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Real Madrid, Barcelona under investigation from EU

Dec 18, 2013, 10:35 AM EST

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Turns out the two richest teams in Spain may be in very big trouble.

Real Madrid and Barcelona top the list of seven Spanish teams under investigation by the European Union (EU) over irregular public funding, as the European Commission starts a lengthy process to put the top Spanish clubs under the spotlight.

Osasuna, Athletic Bilbao, Valencia, Elche and second-tier Hercules are the other sides in question, as Madrid, Barca, Athletic Bilbao and Osasuna are accused of a corporate tax advantage of 5%.

One of the most severe allegations is against Real, who are said to have sold training ground land to the City of Madrid at an over-inflated price of 22.7m euros. ($31.9 million) While Valencia-based clubs Valencia, Hercules and Elche have apparently been handed up to $104 million in state-backed loans.

The clubs, if found guilty, would have to pay the vast sums of money back to the Spanish government.

However, Spain’s foreign minister Jose Manuel Garcia Margallo denied the clubs had broken EU rules. “The government will fight to defend Spanish clubs because they’re also part of the Spanish brand.”

While all this is happening under the looming cloud of Financial Fair Play coming into force in European soccer. FFP lurking in the background has made these allegations all the more harmful as it looks as though Spanish teams are trying to get their houses in order before strict financial regulations hit them hard. Under new rules large amounts of spending beyond their means and taking out loans will be limited as teams are encouraged to only spend the money the generate from endorsements, ticket sales and prize money.

Clearly the big boys in Spain can’t keep snapping up the biggest names in world soccer with only limited revenue streams to rely on.

The European Commission is in charge of the proceedings and its likely to take months to decipher whether or not the clubs acted incorrectly. But let’s break down one particular area, Madrid’s land by their training ground which they sold to the state.

According to a statement from the commission:

“Real Madrid appears to have benefited from a very advantageous real property swap with the City of Madrid. This swap was based on a re-evaluation of a plot of land at a value of 22.7m euros, instead of its earlier supposed value in 1998 of 595,000 euros.”

When City officials, businessman and soccer clubs are all involved, things like this happen quite a lot. But the sheer discrepancy in the value of that land is mind boggling.

It seems as though Spanish soccer is going to be under the spotlight and scrutinized for many months ahead.

  1. mikegcoleman - Dec 18, 2013 at 1:38 PM

    Is this a news piece or an opinion piece:

    “Clearly the big boys in Spain can’t keep snapping up the biggest names in world soccer with only limited revenue streams to rely on.” <– fact or opinion? If a fact, please supply some data

    "When City officials, businessman and soccer clubs are all involved, things like this happen quite a lot. But the sheer discrepancy in the value of that land is mind boggling." Can you cite other examples? Who says it's mind boggling? What is the appreciation on similar real estate over the past 15 years? How close

    "It seems as though Spanish soccer is going to be under the spotlight and scrutinized for many months ahead." Fact or opinion

    Or I guess lazy journalism could be an answer too.

  2. wynswrld - Dec 18, 2013 at 7:24 PM

    Aren’t ‘blogs’ opinion pieces by definition?

  3. unclemosesgreen - Dec 21, 2013 at 6:27 AM

    You’re right wayno – it’s a blog. Mike – stop trying to hold JPW to some imaginary journalistic standard. He’s writing quick-hit opinion-based blog pieces, not exhaustive research pieces. It’s a blog, as wayno so astutely pointed out.

    Now to point out one more small item which is obvious to everyone but you – JPW wrote this piece – so if he says something is mind-boggling, by definition it’s mind-boggling to him. His “proof” is that it boggled his mind. As it did mine. Now run along and kick your dog or do whatever it is that insane idiots do to unwind.

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