Spanish Tax ruling may ultimately play into the Premier League’s hands

The current negotiations between Eric Abidal and Barcelona over a new contract for the defender should be enough evidence to suggest the ‘haven’ of Spanish football is no longer safe. Spain’s decision to hike up the income tax to 52% could be further detrimental to a league so troubled on the financial front, and could heavily damaged the appeal of playing in one of Europe’s top leagues.

The “Beckham Law” has given La Liga incredible leverage with which to persuade footballers that their futures lie in Spain; allowing foreign players in the top tax bracket to only pay 23% tax, less than half of what players in England would pay at 50%. Not only did it allow players’ income to be greatly increased, it also meant Spanish clubs did not necessarily have to increase a player’s wages from what he was receiving at his previous foreign club.

But now with the new tax laws coming into effect, it will greatly disrupt clubs on both the financial front and in their ability to retain or entice players to join the Spanish league. But how greatly will we see the effects of this? With a more level playing field in terms of tax compared to England, for example, Spain not longer hold a greater hand, therefore allowing the Premier League another added bonus on top of the other incentives it holds.

There has already been financial trouble in Spain this season: the opening weekend of the league season was postponed for the players’ strike due to unpaid wages totalling 50 million euros for both the first and second divisions. What this means now is that clubs are going to have to re-negotiate player contracts in order to subsidise the tax increase. While not all players in Europe or leagues around the world are of high enough quality to play for Barcelona and Real Madrid—who evidently will also feel the effects of the tax increase despite their significantly greater revenue—teams such as Sevilla or Villarreal are going to find themselves even further away from the top of the league table. Not being able to pay wages as it is—as has been the case for Villarreal in recent months—means eventually there will be a smaller market of talent to attract. The El Madrigal side are already seeking to offload striker Nilmar in order to pay the wages of the other players; something that highlights how clubs in Spain are regressing and unable to compete for long spells at the top of the table. Another example is Mallorca, who have in recent years just missed out on Champions League qualification but who are also in financial dire straits. The club finished last year in 17th place, avoiding relegation; but a huge drop from their fifth placed position a year earlier.

Not only does the increase in tax affect players’ pay packets, but why would footballers want to play in a league where the financial and competitive disparity is so great, and will only continue to grow? Arsene Wenger said a few seasons ago, “I can’t see anyone with a competitive edge wanting to go to Spain. They have two good teams, but the third placed team is 21pts behind. It’s a league that is in complete disarray, and if you are competitive you stay in England.” Of course, Wenger was talking indirectly to Cesc Fabregas, who the club managed to hold onto in the summer of 2010. But why should what he has to say only be limited to Fabregas? However, players may have other reasons for wanting to join La Liga from the Premier League: the physicality is greatly reduced and players such as Cristiano Ronaldo have been kicked off and then back onto the pitch since they arrived in England. That incentive was greatly heightened by the significant drop in taxes the players would pay.

But now what happens to La Liga?

I don’t believe there will be a huge swing in the number of the world’s best players wanting to play in La Liga, or even remaining there in the future. The fact is, Barcelona and Real Madrid are reason enough to want to go to Spain, and almost every top player in the world who has ambitions beyond their current standing will want to pull on either of the famous shirts. But what we are likely to see are the clubs below the top two struggle. It may open up to a much more unpredictable league, whereby clubs spend heavily to hold on to their stars or attract big names through the increase in wages, but end up paying for it a few years later. For a league in so much trouble already, the tax increase appears to do nothing but harm a league desperately trying to find its feet.

Article title: Spanish Tax ruling may ultimately play into the Premier League’s hands

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