Spanish Inquisition: La Liga, Tax Hikes & The Beckham Law – The Bubble World Of Football

This week confirmed two things to me.

Firstly, and something that has always been understood, and is not really a revelation, is that the world of football is away with the fairies, and completely lives in a fantasy world all of its own. You know the kind of fantasy world I am talking about. One in which if you are a superstar footballer everything is done for you, you are molly coddled to the extreme. A world in which if the government suddenly sees the light and decides to scrap a completely ridiculous tax law, which everyone agrees should go, football clubs throw their arms up in the air and cry that it’s unfair.

The second thing, and please just let me indulge myself with an outrageous stereotype, is that the bravado of the Spanish approach was fully exposed. In the build up to the extraordinary, emergency, high alert, police car-screaming sirens-everywhere meeting that the LFP [Liga de Futbol Profesional] held on Friday, the talk was of a strike.

Real Madrid on strike! Barcelona on strike! Nastic Tarragona on strike, Atletico Madrid on strike. Sorry… did someone say Atletico? Have they actually even started playing yet this season?

As excited as only the media can get, we hitched over to LFP HQ and whipped ourselves up into a frenzy as we waited for the outcome of said meeting. It’s taking forever, which means we are in for one big reaction. “The LFP declares war on the government!!” we wrote and rewrote headlines, each one bolder, braver and wilder than the last “Obama flies in to host peace talks!”

In the end, a limp sounding news conference, hosted by the LFP president and a couple of club supremos, including Florentino Perez, instead announced a commission was to be set up to hold talks with the government.

Flo trying to play saviour again

It’s the bravado of Spain where everyone shouts loudly, threatens the world and then at the final moment walk away. How I longed for a good old fashioned English reaction. You can just picture it. The league clubs are down one end of the pub. The government goes to the other. As the evening wears off, both sets become rowdier, then the slagging match begins:

“Oh yeah and who said you can cut the tax rate?”

“We're the government we can do what we like, It’s an economic crisis and it’s daft that these millionaire foreigners only pay 24% . There should be parity and the people on the street agree with us, so there.”

“Oh yeah? Let’s step outside and sort this out once and for all”

“Go on then… bring it on!”

And everyone heads off outside to sort each other out before the police get to them...

End of stereotype.

The reality is that the reason why clubs are unhappy is because primarily they were not consulted by the government over this decision. And they do have a point.

Although this tax break, known as the “Beckham Law”, was meant mainly for scientists, entrepreneurs and business people, etc.  to help boost Spanish enterprise, in reality it was of greater benefit to sport and mainly football. But clearly a scenario where foreign players pay 23% tax and Spanish nationals 43% is plain daft.

"What have I done?!"

Where the football league has been disingenuous is over their arguments put up against the planned tax change. Putting on a united front, club presidents and chief executives and the governing authorities said they were worried about the long term future of the game. Foreign stars may not want to come to Spain because of the tax rise. We need to protect the future of the Spanish game, we need quality foreigners who can also help develop young Spanish talent coming through the ranks.

Good foreign players will increase the level of the game and that will benefit the Spanish players. To a man they cited the success of the national team since the “Beckham Law”. Spain won the European Championship, Barcelona and Sevilla twice lifting the Champions League and the UEFA Cup in the six years that the law has existed… yes all very impressive.

But here is the flip side. It makes no difference to players at all. When they sign contracts in Spain they talk in salaries after tax. So it means nothing to Franck Ribery if the tax is 0% or 43% and that's because the clubs pay. So if Real Madrid want to buy Ribery and pay him €10 million a year, it now means they have to offer him a much higher salary so when he is taxed at his new 43% he still earns  €10 million a year.

So when the clubs say it will affect the future and players won't want to come, what they are saying is that they don't want to pay the difference in the tax rise which is inevitably what all this means. It’s the reason why the clubs want to strike. This change also doesn't affect everyone. Athletic Bilbao, for instance, operate a Basque-only policy and as such, they have no overseas players. And lower-level clubs such as Xerez for example, and most of the second division sides, would not be able to pay all their players a salary of €600,000 a year, which is the wage threshold where the tax rate rises to 43%.

Talk to the players and by and large they agree with the government. The fans feel the same. The national radio station Cadena SER conducted a vote from its listeners. From a 92% participation in the vote, 88% were in favour of the change.

The commission set up by the LFP will try and wring concessions from the government to balance this out. Two examples being bandied about are to reduce their tax rate for putting on a public event. Football pays more than say bull fighting or theatres and cinemas. The other is to do away with the one free-to-air match shown on terrestrial TV at the weekend. The revenue would increase even further if the Spanish system falls in line with England or Italy, where all live league matches are on pay channels.

The next step is to begin the process of discussion with the government. And clearly a strike is now not going to be an option for the clubs. Both sides, though, are really only interested in one thing: making money. There will be much more jockeying around, many more clever words and arguments to be bandied about, before some sort of compromise will be reached. Personally, I wish they would all just go down to the local bar with players and fans together and just sort it all in a more open and honest way. It would make a truly wonderful change!

Ashish Sharma, Goal.com