Football clubs escape fines
Court finds errors in EC’s case
ELCHE and Valencia football clubs will no longer have to pay multi-million euro fines that were imposed on them by the European Commission, the General Court of the European Union (EGC) has ruled.
Brussels had levied penalties of €20.4 million against Valencia and €3.7 million against Elche, for receiving allegedly illegal state aid.
This was over bank guarantees that were granted by the regional government finances institute (IVF), which supposedly enabled the clubs to obtain loans in more favourable conditions when they were going through financial difficulties.
Between 2009 and 2010, the IVF granted bank guarantees to various foundations linked to professional football clubs in Valencia region, which the EC decided had been illegal in 2016.
The EGC, based in Luxembourg, decided that the reasoning behind this ‘is blighted with several clear errors of evaluation’, such as claiming that no financial institution would grant a bank guarantee to a company that is in crisis.
In the case of Valencia, the EC had not evaluated whether the club could have obtained a comparable facility from a private operator.
Nor had it sufficiently backed up its affirmation that there was no market price for a similar loan without a bank guarantee.
This was put down to it having only examined a limited number of similar operations on the market.
The judgment also said the EC’s calculation that the value of Valencia’s shares was ‘practically nil as the club was in crisis’ had been ‘inexact’, because it had shown profits in the previous financial year and had assets with a significant net worth.
Regarding Elche, Brussels had mistakenly not taken into account the economic and financial situation of the foundation linked to the club that was borrowing the money, the Fundación Elche, since it had been the actual beneficiary of the contested bank guarantee from the IVF, even though the EC did not see it this way.
Nor did the EC take into account that the Fundación Elche had granted the IVF a mortgage on a plot of land as a counter-guarantee, nor that the club’s shares had increased in value since it was recapitalised.
The EGC has given the EC leave to present an appeal within two months and 10 days of the verdict.