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Apr 3, 2013

Real under investigation - report

Real Madrid are being investigated by the European Commission for receiving illegal state aid, according to a report in the Independent.

The issue arises from the Liga club's plans to redevelop its Estadio Santiago Bernabeu, with a new commercial and hotel complex to be built on ground between the stadium and the nearby tree-lined Paseo de la Castellana.

Wednesday's Independent claimed that the EC were looking into the city council's decision to rezone land in the northern suburb of Las Tablas given to the club by the council in a previous land swap in 1996, and accept that newly valuable site in exchange for the site of the new development. The report says the club therefore benefitted in the back and forth to the tune of €22.7 million.

A Madrid source told the Independent that the dealings were all above board, and the council's decision had avoided what could have been a lengthy and expensive legal process.

"[The club] has always been subject to the then current legislation and has received the same treatment as any other entity," the source said. "Madrid City Council, through the agreement with Real Madrid, has protected the municipal interests, avoiding judicial proceedings that when executed would have foreseeably resulted in an obligation to provide Real Madrid with a higher amount of compensation.

"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 €250 million Bernabeu redevelopment plans were unveiled at last October's club AGM. They have been criticised by residents of the plush suburb in which the ground sits, while a family who once owned the land the stadium was originally built on are reportedly making a claim for further compensation. Madrid's city council is currently heavily in debt, after a number of construction investments in recent years.

The Bernabeu redevelopment is a favoured project of Madrid president Florentino Perez. The construction magnate has held the position since 2009, having previously been in charge from 2000 to 2006, and is expected to look for another term this June. The land deal agreed with the city council during his first spell in charge, which saw the club's Valdebebas training facility built, was heavily criticised at the time.

Madrid's socios [members] voted at last year's AGM to change its statutes and make it more difficult for someone from abroad to become president. No viable candidates have yet emerged to challenge Perez for his position.

The EU has recently decided to crack down on any such illegal aid to football clubs. It was widely reported last month that steps taken by the Valencia regional government to guarantee debts at local clubs Valencia, Hercules and Elche were under investigation. Suspected state aid to five Dutch clubs, including PSV Eindhoven, is also reportedly being looked at.

EC spokesperson Antoine Colombani told Spanish news agency EFE that Madrid's situation was being analysed, but a formal investigation had not yet been opened.

"The commission is analysing the situation of Real Madrid, the same as other similar allegations which have been submitted in relation to other clubs," Colombani said. "For the moment, the EC is analysing the information it has, and has not decided to open a formal investigation."