Illegal state aid
B arcelona could be four points clear of Real Madrid at the top of La Liga by late afternoon, and by 11pm the difference could be back to a single point and a game in hand for the club from Madrid, another epic title fight going down to the wire.
The week belonged to Barcelona and that Champions League comeback against Paris St-Germain – so monumental that Michael Owen fired up those once-famous fast-twitch muscles to run around a BT Sports studio. Elsewhere, there was such an appetite to relive the moment of Sergi Roberto’s sixth goal that even the gallery footage of the Spanish television match director picking the camera shots of those astonishing final minutes was broadcast.
As he calls out the numbers of the cameras in turn, showing the viewers the different scenes of triumph and despair, you sensed a man who knew he was conducting the world’s view of a match it would never forget. Like the great movie director who demands the camera keeps rolling to capture that unscripted moment of truth, this was his masterpiece.
The epic story of Barcelona and Real Madrid continues. For all their rich 20th century history there is a strong case for saying that this is the greatest era, and never mind those five Real Madrid European Cups from 1956 to 1960, or Johan Cruyff ’s Barcelona years. Those were the memorable early efforts, but the current day feels ever more like a never-tobe-repeated peak, a defining Sgt Pepper’s of football that will stand the test of time.
We are told that this kind of drama is what football is all about, and why we love it, and the temptation is to forget about everything else and run around the room like Owen, a man once accused of having lost his passion for the game.
That hit of incredulity can carry you a long way, but at some point with Real Madrid and Barcelona we always have to go back to reality, and the story that has followed both through the past seven years, of illegal state aid. Madrid were ordered in July by the European Commission to pay back €18.4million (£16.1million) to the Madrid city council over a land deal and, along with Barcelona, had a second major competition commission ruling against them.
That was regarding the tax payable over a 1990 Spanish law which dictated that only four clubs, Real Madrid, Barcelona, Osasuna and Athletic Bilbao, would be able to constitute themselves as sports clubs, while all the rest would have to become plcs. It is the sports-club model that is, among other things, central to Barcelona’s ‘Mes que un club’ slogan and, at Madrid, Florentino Pérez’s two terms in office as president.
It took campaigners years of lobbying the Competition Commission in Brussels to force the decision which found that the four clubs benefited from the advantage for “over 20 years without an objective justification”. The commissioner, Margrethe Vestager, estimated the unpaid tax at a meagre maximum of €5million for all four clubs, yet, eight months on, the Commission has still not reached a final decision. has seen one independent audit of Real Madrid’s accounts for the past four years which put the tax advantage of their non-plc status for that period alone at €26.9million were every aspect of the Commission’s ruling to be applied. The total for the entire period, the 10 years before the start of the investigation in 2010, would be around €100million including interest. Even to Real Madrid, with a €620 million annual revenue and debts of around €500 million, that is no small matter. For Barcelona, the sums are smaller but still significant, potentially between €50million and €70million. For both clubs, the disadvantages that have befallen their rivals in the interim are incalculable, not least Valencia, for whom a forced switch to a plc model ushered in a series of owners who mismanaged the club.
One of the chief advantages of the ruling for the four exempted clubs has been the different tax rates to which they were subject, and also the privilege that was denied to those forced to be plcs of running a professional basketball club within the same company structure. Both Real Madrid Baloncesto and Barcelona Basquet run as loss-making operations which are then offset against the tax that the respective lucrative football business is obliged to pay.
By way of comparison, last year the American tech giant Apple was ordered by the Commission to pay €13billion after it was determined to have benefited unfairly from taxation rules in the Republic of Ireland which were then lawful. The €5million payment imposed by the Commission on the four exempted clubs is calculated on the basis that the football and basketball operations were part of a single plc structure – but that was unlawful in Spain for the years in question.
Apple was ordered to pay up on the basis of a lawful tax structure being disallowed by the Commission. The four exempted Spanish clubs have so far had their punishment calculated according to a tax structure which is effectively unlawful. It is unlikely to go unnoticed, least of all in the US.
The power of the two clubs remains immense and they know in Brussels that to intervene in the affairs of Spain’s big two is fraught with political danger. What will Real Madrid and Barcelona pay for 26 years of the privilege of being able to constitute themselves differently to all but two of their domestic rivals? What is a fair price?
And how vigilant will the European Union be, in this golden era when the temptation is to think simply of those great midweek events that burnish the legend and can make us imagine that football in 2017 really is as simple as the moment and the emotion?
Officials know that to interfere with Spain’s big two is a dangerous game