Real Madrid say they will appeal an EU ruling that must pay €18.4 million to the local council due to a land-swap in which the Liga club benefitted unfairly -- while blaming a Barcelona-based architects firm for providing a misleading valuation to the European authorities.
The European Commission has ordered Madrid to reimburse the local city authority a total of €18.4m, saying that the Liga club benefitted from an illegal state subsidy in the form of land adjoining its Estadio Santiago Bernabeu which was handed over by the council in 2011, instead of a site in suburban Las Tablas which had been promised back in 1998.
The same EC judgement also found that Barcelona and five other La Liga clubs must repay money to the Spanish government over various instances of the state providing aid to them.
Madrid have reacted by rejecting the ruling completely, saying in a club statement that in fact it was the city council who had got the better of the complicated arrangement which saw the club gain access to land required for its planned €400m stadium expansion.
"In light of the advanced information from the European Commission regarding files opened about alleged state help for various Spanish football clubs, Real Madrid C. F. would like to express the following:
"1. Regarding the agreement signed in 2011 between our club and the Madrid City Council, that had the basic aim that the City Council would compensate itself in the way most beneficial to them, in the case of the a failure to deliver the plot of land B-32 in Las Tablas, as it was public land. This obligation was contracted by the Madrid City Council for the barter execution convention of the Sports City, signed with Real Madrid in 1998. Any other compensation formula would have cost the City Council practically double the value of the plot of land B-32 fulfilled in the convention.
"2. The valuation method used in the cited convention is the only objective method, as it is based in the cadastral [public survey] value, legally obliging for all Spanish City Councils, and therefore is applied in all transaction between City Councils and third parties whether they are public or private. The cadastral value is calculated by the Treasury Department and it is that which is used by the government as it's the most objective.
"3. It is a surprise that the European Commission have used a valuation made by an architect's office in Barcelona to dictate their decision, when said firm has little experience in making similar estimates in general and almost none in the city of Madrid. Real Madrid, despite the only objective and legally obliging valuation being the cadastral value, presented in the report a valuation made by one of the most important companies in the world, Aguirre Newman, whose report concluded that Real Madrid had even been under-compensated by more than €7.5 million.
"Due to these reasons, once Real Madrid know the decisions made, will appeal in the Court of Justice of the European Union with confidence that those decisions will be revoked. In any case, Real Madrid, following a prudential accounting criteria, has in their provisional accounts all of the quantities whose reimbursement may finally be obliged."
The EC ruling also said that the four La Liga clubs which are still members owned (Madrid, Barcelona, Athletic Bilbao and Osasuna) had gained an unfair competitive advantage through recent years as they are charged a lower tax rate of 25 percent than all their peers which are run as private businesses and must pay 30 percent.
Each of the clubs has been ordered to pay a sum of around €5m extra to make up for the difference since 1990.
La Liga president Javier Tebas said in AS that this judgement was "nonsense" as any advantage gained from paying less tax was balanced out by members-owned clubs run as "civil societies" having to deal with extra obligations which hold them back in different areas.
"To say the clubs that are not limited companies, since 1990, get an advantage is nonsense," Tebas said. "The real tax advantage is in Ireland, where clubs pay just 12 percent. That generates unfair competition throughout the EU. In Spain, 'civil societies' have more obligations -- such as presenting bank guarantees and strict financial controls. The EU did not look at this part. We will defend this wherever we can. This looks to me more like a political ruling, not a legal ruling. I am sure it will be overturned."
A third part of the EC ruling found that loan guarantees given to Valencia-based clubs by publicly owned banks between 2009 and 2013 -- €81m to Valencia, €18m to Hercules and €14m to Elche -- also counted as unfair state support. Tebas accepted that the European authorities were correct in this.
"I have never been in favour of public subsidies, as that does generate unfair competition," he said.