Real Madrid under investigation amid allegations of illegal state aid

The Independent has learn that the EC competition office, run by the Spaniard Joaquin Almunia, has delayed its decision on the case. It is alleged that Real and Madrid City Council agreed a favourable deal for land around the Bernabeu stadium which is to be redeveloped into a lucrative new shopping mall and hotel complex.

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The allegation against Real is that their transactions with Madrid city council, dating back to a 1996 agreement between the two parties, constitute illegal state aid under article 87 of the Treaty of the European Community. It is alleged that the council hugely overestimated its debt to the football club in order that the former could give Real the prime city-centre land they require for their new development.

As with all leading European clubs, Real are subject to Uefa FFP regulations which forbid any form of state aid. In a joint statement released by Uefa’s president, Michel Platini, and Almunia last year, they declared that the “objectives [of FFP] are also consistent with the aims and objectives of European Union policy in the field of state aid”.

The investigation into Real’s deal with Madrid city council centres upon an area of land in the north of the city, Las Tablas. Having originally been valued at €421,000 when it was part of a payment by the council to the club in 1998; the same land was then valued at €22.7m in 2011, a 5,400 per cent rise, when the council decided they had to take it back. In lieu of a €22.7m payment, the club was given the land they needed to develop their stadium.

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In response to The Independent’s questions about the process, Real said that they had not received “any special privileges in its real estate activities since it has always been subject to the then current legislation and has received the same treatment as any other entity.”

The club claimed that the valuation of Las Tablas in 2011, which found its value to have increased 54-fold, was carried about by Madrid City Council, and was therefore “independent”. “Acting like this, MCC, through the agreement with Real Madrid, has protected the municipal interests,” Real said, “avoiding judicial proceedings that when executed would have foreseeably resulted in an obligation to provide Real Madrid with a higher amount of compensation.”

Real said: “The valuation of all the properties have increased due to the time lapse between the different valuation that in some cases exceeds 10 years, the degree of evolution of the urban development process and the evolution of property prices.”

The Independent has seen documentation confirming the existence of an investigation by the competition commission into Real receiving state aid. A spokesman for the EC competition office said that the investigation was at a “preliminary” stage.