published the full text of its Decision on incompatible State aid to Valencian football clubs (SA.36387, an appeal has been filed). The Commission concluded that public support measures in the form of loan guarantees by the regional government of Valencia in favour of the football clubs FC Valencia, Hercules and Elche were granted in breach of EU State aid rules. As a result, Spain has to recover the illegal State. A  further decision regarding incompatible State aid granted by Spain to four other professional clubs (FC Barcelona, Real Madrid, Athletic Bilbao, Atlético Osasuna) has not been published yet.

The Commission concluded that the three Valencian clubs were in financial difficulty at the time of granting of the measures and the premiums charged for the guarantees cannot be considered as reflecting the risk of default for the guaranteed loans, which is why the measures provide for a selective advantage. The Commission grounds the distortion of competition and effect on trade between Member States on different reasons. Professional clubs compete for presence in European competitions as the UEFA Champions League and the UEFA Europa League. Furthermore, professional sports clubs are active on the markets for merchandising, broadcasting rights and sponsoring. On these markets, the teams generate revenue and compete with other clubs within and outside their home country. Therefore, public support measures granted to professional sports clubs can be liable to distort or threaten to distort competition and affect trade between Member States.

The Commission takes into account that measures granted to sport clubs might be found compatible under the State Aid rules under the notion of “development of economic activities” as the Union shall contribute to the promotion of sporting issues. But in this case the examined aid measures of the regional government of Valencia cannot be considered compatible with the internal market because the conditions and principles of the applicable guidelines are not met.

There might be good reasons for financial contributions by the State to sport clubs. However, The State, stakeholders and the clubs themselves shall thoroughly review legal boundaries especially regarding EU State aid law. Unlawful aid can be granted in many ways and often is not visible at first sight. As incompatible measures will be recovered from the beneficiary it is crucial to be aware of this topic whenever a club is dealing with authorities.

Permanent link to this article: https://blogs.dlapiper.com/mediaandsport/2016/11/valencian-football-clubs-have-to-pay-back-more-than-eur-30-million-of-state-aid-professional-sport-clubs-should-be-aware-of-the-european-state-aid-rules/