We have all seen the eye-watering football transfer fees, particularly in the Premier League and with other country’s top clubs, where a player can effectively be “sold” to another club. The effect of this is of course to make “the beautiful game” staggeringly expensive in terms of ticket prices. To watch Arsenal play live can cost between £41 and £87 and a season ticket for Tottenham Hotspurs costs between £985 and £1995.
The news has been breaking till yesterday (31st January) on the latest round of transfers, so a look on any of the sports pages will tell you the specific deals, like the Telegraph, for instance. The highest so far was Gareth Bale, “sold” by Spurs to Real Madrid for around £80 million. One of the latest has been for Chelsea manager Jose Mourinho to sign St Etienne centre-back Kurt Zouma on a five-and-a-half-year deal, amount unannounced.
And who gets all the money in each transfer deal? The selling club gets around 90%, and the player and his agent get the remainder, how it is split between them depending on their deal. Presumably, they will be taxed on that as income, but how is the club’s share of the income handled?
The UK General Election 2015 blog has asked the question on whether the actual transfer itself is levied or not. It seems it is seen as an expense much like a company buys machinery or commodities to then repackage and sell it. Any taxation of the club comes from the club’s profits or in most cases with big club’s losses, so they then don’t have any taxes to pay.
But here we are in a world where it seems some über-rich corporations and individuals can hire good lawyers and accountants to avoid tax, whereas those with less flexible remuneration and taxation systems (like PAYE) can easily have more tax extracted from them. Many think it obscene that someone who has worked hard for years and studied to get themselves in a £150k a year job is forced to pay more tax. And Labour want to increase their tax from 45p in the pound to 50p, which would raise around £300 million, providing none of them took avoidance measures (which many would).
Meanwhile, a top footballer who gets paid more than that a week/month (for example, Beckham was on £30 million a year, nearly £600K a week) is then bought and sold for fantasy money to offset tax bills and contributes no tax to the club’s country. People are finding themselves going cold or hungry yet the media has been full of record breaking deals and Sky Sports News even had a chart like a charity telethon of money spent by all the clubs.
It can be argued that the “football business” generates millions worth of GDP, but just how much of that is tax exempt or written off against other expenditures? Or like the comedians who make themselves into businesses then go offshore and pay nothing or next to nothing back to the country which has made them rich in the first place.
A 50% tax on football transfer fees would generate as much income as would Labour’s 50p tax rate. UK General Election 2015 is asking for support of such an idea. UKIP are a libertarian low-tax party and one can guess their position would be against it, but which is better in terms of the “politics of envy” – 50p tax rate on high earners, or a football transfer tax?