ESPN, see here, wrote that the plans of French president Francois Hollande to apply a 75 % tax on those earning above €1 mio. a year will also include the football world even though rumors had mentioned that specific ‘creative industries’ (sports and artists, i.e. singers or actors) would be off the hook in terms of the tax. Hollande told the French television station TF1 that “it’s very important that those who are paid more than €1 million are also aware that it should be an example to be a patriot. We have to call on patriotism at this time.”
Due to capital injections from the Qatar-based owners, Paris Saint-Germain (PSG) has re-established the club’s image as a serious competitor in European competitions. The club has not seen similar success at this stage since its golden period in the 1990s where the club also had a good amount of ‘star player’ quality in its roster. The current amount of star players at PSG, including Zlatan Ibrahimovic, Thiago Silva, Ezequiel Lavezzi, Javier Pastore, Lucas Moura to mention a few, will be affected. Nasser Al-Khelaifi, president of PSG, responded to the issue by saying that “we love France, we respect the regulations, we have no problem with that. We can’t change anything.” Originally, thoughts went in the direction that the new tax would not influence small- or medium-sized companies but would only apply to large companies with 5,000+ employees. Hollande cemented the fact that the tax will affect all companies, which have employees earning more than €1 mio. a year, and that is a big ‘blow’ to the sports world and football in particular when considering the ambitious attempts of top tier French clubs (especially PSG at the moment) to compete in Europe. Simply, this new law may be a negative influence on PSG’s ability to recruit top talents although the Qatar-based owners seem to be willing to invest highly in players.
It is still hard to understand in detail how the new tax works in practice but rumors are that organizations will have to pay a tax, which amounts to approximately 75 % on the share of employees’ salaries above the €1 mio. mark. Although this is supposed to help the country’s economic situation by letting the wealthiest portion of society pay a bigger amount, it will most likely have a negative impact on the French Ligue 1 and top football clubs, which are notoriously known for struggling to balance their finances. This initiative will put them in a tougher situation viewed from a business standpoint taking competitive, financial and other market-related parameters into consideration. French football and PSG have probably already asked the question: ‘what happens to our international competitiveness and the attractive appeal of the league and the club when we lose our best players?’ The iconic sports brand and footballer David Beckham created much hype and buzz when he entered Paris as a PSG-player and communicated that he would donate his salary to charity. For that reason, his ‘employee status’ is not affected by the law, but the question is whether or not he would have landed in Paris without Ancelotti coaching PSG and the presence of other star players (and of course without the Qatar-owners that made this fairytale realistic)? I don’t think so! Let’s say Ibrahimovic (hypothetically) earns €10 mio. a year, then PSG would have to pay €7.5 mio. in tax. Then add up the salaries of all PSG-players above the €1 mio. mark – this is not good news (even for a club with ‘deep pockets’). All in all, it weakens PSG’s, Lyon’s, Marseille’s and other top French clubs’ opportunities to sign top talents and players. The best talents and players are most likely attracted by clubs with a chance to be present in European competitions on a consecutive basis – and not only by that, also by these clubs’ ability to compete successfully at this stage. PSG has positioned itself at this stage in the current UEFA Champions League tournament but the Qatar-owners must pay a higher ‘price to compete’ in the future.