They don’t play:

BUENOS AIRES, Argentina (AP) — Argentina’s tax chief laid out new rules Thursday aimed at reducing tax evasion and money laundering in soccer, the country’s sacred national pastime.

Ricardo Echegaray has made Argentina’s soccer clubs responsible, starting Friday, for putting the profits from player transfers into special bank accounts. Player contracts must be reported along with these profits, and the investors and agents involved must be registered as representing the player. If any of the income or other information they declare doesn’t match, the tax agency will block those responsible from operating within Argentina’s financial system.

Argentina is the world’s top exporter of soccer players, generating hundreds of millions of dollars in profits as thousands of players are transferred from team to team each year. But Echegaray says the players themselves are often cheated by shadowy businessmen hiding their cash, and their clubs are put at a major disadvantage as powerful financial interests control the cash that drives the game.

This is the fruition of the rampant reliance of all parties on third party player ownership, wherein agents, sports management companies, and dodgy investor groups purchase the economic rights to a player and reap the rewards of any potential transfer. It ostensibly benefits Argentinian clubs who may not otherwise be able to compete for the signature of younger star players, but it’s also susceptible to abuse, with transfer monies leaving the country to far and away global interests, who are often concealed.

Earlier this week, Michel Platini reaffirmed his desire to ban third-party ownership outright in Europe:

[Platini] wants to end the third-party ownership of players’ transfer rights but that is being fiercely opposed by agents who contend it would be a disaster for smaller clubs who depend on outside financing to secure big names.

The issue came up repeatedly at a two-day football conference in Dubai with several agents complaining the issue was being mischaracterised in the press and that imposing a ban – which is already in place in France and England – would only serve to further widen the gap between big and small clubs.

Platini would presumably say that the egregious transfer fee inflation permitted by clubs able to spend well in excess of turnover is the disease, and that third-party ownership an unfortunate symptom. Ideally, instead of hoping for a cheap buy from a third party owner, smaller clubs would turn to the old, less flashy method of developing young stars to sell on to bigger clubs in order to help boost their finances, and, with good management, their on-field fortunes.

But whatever, money is money, and the Kia Joorabchians still need to peddle the phony line about helping out the little guy while they rake in money that rightfully belongs both to the player and the clubs they sell to.

Comments (1)

  1. It it very important not to over look the situation within Argentina. While it is easy to turn towards the ‘international’ side of the story, it is the ‘tax-man’ AFIP trying to enforce the law. At the beginning of the season, nearly 20 players in the first division were not allowed to play for several matches because the termination of their contracts was blocked by AFIP. The escalating interest of AFIP in football, in my mind, has more to do with a more broad political-economic situation in the country: wealthy people not paying all of their taxes. The major concern in Argentina is keeping track of the money in the economy, including foreign currency controls, which some Argentinians think are ‘oppressive’, and stricter import-export controls (tariffs and port customs and duties).

    Third-party ownership in Argentina is a major plague in terms of ‘keeping track’ of the money. The most financially successful clubs – Velez and Lanus – have managed to keep contracts within the club, while other major clubs like Independiente, San Lorenzo, River, the list goes on, have major debts from years and years of third-party contracts. The biggest problem from a club’s perspective (if we separate the club from its corrupt political leadership) is that the club is responsible for paying the player but gets none of the benefits of the ‘sell-on’. Contracts, negotiated by these third parties and their representative friends to ensure that they receive a significant cut of the contract, are inflated and very expensive. San Lorenzo in the past year had 50 player contracts on the books, some players from dirty transfers that made representatives and their friends significant money, while the club is stuck as legally responsible for paying the contract.

    Financially, if the system was ‘clean’, Argentinian larger clubs would be able to compete against many middle and lower tier European clubs in terms of contracts and do, despite the problems, have access to decent talent production in the youth structure of Argentine football (helped a lot by the ‘brand’ of Argentine football). The financial benefits of player sales within the Argentine economy could be very significant to the health of the club. Unfortunately, the political control of many clubs is self-interested and manipulative.

    Moving money through player transfers, sheltering it from the Argentinian Tax-Man, and leeching revenues from the major financial resources of clubs are all Argentine problems. One of the biggest tools, however, that AFIP has – not available in other areas – is that the government is now one of the major ‘investors’ into football and AFA through the broadcast of “football para todos”, the live and over the air coverage of all first and second division matches. FPT rescued the first division financially a few years back and is now injecting several hundred million into football (cannot find the exact number at the moment), ensuring that money ends up improving the quality and stability of football in Argentina is of significant political interest of the government but is also a major influence within AFA allowing AFIP to push into the realm of third-party ownership.

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