EC and Spain looking into Real Madrid property deal

The European Commission and Spanish government are looking into a property deal reported to have netted Real Madrid 480 million euros ($600 million), the EU executive said on Wednesday.

The club's sale of its training grounds to the City of Madrid in 2001 wiped out its debts and enabled it to buy world class players such as David Beckham.

A European Commission spokesman said the City of Madrid had re-zoned the training grounds for development, vastly increasing its value, and then purchased the site.

If the city paid more than a private purchaser would have, it would amount to a hidden state subsidy and Real Madrid would have to pay back the government, the Commission said.

"We believe there may be certain state aid elements attached to this," Tilman Lueder told a daily news briefing. "We believe the City of Madrid may have overpaid."

The sale of the training ground to the Madrid city council and regional government for office buildings erased Real Madrid debts of 270 million euros and permitted the team to buy new players and build a training complex on the city's outskirts.

The Spanish government sent the Commission a 30-page explanation, answering questions from the EU executive and explaining that it, too, wanted answers, Lueder said.

Spanish newspapers reported that the deal in April 2001 netted Real Madrid 480 million euros.

The government's explanation may put an end to the matter, or it may raise serious doubts and spur a formal investigation Lueder said.

The Commission is also looking into other cases of possible state subsidies to football teams, particularly in Italy.