Ligue 1: How Controversial French Tax Plans Could Halt the League's Growth
When Socialist party leader François Hollande was elected President of France in May 2012, he was supported based on a number of promises.
Perhaps the most drastic of these was a tax on the "super rich." All annual earnings above €1 million per year would be taxed at 75 percent in order to help steer the country clear of recession amid a global economic crisis.
For the average Frenchman, it is a sound austerity measure. The "super rich," after all, earn that title because they can afford to take a financial hit, particularly if it's for the good of the country.
Yet Hollande has struggled to implement the controversial tax, with France's highest court deeming it "unconstitutional" last year. The President now has the worst popularity rating of any French leader since 1981, with the backing of a paltry 27 percent of voters.
There are many reasons for Hollande's lack of popularity, but chief among them could be the fact that there are millions of football fans in France, and his 75 percent tax would cripple the growth of Ligue 1.
The French top flight has seen steady growth throughout over the past 10 years. In 2006-07, overall revenue in the league was at around €830 million. According to a 2012 Deloitte report, this grew to over €1 billion in 2010-11, putting them not far behind Europe's other four major leagues.
That figure will certainly be higher today, with the positive financial effect and trickle-down revenues of Paris Saint-Germain's Qatari takeover in 2012.
Les Parisiens' spending spree and accumulation of world-class players has brought a global audience to a league that previously had little reach outside of French borders. Al Jazeera have injected €500 million into Ligue 1 coffers with a four-season television rights deal, and they now showcase the league to potential new fans around the world on their beIN Sport channel.
Yet all this positive growth could be stunted if Hollande's tax plan is put into action.
Zlatan Ibrahimovic, for example, earns €14 million annually. With the "super rich" tax, at least €9.75 of that figure would be instantly removed from his salary, with a lower tax band applying to the first million Euros.
To keep Zlatan on a net salary that is competitive with one he could find in the rest of Europe, PSG would need to give him an absurd gross salary. This would wreck their pay structures and potentially cause havoc in light of the new FIFA Financial Fair Play (FFP) rules that are set to be introduced next season.
How ironic that the FFP rules designed to level the playing field could actually be very unfair for France's top flight clubs.
Only around 3,000 of France's 65 million residents are set to be affected by the 75 percent tax legislation, but that group includes approximately 120-150 footballers. That's around a quarter of Ligue 1's players.
Clearly, it's not just PSG's box office cast that will be damaged by the tax proposal. Even Monaco, who have long benefited from favourable tax laws, are being forced by the French Football League (LFP) to set up financial residence in France, putting them under the same potential 75 percent restriction. Rumors of the Ligue 2 side employing Roberto Mancini and giving him a huge transfer kitty would certainly be quashed.
Elsewhere in Europe, high-earning Ligue 1 players could expect to have their salaries subject to tax rates between 50 and 60 percent. In the austere UK, for example, a rate of 45 percent will be applied to annual earnings over £150,000 from next month (on top of National Insurance contributions) which is a 5 percent drop in the highest tax band. It's no wonder that so many forward thinkers from France have joined Newcastle this season!
There has been talk of lowering the proposed French rate from 75 percent to 60 percent, but LFP president Frederic Thiriez believes this is not enough, and plenty of top players have already expressed concern over the news. He is quoted by ESPNFC:
Of course the players would prefer to be taxed at 60% rather than 75%, it's mathematics. But it won't be key in keeping players. The best ones will still leave. The 75 percent tax rate, a lot of players have talked about it, because it was in the news. A small, possible reduction isn't going to reassure them.
For now, the "super rich" tax continues to be bandied around French parliament and the court system. But if it is imposed—and no exception is made for footballers—it could be the death knell for a league that is getting stronger every season.
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