UK arrests at football clubs is hopefully start of genuine change, transparency
Is something finally happening? Are they actually getting off their rear ends?
Clubs in France and England, including West Ham and Newcastle United, newly promoted to the Premier League, woke up this morning to raids from tax authorities. Her Majesty's Revenue and Customs (HMRC) said in a statement that "several" men working in "professional football" have been arrested for suspected tax fraud.
We don't know the details, so there's no point in speculating right now about who and why and what the practical outcome in fines or points penalties. What we do know is that football has a tremendous need for transparency and oversight. And, perhaps more than most industries, it's acutely vulnerable to dishonest behaviour.
This is an industry where assets get traded for cash and many transactions are across borders, raising issues of jurisdiction. It's an industry shrouded in secrecy, from the details of player contracts to the size of transfer fees to the commissions paid out by the agents and intermediaries who make them happen. What's more, the nature of football -- which is, ultimately, a fairly tight-knit community of people who mostly all know each other, at least at the top, and who often have overlapping interests -- is such that the potential for conflict of interest is huge, at every turn.
You have agents who represent both managers -- the guys who decide which players a club should sign and how much to pay them -- and players themselves. By the way, while everyone knows the high-profile cases like that of Jorge Mendes' Gestifute, which represents both Jose Mourinho and David De Gea, for example, there are cases up and down the food chain.
Last year, I got a call from the agent of a manager I'd criticized. The agent, wanting to boast how clean he was, told me "In all the years X has been a manager, I've never taken a single one of my players to his club!" It's a little bit like saying "In all these years when I could have done something that would present a massive conflict of interest, I never did! Aren't I special?"
That just goes to show the extent to which certain practices are common in football.
As the game's top players increasingly generate revenue streams beyond the playing pitch, another favorite revolves around image rights. Incidentally, this is one practice HMRC said they were investigating last December, with 43 players, 12 clubs and eight agents being scrutinized.
Clubs pay players a salary for actually playing the game. In some cases, they make additional payments for the players' "image rights," which is basically the right to commercialise the players' likenesses. Obviously, say, a Manchester United T-shirt with Paul Pogba's face on it will be worth more than one featuring Tim Fosu-Mensah. Payment for these image rights royalties is taxed differently and in some cases, it can be paid to a player via an off-shore company. The problem would arise, hypothetically, if you decided to pay Fosu-Mensah's image rights as much as you pay Pogba's. At that point, you start to wonder whether it's a legitimate deal or whether it's just a way to save yourself money on Fosu-Mensah's salary.
"There have been some cases where we have questioned whether it is possible, for example, [for] a theoretical reserve player who almost nobody will have ever heard of to have received such enormous payments for image rights which seem highly unlikely to us," Jon Thompson, HMRC chief executive told the British parliament last year.
(For the avoidance of doubt, he was not talking about Fosu-Mensah. I used that as a totally hypothetical made-up example.)
The aforementioned inquiry into image rights may or may not be related to this morning's arrests. But the Times of London are reporting that Wednesday's raids are part of a coordinated investigation by French and English tax authorities concerning transfers between English and French clubs, image rights and payments to agents.
If crimes have been committed, then, obviously, the book should be thrown at those involved. You hope that this will also serve as a warning to football itself.
It should not take the might of the tax man to patrol the game. Tax evasion of this sort isn't just a crime, it's cheating. You get players more cheaply and therefore you can sign better players than you could otherwise afford. Because you have better players, you perform better. That means somebody else performs worse and gets relegated or sacked. It's performance-enhancing drugs by another name.
Football keeps hiding behind the blanket of privacy and "competitive advantage" to deny transparency and oversight of the sort that would help stamp this out. Things like FIFA's Transfer Matching System help provide a bit of accountability but it's a drop in the ocean.
The reality is that, when it comes to transfers and compensation, too much of football operates in a murky, Wild West landscape. It's high time for that to change.
Gabriele Marcotti is a Senior Writer for ESPN FC. Follow him on Twitter @Marcotti.