Besi
¤ TheSaint ¤
EU regulators ordered Italy on Wednesday to change its "Save Soccer" law, saying a rule that lets clubs such as Prime Minister Silvio Berlusconi's AC Milan write off players' contracts over 10 years violated EU law.
The European Commission said the legislation, enacted last year to rescue heavily indebted Serie A soccer clubs, "breaches EU accounting laws in that the balance sheets of a number of sport clubs fail to provide a true and fair view".
Rome has two months to respond, after which the Commission may take Italy to the European Court of Justice unless it makes a satisfactory response.
Many Italian soccer clubs are heavily in debt because of the high cost of transfer fees paid to other clubs and agents to sign star players and wages to retain them.
The EU executive, headed by Berlusconi's centre-left political rival, former Prime Minister Romano Prodi, said the law enabled clubs "to submit accounts which underestimate their true costs in a given year, hide real losses and give a misleading picture to investors".
Commission spokesman Jonathan Todd said Brussels was worried that unless it challenged the law, the precedent could spread to other countries and economic sectors.
"If we allow one category of companies to break the rules so as to write off contracts over a period longer than their economic life, other countries and other sectors could follow," he told a news conference.
TAX BREAK SCRAPPED
EU law normally limits the period over which firms can write off capital losses to three years. A specific provision stipulates that athletes' contracts may not be written off over a period longer than the duration of the contract.
Italy agreed in March to cancel a planned tax break for ailing soccer clubs, satisfying part of a two-pronged EU inquiry into the "Save Soccer" law, denounced by critics as a self-serving statute to help Berlusconi's business empire.
The billionaire prime minister owns former European champions AC Milan. Three of Italy's top clubs are public companies quoted on the Milan stock exchange -- Juventus, AS Roma and SS Lazio.
The Italian soccer federation declined comment and referred all questions to the prime minister's office, which had no immediate reaction.
A survey earlier this year showed the 18 clubs in Italy's top division, Serie A, posted a combined operating loss of 948 million euros ($1.2 billion) last season, with wages consuming 85 percent of revenue.
Finance police searched the offices of all 42 clubs in Italy's top two divisions in February as part of investigations into suspected accounting fraud in soccer.
The Commission disputed Italy's contention that the "Salva Calcio" law was a once-off measure, saying that its effect would endure for the entire 10-year period of the write-off.
Asked what would happen if the highest EU court ruled against Italy, Todd said the Commission hoped Rome would agree to change the law.
But if the court found in the Commission's favour, other European clubs from outside or inside Italy which did not benefit from the illegal provision could sue Italian clubs that had enjoyed the longer write-offs for compensation, he added.
Todd said he was not aware of any complaints from rival European clubs so far.
The European Commission said the legislation, enacted last year to rescue heavily indebted Serie A soccer clubs, "breaches EU accounting laws in that the balance sheets of a number of sport clubs fail to provide a true and fair view".
Rome has two months to respond, after which the Commission may take Italy to the European Court of Justice unless it makes a satisfactory response.
Many Italian soccer clubs are heavily in debt because of the high cost of transfer fees paid to other clubs and agents to sign star players and wages to retain them.
The EU executive, headed by Berlusconi's centre-left political rival, former Prime Minister Romano Prodi, said the law enabled clubs "to submit accounts which underestimate their true costs in a given year, hide real losses and give a misleading picture to investors".
Commission spokesman Jonathan Todd said Brussels was worried that unless it challenged the law, the precedent could spread to other countries and economic sectors.
"If we allow one category of companies to break the rules so as to write off contracts over a period longer than their economic life, other countries and other sectors could follow," he told a news conference.
TAX BREAK SCRAPPED
EU law normally limits the period over which firms can write off capital losses to three years. A specific provision stipulates that athletes' contracts may not be written off over a period longer than the duration of the contract.
Italy agreed in March to cancel a planned tax break for ailing soccer clubs, satisfying part of a two-pronged EU inquiry into the "Save Soccer" law, denounced by critics as a self-serving statute to help Berlusconi's business empire.
The billionaire prime minister owns former European champions AC Milan. Three of Italy's top clubs are public companies quoted on the Milan stock exchange -- Juventus, AS Roma and SS Lazio.
The Italian soccer federation declined comment and referred all questions to the prime minister's office, which had no immediate reaction.
A survey earlier this year showed the 18 clubs in Italy's top division, Serie A, posted a combined operating loss of 948 million euros ($1.2 billion) last season, with wages consuming 85 percent of revenue.
Finance police searched the offices of all 42 clubs in Italy's top two divisions in February as part of investigations into suspected accounting fraud in soccer.
The Commission disputed Italy's contention that the "Salva Calcio" law was a once-off measure, saying that its effect would endure for the entire 10-year period of the write-off.
Asked what would happen if the highest EU court ruled against Italy, Todd said the Commission hoped Rome would agree to change the law.
But if the court found in the Commission's favour, other European clubs from outside or inside Italy which did not benefit from the illegal provision could sue Italian clubs that had enjoyed the longer write-offs for compensation, he added.
Todd said he was not aware of any complaints from rival European clubs so far.
