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European Commission looking into allegations of State aid in favour of Celtic FC

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The European Commission has announced that it has received a number of complaints in relation to land deals between Glasgow City Council and Scottish football champions Celtic Football Club.

Complaints have been made against Glasgow City Council and Celtic FC that they are in breach of Article 107 of the Treaty on Functioning of the EU.

Article 107 of the Treaty on the Functioning of the European Union, ensures that ‘any aid granted by a member state or through that state’s resources do not distort competition and trade within the European Union by favouring certain companies or goods’.

The European Commission are responsible for enforcing the rules on EU State aid, primarily the Directorate-General (DG) for Competition.

When Scotzine contacted the European Commission, a spokeswomen confirmed that they were investigating several allegations of state aid funding between Glasgow City Council and Celtic FC.

A spokeswoman for the Commission told Scotzine: “The Commission has indeed received complaints about alleged state aid in land deals between Glasgow and Celtic. The Commission has requested and received detailed information from the UK authorities, as the Commission always does when it examines a complaint.

The allegations revolve around deals between Glasgow City Council and Celtic FC since the early 1990s, including land dubbed ‘The Celtic Triangle’, which is part of Celtic’s redevelopment of the adjacent land around Celtic Park.

Each allegation of potential state aid breaches had to be investigated by the Commission. According to the Commission’s own website: “Each notification triggers a preliminary investigation by the Commission. The Commission may request information from the notifying Member State, if the notification is incomplete. If the Member State fails to reply to an information request in the prescribed period of time, the notification is deemed to be withdrawn.

“From the time it has received a completed notification, the Commission has two months to decide that:

  • there is no aid within the meaning of the EU rules, and the measure may be implemented; or
  • the aid is compatible with EU rules, because its positive effects outweigh distortions of competition, and may be implemented; or
  • serious doubts remain as to the compatibility of the notified measure with EU State aid rules, prompting the Commission to open an in-depth investigation. In this instance, the measure may not be implemented until the investigation is concluded. (See formal investigation procedure).

If the preliminary investigation finds any misuse of state aid has taken place then a formal investigation will be conducted by the commission. If their investigation gets that far and any allegations of wrongdoing are proven then Glasgow City Council would be required by law to recover all aid with interest from Celtic FC.

The commission spokesperson added: “This information is currently being analysed so no conclusions can be drawn at this stage. The Commission has not opened any formal investigation.”

Scotzine contacted Glasgow City Council in regards to the allegations and the Commission opening up preliminary allegations, a council spokesperson said: “A complaint was made to the European Commission on historic land deals around Celtic Park. The Commission is legally obliged to investigate all such allegations, and the council was happy to provide information on these transactions.”

According to City council documents obtained by Scotzine, deals which saw Glasgow City Council purchase land from Celtic plc, was related to their East End Regeneration project in time for the Commonwealth Games this year.

GCC purchased Strathy Park, which was independently valued by James Barr, Chartered Surveyors, at a market value of £500,000. According to the Executive Committee document from November 2007, council officers ‘view is that this valuation is fair and reasonable in the circumstances’.

Celtic entered into an agreement with GCC to buy the Westthorn Recreation Ground from the council, with both parties agreeing that the valuation of the land – independently valued – was £675,000. As part of that deal, GCC would be entitled to 50% of any ‘uplift in value’ if Celtic sold the site within five years from the date of purchase. Celtic were also to pay the council £10,000 as a ‘contribution to its expenses’.

Back in 2000, the land at Westthorn was leased to Celtic Plc on a five-year term, at a rental of £26,000 per annum. According to Council documents obtained, Celtic invested around £500,000 on ‘enhanced facilities at both Barrowfield and Westthorn, including 2 new training parks, one of which is artificial grass and floodlit’.

Further documents dated 2005, are related to Celtic’s proposed purchase of the land dubbed ‘the Celtic triangle’ which comprises the land in and around Celtic Park between London Road, Janefield Street and on the western boundary the proposed line of the East End Regeneration Route.

The area included land which formerly housed tenements – now demolished nearly 20 years ago – and the former London Road Primary School, deemed by the council as surplus to their requirements [and reportedly structurally unsafe]. Council documents stated: “Celtic has offered to purchase the cleared sites from the Council at a total price of £375,000 (£100k per acre) which is considered to be the open market value to Celtic for car parking purposes. The District Valuer has been consulted on, and has agreed this value. Although there are no other development proposals in mind, Celtic has agreed the principal of equity participation in the event that at some point in time development proposals are brought forward which lead to site enhancement. The nature of the equity participation has yet to be agreed.”

“The acquisition of land from the Council also allows Celtic to enter into an excambion with the West Of Scotland Housing Association to free up land for its housing programme. Celtic would not make these sites available if its existing coach and car parking arrangements, and its planned parking aspirations, were compromised.

“At this stage Celtic is unclear how it would utilise the former London Road primary school but is seeking an option to purchase the building until a full development review is complete and more specific proposals brought forward.”

Recent announcements made by the club now see the former primary school being turned into a museum, ticket office and club superstore, with work already commencing with the old ticket office being demolished behind the school.

Despite claims on one Rangers supporters website, Celtic did not purchase the land that their Lennoxtown training ground now resides on. Celtic did purchase the land for £493,000 exclusive of VAT [despite the Rangers site claiming £497,000]but not from Glasgow City Council, the Parkhead side purchased the land from the Greater Glasgow Health Board. All business dealings by the Greater Glasgow Health Board are audited by the Auditor General of Scotland and not Glasgow City Council nor East Dunbartonshire Council, which is where the Lennoxtown land resides within.

The article published by the Rangers supporters website follows calls on Rangers forums for fans to send complaints to the European Commission over State Aid allegations made on the same websites.

Such an orchestrated campaign mirrors a recent campaign conducted by Celtic fans demanding the Advertising Standards Agency look into Rangers’ advertising and claims of being the world’s most successful football club. ASA found in favour of Rangers.

Celtic FC issued a statement this evening, which read: “Celtic Football Club operates to the highest standards and with the utmost integrity. At a time when the Club is committed to investing in and improving areas around Celtic Park, not only for Celtic supporters but for the benefit of the local community, it is sad that these baseless accusations have been raised with the European Commission.

“Any suggestion that Celtic has been the beneficiary of state aid is preposterous – as ludicrous as any suggestion that we have benefited from soft loans from our bankers. The historic transactions referred to were negotiated with the Council on commercial terms at market rates.

“The Club will assist the Commission fully with the process and will not be deterred from our work to improve our local area.”

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About Author

scotzine

Andy Muirhead is the Editor of Scotzine and the Scottish Football fanzine FITBA. He is the Scottish Football columnist for The Morning Star and has written for a number of other publications including ESPN, Huffington Post UK, BT Life's a Pitch and has had his work featured in the Daily Record, The Scotsman and the Daily Mail.

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