Stadium aid complaints looked into by European Commission
- 15 January 2014
- From the section South West Wales
Complaints have been made over possible illegal state aid funding for sports teams from two Welsh councils, the European Commission has confirmed.
Questions were raised last month about how Carmarthenshire council helped fund the Scarlets and how Swansea council helped fund the city's Liberty Stadium.
Swansea council said it was in dialogue with the commission but Carmarthenshire council said it has not been contacted.
The commission said no formal investigations are taking place.
State aid rules, policed by the commission, limit how much public money can be given to private companies.
Swansea council has been asked to give details over funding arrangements at the council-owned Liberty Stadium where Swansea City FC and the Ospreys rugby region to play.
And there are claims that Carmarthenshire council could have broken regulations in the way it gave more than £20m aid to the Scarlets rugby region.
While the council said their has been no contact, BBC Wales has seen correspondence from the office of the European Commission's director general for competition which says that it is looking into the financial assistance provided to the Scarlets.
'Ask a few questions'
The process could end with formal investigations into either or both councils.
David Hughes, head of the European Commission's office in Wales, said: "There is no formal investigation into state aid subsidies into any UK sporting club.
"There are formal investigations going on in Spain into clubs like Real Madrid and in the Netherlands as well but there are no formal investigations going on in the UK.
"What we have in the UK is we have a few cases that have come to light in the media where allegations have been made against certain operators and the commission is legally obliged to look into the matter to ask a few questions in order to see whether there's any substance to these allegations."
The issue of state aid funding in sport has risen to prominence recently.
Five Dutch football clubs are being formally investigated and last month the commission announced that it is formally investigating seven Spanish clubs including Real Madrid and Barcelona.
It is expected that these Spanish cases will go all the way to the European Court of Justice.
Now the focus could switch to Wales.
Concerns were raised last year about the amount of financial assistance provided by Carmarthenshire council to the Scarlets.
More than £20m has been given to the region by the council since 2007.
It contributed almost three-quarters of the cost of building the £25m Parc y Scarlets which has been leased to the region for 150 years and is currently being used rent free.
It has also provided loans to the club of around £8m. Recently one of those loan deals was renegotiated so the region pays less interest.
At the same time, the council has announced plans to reduce spending on parks, playgrounds and playing fields. That decision has been criticised by some local councillors and residents.
Carmarthenshire council said in a statement that it had not been contacted by the commission over Parc y Scarlets.
The council also said that it took independent legal advice as a requirement of its decision back in 2007.
It added: "Such advice clarified that due to the way the original agreement was set out, state aid did not apply.
"Despite the same questions being asked and responded to repeatedly over the past six years, we remain confident with this advice, and have reiterated this on several occasions."
In Swansea, the local authority built the Liberty Stadium in 2005 at a cost of £27m.
The clubs pay a peppercorn rent to the Swansea Stadium Management Company (SSMC) - a body running the stadium which is a partnership between the council and the two clubs.
The clubs also contribute over £1m a year to the running costs of the stadium with any profit made being returned to the teams and the local authority.
However, it is understood so far that SSMC has failed to ever return a profit which means the council is yet to see a return on its investment.
A Swansea council spokesman said: "The European Commission has asked us a number of questions in relation to the Liberty Stadium and currently we are in dialogue with them, as are a large number of sports clubs from across Europe."
Swansea City FC and the Ospreys have declined to comment. The Scarlets have also been contacted by BBC Wales.