How EU Foreign subsidy rules will harm football in Europe but boost PL clubs

By Tony Attwood

Back in 2016 the European Commission hardened its attitude towards clubs in the European Union getting “state aid” – which is basically illegal payments from governments to help them keep going.

The most notorious cases involved seven Spanish clubs including Real Madrid, Barcelona, Valencia CF.  And indeed the recent collapse of Barcelona’s finances can be seen to have originated with this change of stance.   

In fact just recently Barcelona’s economic vice president, Eduard Romeu, stated that the debt of FC Barcelona had now exceeded 1 billion euros and was still rising.   On 20 June this year he added that, “Covid is not to blame for everything,things were going badly before.”

That situation is not sustainable, not least because as we all know, transfer fees are not paid all at once – usually they are paid over a four year period.  Which means that if Barcelona were to start defaulting on its debts (something that seems inevitable once interest rates start to rise once more, as they must surely do), it would impinge on football clubs across the world.

Because of the highly confidential nature of some of these transactions, the EU has yet to give us all the juicy details but it is not hard to discern the links between national and local government bodies on the one hand and football clubs in Spain on the other.

State aid in the EU has been outlawed for a long time, but this was the first time the EU Commission slapped down on it in relation to football, and of course it was just in time.  Had they not done so the amount of state aids pouring into the likes of Barcelona during the covid crisis would have been beyond belief.  There have also been cases involving Dutch clubs, but the level of illegal aid seems to have been less.

Now of course the UK is no longer governed by these EU rules, and I am not sure I have seen the government do anything in terms of helping individual clubs, although they have clearly acted against the interest of certain clubs on occasion – as when they blocked the sale of Newcastle recently.  Generally, however, in England all that happens with boring and tedious regularity is that the government bails out the FA.

What the new rules will stop however are further take-overs as we saw with the Qatar Sports Authority (which is effectively part of the state) taking over Paris Saint Germain.

Now this does have an implication for English football, because it will make English clubs look ever more attractive to organisations such as Qatar Sports Authority given that the Premier League has the highest of profiles, and there are no regulations to stop the investment.   Indeed such a move has already been tried with the aforementioned sale of Newcastle United, and was only stopped by the rather ludicrous notion that the buying state was involved with a breach of copyright.  As if that was of concern given the wholesale breach of human rights in the building of the stadia in Qatar – which England hopes to be playing in.

And there is a further implication, because it seems that the new EU regulations allow the Commission to consider subsidies from foreign governments across the last ten years where there is reason to think that the investment has distorted competition.

Certainly in the case of PSG it is hard to think otherwise. Between 1986 and 2012 PSG won the league once.  In the last ten seasons they have won it seven times, coming second in the other three seasons.  And all the investment has to be, in order to be considered a distortion, is something that improves the “competitive position” of the club.

Obviously if the UK were still part of the EU this would scupper the position of Manchester City whose rise has been similar to that of PSG.  But yet again they have escaped.

But there is one other interesting point here.   The Commission has given itself the right to investigate issues outside the EU where events have impacted on the EU and organisations based in the EU.  Thus Manchester City and Chelsea with their huge foreign investments could be argued to have gained an advantage which has caused them both to do better in European competitions than they might otherwise have done. 

Now that might seem fanciful and some distance away, but if European clubs do have their financial situations cut back and English clubs then come to dominate the European competitions, that could be the trigger that would make Uefa act.

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