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January 2021

MEPs have written to the European Commission asking them to investigate whether Gareth Bale’s

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.


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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.

 Now the question arises, did Tottenham connive with Real Madrid over the deal with an agreement in advance that the promissory notes could be sold to the banks in Spain?  If so, Real Mad and Tottenham H conspired together with the Spanish banks to circumvent EU regulations in getting the state aided banks to back the loan.  The punishment for doing this is three months solitary on the moon without a spacesuit.  (Actually I may have got that wrong, but it is certainly frowned upon.
It does indeed look on the face of it as if some conniving was going on because a contract relating to the deal which has been leaked suggests that Real Mad also relinquished its claim on “outstanding amounts” owed by Tottenham H related to the signing of Rafael Van der Vaart.   Now this writing off of older debts of unspecified amounts is always something that excites tax lawyers who argue that if the deal was legitimate and straightforward there would be no need to have paragraphs like this hidden away in secret contracts.
A previously revealed issue of a contractual clause between the two clubs suggests that Tottenham H joined together and agreed to reveal false figures concerning the cost of G Bale.  It has been suggested that this was to mislead Cristiano Ronaldo.  But again, tax departments don’t like false figures.  It is fine to say nothing, but to say something that misleads is not good.

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

Barcelona $530m
Manchester United $510m
Arsenal $320m
AC Milan $320
Now of course these figures remind us just how difficult it is to calculate debt.  At this time Chelsea’s debt is either recorded as zero by some people or as around $1200m, depending on how you look at it.  The owner has loaned money to the club ($1200)  but also owns the club so it is a bit of a circle (hence zero).  Throw in the conversion of debt into shares and it gets more complicated.
But the Real Mad debt is different because this is real money owed to people who might want it back.  Arsenal’s debt is different as it came down dramatically in the following year because of new deals coming through from sponsors and more and more of the stadium debt was being paid off.  Different again from Real Madrid which is not paying off anything other than the loans on players it bought three years before who are now only worth half as much as they signed but didn’t pay for them.
Of course such huge debts have nothing to do with the fact that Lionel Messi, Javier Mascherano and Neymar are all tied up in long court proceedings over tax they have failed to pay.
But there is the intriguing fact that over the past five years Tottenham have made a profit on their transfer dealings of £36m – the only Premier League club to have managed to do this.  The Bale deal clearly was a major part of this, but even so, it has been an amazing achievement.  It compares with the £99m net spend by Arsenal, £224m by Chelsea, £300m by Man U, and £320m by Man C over the same period.  How did they do it?  A genius negotiator and a set of managers who could see bargains everywhere is the official answer.

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.

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The latest Untold book is Arsenal: The Long Sleep 1953-1970 with a Foreword by Bob Wilson, available both as a paperback and as a Kindle book from Amazon.   Details of this and our previous and forthcoming titles can be found at Arsenal Books on this site.

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Two more anniversaries

  • 19 February 1898: Arsenal and Millwall exploited their local rivalry by playing in the United League for the second time in a month.  It was a 2-2 draw in front of 12,000 fans.
  • 19 February 1905: Herbie Roberts born in Oswestry.  Having played for his hometown club (while working as a policeman) he only ever played for Arsenal (297 league games) and England (one game).

10 comments to MEPs have written to the European Commission asking them to investigate whether Gareth Bale’s

  • Usama Zaka

    I always keep wondering as to from where do Real Madrid get all this huge amounts of money, even with tons of debt. They don’t have super billionaire owners.

    Really interesting stuff there you mentioned, Tony. Again just like you said all these are bits and pieces slightly put together giving a better picture.

  • Andy Mack

    If anything untoward did happen between the Spuddies and RM then it’ll be blamed on their financial advisors (even though the spuddies shout loud about how sharp Levy is financially) and little to nothing will happen beyond a warning not to do it again.

    The more interesting thing is that the Spanish football TV deals must change so that La Liga negotiates as 1 entity (instead of each club for themselves) and splits the money more equitably across the league teams which will reduce the big 2’s income considerably, but stop the tiny teams going bust. So how can RM pay their debt….
    I may have missed it, but I thought the La Liga TV renegotiations were happening soon, or has that been swept under the carpet for a season or two.

  • GoingGoingGooner

    An interesting read.

  • Notoverthehill

    Very curious indeed, Tony!

    Checking the 30th June 2013 Financial Report, with Post Balance Sheet events, the G Bale transfer to Read Madrid is disclosed.

    BUT, the odd thing is, I quote …including Football League levies, the uncontingent net income from these transactions amounted to approximately £933.000.

    S. Caulker was sold to Cardiff City
    T. Huddlestone was sold to Hull City
    M. Luongo was sold to Swindon.
    S. Parker sold to Fulham.
    G. Bale was sold to Real Madrid.

    All Spurs received was the princely sum of £933.000 ????

    Note 25 of the Accounts is the source.

  • Josif


    I recall reading about Real Mad’s real estate schemes about 18 years ago. They had had a huge debt back then, apparently looking for a buyer to break the world record for their talisman striker Raul Gonzales Blanco in order to plug the budget hole. However, Real got a help regarding real estates and were effectively bailed out.

    Things went to extreme with Florentino Perez’ first arrival. Hd won the elections after promising the purchase of Luis Figo – his rival Lorenzo Sanz couldn’t match that promise as he could only offer Diego Tristan to his voters. Perez was elected and Real broke the world record by signing Luis Figo. Real paid the minimum fee release clause that had been in Figo’s contract. Unlike in England, contract clauses like that one are respected in Spain.

    It’s always interesting when two clubs make a lot of transfers between them. Van der Vaart, Modric, Bale… Let’s not forget all that circus regarding VdV’s transfer to Tottenham (Liverpool were apparently played by ‘Arry thanks to Ryan Babel’s transfer story), Modric’s desire to leave for Chelsea before he was sold to Real and Bale’s fee that apparently wasn’t correctly reported in public.

    That’s why I’m against comparing Bayern with Real. The Germans pay on time while Spain lend a hand (pun intended) to Real and Barcelona. That’s why Bayern were protesting in the past.

  • GoingGoingGooner

    The Germans are the ones that are pushing for an investigation into Spanish football finances. They believe that they are underwriting the Spanish bailout and yet their firms (read Bayern Muenchen) have to compete against state funded competition.

  • Mandy Dodd

    Very interesting.
    But being Spurs and Real, they will probably get away with it

  • insideright

    Maybe this is another reason why Spurs new stadium continues at a snails pace. With questions relating to their current claimed financial position and with downward pressure on ticket prices those being asked to lend Spurs vast sums of money must be scratching their heads and wondering whether they will actually get their money back.

  • Rufusstan

    @Andy Mack.

    Almost kick-off so cannot go back and find sources now. I think the La Liga TV renegotiation has been neutered because the big 2 managed to slip in a clause that states that neither can be financially disadvantaged by new deals for some years.

    It would mean that they still get at least what they do now under the new deal.

  • finsbury

    Can’t forget the role stadiums play in these games or the money cycled through such projects.

    Will mayor boris give both Tottenham and West Ham a stadium at the general citizen’s expense?

    If Tottenham don’t secure their funding before the next mayor comes will we all be amused?

    Do we forgive and ignore the shambles charade and worse associated with the Olympic stadium bungle as it was Boris’ good stand up and honourable chum Lord (& master for plebs like you or I) Coe the wise Expert who insisted on no football infrastructure being built or considered in the original stadium design but hey I guess these kind of decisions keep some people happy and busy and I therefore I conclude that it’s true with this much be firm evidence from which we must conclude that such thinkers truly are experts at business. Or something like that.