European Commissions Launches First State Aid Investigations Into Football Clubs
On 6 March 2013, the Commission opened an in-depth investigation, the first of its kind, into the public funding of five professional football clubs in the Netherlands. It has doubts as to the compliance with EU State aid rules of a number of measures taken by five municipalities in the Netherlands in favour of their respective professional football clubs. The Commission also confirmed that it is looking at measures in other EU Member States, suggesting that professional football clubs in other countries will also be subject to investigations.
The investigation comes after the Commission sent an information request to all EU Member States in October 2012, asking each State to provide all relevant information regarding public financing of professional football clubs in their country.
Since the underlying legal and economic concepts of the Commission’s probe into the financing of football clubs are not limited to football, this development may have broad implications for all professional sports clubs in the European Union and for the public authorities financing them. It is likely that, at a later stage, the Commission will initiate similar investigations into other professional sports, such as ice hockey, basketball and handball.
Underlying the investigation is the idea that professional sport, as opposed to amateur sport, is an economic activity to which the general EU State aid rules apply. While the economic nature of professional sports has been recognised in the past, the Commission did not apply the general State aid rules to the financing of professional sport clubs until it opened this investigation.
According to general EU State aid rules, the Commission may investigate public support measures going back ten years. Should the Commission come to the conclusion that the financing of a professional sports club infringes State aid rules, it can order the Netherlands to recover the aid from the clubs. The relevant public support measures could no longer be applied and all financial advantages granted to the clubs would have to be recovered.
This investigation is well within the rules put in place by the European football governing body, L’Union des Associations Européennes de Football (UEFA), to ensure that football clubs are financially managed within their means in a prudent and responsible manner. Pursuant to the UEFA financial fair play rules, football clubs are under an obligation to balance their books, taking into account the income generated from their own resources. In March 2012, a joint statement from the Commission and UEFA stressed that State aid rules and the association’s financial fair play rules have the same objective.
The in-depth investigation in the Netherlands may only be the tip of the iceberg as the Commission has also turned its attention to sport infrastructure financing. In addition, the Commission is currently investigating the financing of arenas in Copenhagen and Uppsala. Sports clubs and public authorities should therefore review the compatibility of their funding with EU State aid rules and develop a strategy to respond to possible information requests from the Commission.
Katharina Dietz, a trainee solicitor in the Brussels office, contributed to this article.