By Tony Attwood
The issue of state aid in football won’t go away. The amount of effective aid given to West Ham United over the Olympic Stadium is still a matter of contention and a legal battle. The question of how much aid the city of Madrid gave to Real Madrid in the land deal through which land of limited value in the outskirts of the city given to the council in return for land of similar size but much higher value near to the Real Mad stadium continues to occupy the minds of the civil servants in the EU who consider such things.
And now three Members of the European Parliament have raised the issue of whether the Spanish bank Bankia, the which was given a bail out of£14 billion by the EU during the banking crisis, financed the transfer of Gareth Bale to Real Madrid. Bankia was formed from the merger of seven banks, including Caja Madrid, which “owned” the Real Madrid’s debt.
Now you will probably have been reading some of this on other sites and certainly in the more eloquent bits of the national media. But there is something else lurking underneath, for in the contract between Real Mad and Tottenham H something else was revealed. Something that at one level looks like a little detail. But which taken taken in context might mean something more.
Let me say, as always in these things, Untold doesn’t have a team of hackers or of sources close to clubs like Tottenham H or Real Mad. We don’t have hidden cameras. What we do is always the same: put bits of information together and see what we get. A bit like saying, “oh look there are only a small number of referees working in the PL. What does that imply?”
Anyway, back to this issue. A question was tabled by the Conservative MEP Daniel Dalton, who is a member for the West Midlands, the Belgian MEP Sander Loones and Spanish MEP Ramon Termosa. Daniel Dalton was a cricketer and has declared no footballing interest. I can’t find a footballing link for Ramon Termosa but he is a Spanish MEP so he is close to the issues of Spain’s financial implosion.
The issue of the Spanish banks is an issue to do with who took over the risk of the three final instalments of the money that Madrid agreed with Tottenham Hotspur for Bale. It goes like this: Real Mad were willing to pay Tottenham H a lot for Bale – but not all at once. They would pay some at once, and the real on tick.
But the amount owing was so much Tottenham H wanted a guarantee that if Real Mad failed to pay on the day, the third party (normally a bank) would pay Tottenham and then go chasing Real Mad through the courts.
This approach was essential to the deal because it meant Real Mad didn’t have to borrow money from a third party for the deal – something Real Mad could not have done because following the intervention of the EU is rescuing the Spanish banking system such loans on such speculative ventures were banned. Spanish football clubs are not allowed to borrow from banks since the banks have been bailed out by taxpayers money.
As Daniel Dalton said: “Real Madrid are the world’s richest football club and if it has used a state owned bank, owned by taxpayers to guarantee multi-million pound record transfer fees, then it is clearly something the EU should look to address to ensure there are no unfair competitive advantages given to football teams supported by taxpayer-funded financial institutions.”
But herein lies the problem because although Real Mad is seen as the richest club, it is also the most indebted club. And that means it has problems borrowing any more.
In the Real Mad deal promissory notes were issued to Tottenham Hotspur FC. These were held by Tottenham’s bankers who then sold them to Spanish banks, which meant the money lending operation has gone round in a circle. The Spanish banks were in effect doing the lending.
There has also been speculation over an agreement between Tottenham H and Real Mad which goes back to August 2012 just before Tottenham announced the sale of Luka Modric to Real Madrid for £33 million, one of a series of sales which have left Tottenham uniquely making a transfer profit in recent years. Several MEPs have started to ask questions about this.
Of course there is no suggestion that anything is wrong, and as I said at the start, I don’t have undercover operatives digging up this stuff, but the way in which the transfer fee of Bale was manipulated, and with the issue of the role of the Spanish banks in the matter, some people are starting to look into the matter a little further – not least Barcelona who are anxious to remove the focus on their top players who appear to have all had the idea that they didn’t really have to pay any tax if they didn’t want to because they were with… Barcelona.
In November 2014 a number of newspapers and web sites reported that Real Madrid had a debt of $750m, the largest in world football. This was particularly worrying since it is difficult to see how Real Madrid can expand its income further to write down this debt. It is unlikely to get any more people into the ground in a season, its marketing division has explored every avenue, and its player trading does not look like moving away from the fundamental approach of buying players at top price and selling them for less.
Other club debts recorded at the time were
Mind you help might be on the way. Given Mr Osbourne’s generosity to tax avoiders in the UK such as Google, Facebook, Amazon, Starbucks and the like, it is almost certain that Messi and Neymar will be in the EPL next year. Indeed it is more than likely that Real Mad will up sticks and move to England as well, just to get the better tax deal.