Celtic FC and State Aid

[ian1964 10,761]

The club currently play at Celtic Park, which has an impressive capacity of 60,832. The club are on course to win the Scottish Premier League for the second time in as many years. Founded in 1888 by Brother Walfrid as a club with a charitable ethos for local Roman Catholics. The club is owned and operated by The Celtic Football Club PLC.

 

With Scotlandâ??s second biggest fan base, the majority having an Irish/Catholic background, Celtic draw on huge crowds every home game. It is also important to note of their sizable away support. The question begs, just how could a British club with far less resources of wealth when compared to other British clubs, fund a 60+ thousand UEFA category 4 stadium?

 

Celtic FC was saved in 1994 for near extinction by Fergus McCann. In short, McCann invested heavily and set about implementing a 5 year strategy. A foundation block of his 5 year plan was to redevelop Celtic Park, increase capacity from 50 to 60+ thousand.

 

Glasgow City Council agreed to sell some surrounding land to the new Celtic PLC for a reported £1. What is staggering is that at the time of the committee conducting a vote, ELEVEN where involved with Celtic, 7 being shareholders and 4 being season ticket holders. The few remaining councillors â?? Labour, SNP and a Tory all voted NO to selling the land for £1.

 

â??State aid is any form of financial assistance given by central or local government, or other publicly funded bodies, to private companies that might distort a free market. In general terms, the rules are broken only when a public body acts in a way a private investor would not: so a fixed-term loan to a club at commercial rates is fine, but an open-ended commitment to plug holes in the accounts is not.â?

 

If a public authority is found to have broken state aid rules, the European Commission can impose fines and force the recipient of the aid to repay it.

 

Fast forward a little more than 15 years. Real Madrid â?? the Spanish giants have had allegations against them that their transactions with Madrid City Council, dating back to a 1996 agreement between the two parties, constitute illegal state aid under article 87 of the Treaty of the European Community. It is alleged that *the council hugely overestimated its debt to the football club in order that the former could give Real the prime city-centre land they require for their new development. (*Note in the Celtic case, Glasgow City Council owed nothing to the club)

 

The investigation into Realâ??s deal with Madrid City Council centres upon an area of land in the north of the city, Las Tablas. Having originally been valued at â?¬421,000 when it was part of a payment by the council to the club in 1998; the same land was then valued at â?¬22.7m in 2011, a 5,400 per cent rise, when the council decided they had to take it back. In lieu of a â?¬22.7m payment, the club was given the land they needed to develop their stadium.

 

Under the competition commissionâ??s guideline 7.2 on state aid they have a year to investigate and rule on the complaint, made about the valuation of Las Tablas property, unless they are still awaiting information from respondents. The allegation was raised in December 2011. The investigation into Real has been mentioned publicly just once by Mr Almunia (a Spanish native, who supports Real), who has also focused on other clubs alleged to have received state aid.

 

Glasgow is dominated by two teams, Rangers and Celtic, it is of course fairly reasonable that roughly half the members of the committee would have an affiliation to one team or the other. There are several things to discuss here. The first for me is the clear conflict of interest for the Glasgow City Council councillors who had shares in Celtic PLC, the company who owns and operated Celtic Football Club. Being custodians of the public purse, any conflict of interest that may arise, particularly any that they stand to benefit from should have been raised at the very least.

 

This brings us to the £1 price tag. Even in an economically and socially deprived part of the City, there could not have been any piece of land in an 1994/1995 East End of Glasgow worth £1. Furthermore, a row of houses has to be demolished and the residents rehoused due to the overhang of parts of Celtic Park cutting out sunlight. Instead of Celtic being hit with the reported £1,500,000 kick-out fee, Glasgow City Council took it upon themselves to foot the bill.

 

The hardworking people of Glasgow must now ask questions of their City Council. Why was several large pieces of land which belong to the public, sold for £1?

 

And will the ECC investigate the alleged â??State Aidâ?? of Celtic FC? If found guilty, what should be the repercussions?

 

Looking at it from a business point of view â?? Celtic PLC has conducted a great piece of business here. Not only picking up a prime piece of land for buttons, but getting the local City Council to foot the first part of the development! You cannot fault them.

 

However, going back to Brother Walfrid, who remember opened Roman Catholic-only soup kitchens for the poor whilst implemented other charitable causes in the East End, is this the legacy he wanted to see? Ripping off the people of Glasgow for financial gain? A lot of noise is made from Celtic supporters as being upright citizens with a charitable outlook.

 

If you know your history, correctlyâ?¦ are you happy for your club to conduct business like this?

 

 

http://economicsfc.wordpress.com/2013/04/09/celtic-fc-and-state-aid/