By Tony Attwood
Atlético Madrid recently beat Chelsea 4-1 in the European Super Cup. Unfortunately Atlético Madrid made a tiny error. They forgot to pay their bit of the tax bill owed by Spanish clubs to the Spanish government.
It seems that in Spain not paying tax if you are a football club is, well, just what you do. A Spanish Practice, as we used to say in the old days. Now that cute little habit means that Spanish football clubs owe the Spanish government €1,350,000,000 (that is 1.35 billion) in tax. And government want it back. With interest.
The European Super Cup holders haven’t coughed up, so now they are paying (according to El País), 4.5% interest, which in their case means €15 million a year.
Now most of the time we focus on the issue of the losses that Man City and Chelsea make when it comes to Financial Fair Play, but not paying your debts is also a crime. In fact I think Portsmouth got rumbled for this in April 2010 when they would have qualified to play in Europe after reaching the FA Cup Final. A joint statement from the FA and Premier League said at the time: “The FA and Premier League have confirmed to the administrators of Portsmouth Football Club that they shall not consider any late application for granting of a UEFA Club Licence for the 2010-11 season.”
In the Madrid case the statement read: “The [Uefa] Club Financial Control Body’s investigatory chamber has identified that important overdue payables towards other clubs, and/or towards employees or social/tax authorities existed in 23 cases. 23 clubs involved in 2012/13 Uefa club competitions have seen the payment of their prize money temporarily withheld pending further investigation. This measure will remain in force until all identified balances have been settled in full or until a final decision by the CFCB adjudicatory chamber is taken.”
But that might not be all for Atlético for elsewhere the Spanish press have said that they have failed to pay the instalments due on the transfer of Falcao from Porto. There is talk of Atlético selling the player on to raise the money to clear the debts.
Málaga, who I have written about so many times of late, also has debts, as they did not sell off enough players in the summer to clear the problems created by the sudden lack of interest in the club by Qatar. Although quite surprisinly they have had a good start to the new season and are fourth in the Spanish league. So they too are having their Uefa money withheld.
Many of the clubs on the list are not particularly well known, but tucked among the various Bosnian, Croatian, Romanian and Serbian clubs we also find Sporting Lisbon and Rubin Kazan.
So the next step is that the clubs have until the end of this month to give Uefa an update.
Withholding money from Uefa is of course the smallest of penalties – nothing like refusing to allow a club into the Europa or Champions Leagues. But given that these clubs are seriously in debt it will hit them much harder than it would ever hit a club like Chelsea and it is more than likely that some of them simply won’t be able to pay the debts as they have been living in debt for such a long time. This is especially true in Spain where the banks have seized up, and the local authorities are themselves trying to solve their debt problems.
But there is a significance here, for the fact is that the main problem for these clubs are the debts owed to government – and if you think of the central problem that tends to bring down English clubs it is the failure to pay VAT and PAYE. Ludicrously, in my view, the FA and Premier League cling to the rule that says if “football debts” are paid out everything is fine. Uefa is saying, no it isn’t.
Of course Uefa isn’t going to hurt the average lower league club that has been into administration several times. And remember Southampton of the Premier League were in administration as recently as April 2009. With the banks less and less willing to fund local teams because of the bad image such a removal of funding brings, some clubs really are struggling to find places to borrow money.
This is not the tidal wave that will sweep away all financial foul play but it is a very positive step in the right direction.