The case

Although there is no available official European Commission decision or press release, this case concerns a “prenotification” which was made to DG COMP by the end of 2016.

The case relates to the construction of a new football stadium in Limassol, Cyprus which is intended to meet the UEFA Champions League specifications. Its cost is expected to exceed €30 mln.

The initial position of Cyprus appears to have been that the total construction cost of the stadium would be borne by the state through a grant by the Cyprus Sports Organisation (CSO) to the three local football sport clubs which would benefit from the use of the stadium. The three clubs already had the rights to possess the land where the stadium would be constructed under relevant lease agreements with the CSO.

Opinion of the competent authorities

According to the local press,[1] the European Commission’s DG COMP in its preliminary assessment appears to have considered that the arrangement involved state aid and raised certain concerns for the proposed mechanism of funding the construction of the stadium. As it was further reported, DG COMP’s main “conditions” appear to have been the following:

First, that the owner of the stadium will need to be the CSO rather than the three clubs of Limassol (Apollon, AEL and Aris).

Secondly, that the state land in Limassol, which was leased by the CSO to the three clubs for the construction of the stadium, should be returned to the CSO by canceling the lease agreements.

Thirdly, that the stadium will not be used exclusively by the three Limassol clubs nor should they be granted preferential treatment regarding the fees they will pay for the use of the stadium.

The information set out above seems to be corroborated by the findings of the Report of the Auditor General of the Republic of Cyprus (the “AG”) concerning the CSO’s Audit for the Financial Year of 2017.[2]

According to the AG’s Report, one of the main questions raised by DG COMP was why the three football clubs would not incur any costs for the construction of the stadium in circumstances where they would receive preferential use of the football stadium. Furthermore, it had to be ensured that the three football clubs, to which the company managing the football stadium would belong, will be charged an arm’s length fee for the use of the stadium.

In its Report, the AG makes a recommendation that any state plans to proceed with the construction of the stadium should only proceed with DG COMP’s approval and on the condition that the land will belong to the state.

The construction of the stadium has commenced in early February 2019.[3]

Comment

Unsurprisingly, DG COMP examined the modalities of this case considering that it involves some form of state aid, following its decisional practice, such as in case SA.46530 – Construction of Bratislava national football stadium.

According to the Leipzig/Halle judgment, the funding at each level must be in line with the EU State Aid rules: construction, operation and the use of infrastructure.

Chrysses Demetriades & Co.LLC

[1]https://in-cyprus.com/eu-comity-intervenes-for-limassol-stadium/ (in English); http://www.philenews.com/koinonia/eidiseis/article/517149/nees-peripeteies-ga-to-gpedo-tis-lemesoy; (in Greek)

[2]See pages 86 – 94 (in Greek) : http://www.audit.gov.cy/audit/audit.nsf/All/FDDB46A16A666A4AC22582AD00267EA4/$file/2018.06.15%20%CE%95%CE%BB%CE%B5%CE%B3%CF%87%CE%BF%CF%82%20%CE%9A%CF%85%CF%80%CF%81%CE%B9%CE%B1%CE%BA%CE%BF%CF%8D%20%CE%9F%CF%81%CE%B3%CE%B1%CE%BD%CE%B9%CF%83%CE%BC%CE%BF%CF%8D%20%CE%91%CE%B8%CE%BB%CE%B7%CF%84%CE%B9%CF%83%CE%BC%CE%BF%CF%8D%202017.pdf?OpenElement

[3] https://cyprus-mail.com/2019/02/05/work-begins-on-new-limassol-football-stadium/(in English)


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