Our View: Rental for Tsirion stadium should have been done within EU rules

The European Commission will in the end decide whether the annual rent charged by the Cyprus Sports Federation (KOA) for the use of the recently completed football stadium by the three Limassol clubs is fair or whether it is underpriced, in which case it would constitutes state assistance. The Commission had given its consent to the use of the new football ground by the three clubs, at the end of last year, because the Tsirion stadium, in which they were playing, was deemed unsafe, but said it would look into the matter subsequently.

The issue had been raised by the auditor-general and the office of the Commissioner for State Aid Control, both of whom argued that the leasing of the new stadium should have followed the open procedure of inviting tenders instead of the lease being offered directly to the three clubs by KOA. The auditor-general wrote to the Commission to point out that an irregular procedure had been followed and the matter is being looked at. He has a point, but the reality is that the stadium was built by the state so that Aris, Ael and Apollonas could play there. Then again, a third party may have leased the new ground at a higher price, and then charged the clubs for its use.

A report by the audit office mentioned that a study by a consultancy firm estimated the annual cost for the management, maintenance, utilisation of the stadium would be in the region of €800,000. In the end however, KOA agreed to lease the stadium to the three clubs for €400,000, a deal that went ahead despite Odysseas Michaelides’ attempt to stop it on the ground that the rent would be below market value and therefore not in the public interest. The alleged, lower than market value rent charged (it would be interesting to know what the market rent for football stadiums actually is) by KOA could be regarded as a form of state aid to the three clubs.

Now, there is a danger that the European Commission could decide the rent agreement was non-compliant with state-aid rules and order a higher amount be paid for the lease. Will the cash-strapped clubs be prepared to pay a higher amount bearing in mind that gate receipts might not cover the rental cost per game? What would happen then? The previous government had failed to give any thought to the many issues that would arise by building a stadium and giving it to the football clubs at what appears like a bargain rent. The objective was, after all, to help the Limassol clubs, which cannot make ends meet, but this should have been done within EU rules on state aid. Now, KOA and the new government might have to go back to the drawing board, to deal with a problem that everyone knew would arise but had no interest in addressing at the time.