The headhunter was calling me about a CEO role at a top six Premier League club. He was building his long list of possible candidates. One of the lures was that half the salary would be paid outside the UK in a low tax jurisdiction, ostensibly for services rendered directly to the club’s overseas owners. Smelt off and anyway I didn’t hear from him again.
But then in April this year, Der Spiegel published a list of allegations about Manchester City’s finances which included the suggestion that former manager Roberto Mancini had benefited from what it described as a ‘fictitious consultancy contract’ that was ‘paid without deduction of any taxation.’ Turns out split employment might actually be a ‘thing’ in football after all. Man City was fined €10 million in 2020 for failing to cooperate with UEFA’s investigation into possible breaches of financial fair play regulations. It had previously managed to overturn a European ban.
You can read the Der Spiegel piece here
Put a ceiling on spending in elite sport and you can be sure that it will be tested in the search for success. The scandal at Saracens which effectively led to their relegation in 2020 had ‘off the books’ payments to key players at its heart, thereby circumventing the Premiership salary cap. Last month UEFA fined eight European teams a minimum of €26 million for financial breaches - tokenism by comparison with Sarries’ punishment given football’s far greater wealth.
With rugby clubs financially stressed, carping that the post-covid lowering of the salary cap is making the Premiership uncompetitive in the international market for talent has suddenly dimmed.
The chatter in the paddock at the F1 Grand Prix in Singapore last weekend was of two teams alleged to have broken the sport’s new budget restrictions. This framework has been credited with bringing much-needed financial stability to teams up and down the grid. The media is reporting fingers being pointed at Red Bull for a major breach of the regulations and Aston Minor for a minor one.
The outcome of the FIA’s scrutiny of all ten teams’ books was said to be have been due on 5 October but has been pushed back by at least five days. Sanctions (probably, possibly?) to follow. For now, we have the latest chapter in the Toto Wolff / Christian Horner soap opera.
“We are using used parts. We have made more than 40 people redundant, who are dearly missed. It was a huge mammoth project to make the cap. [Red Bull] have been investigated for weeks and months, so maybe he doesn’t speak to his CFO.” Toto Wolff, Mercedes
“We take umbrage. We believe we are fully compliant. They are bang out of order. People in glass houses shouldn’t throw stones.” Christian Horner, Red Bull
It’s hard to envisage Red Bull being deducted points from last season, so overturning what was already a hugely controversial championship victory for Max Verstappen. And any deduction for this season would likely be irrelevant given how far the Dutch driver is ahead in the race for the title.
The FIA has given itself a headache by taking far too long to comb the figures. Any self-respecting business should be able to hand over a set of unaudited December management accounts by mid February. These would be sufficient for a regulator to start its work, with final verdicts being reached on the back of audited results and announced by, say, the end of May. This would be early enough for any penalty - whether financial or sporting - to have genuine impact on the current season. And if retrospective, to reset the previous year’s outcome while it still lived large in the memory.
As to possible penalties, it would be easy to concoct a meaningful schedule, but far harder to implement given the lengthy and difficult process undertaken to agree the new financial regulations in the first place. My starting suggestion? A current season points deduction equal to the percentage spending overrun in the previous year. So, 10% overspend equals 10% of points won are wiped out in the subsequent year. In addition, a team’s budget for the season after that is reduced $ for $ in line with their previous overspend. Together, quite the disincentive to take a bite of the forbidden apple.
Formula 1 could look to American team sports for reassurance that spending caps can be implemented and policed effectively. Yes, boundaries are tested, but closed-league structures mean that deep down all owners realise that the value of their product does ultimately lie in the collective. The NFL even stipulates a minimum spend on player salaries as well as imposing a cap, to ensure everyone invests to maintain the quality of competition. Major League Baseball ‘taxes’ over-spenders, redistributing some of the proceeds to under-spending franchises. Much harder to achieve budgetary compliance in ‘open’ sports where relegation and promotion are at stake.
No need for Woolf and Horner to dial down their hissy fits and finger jabbing though. So much of F1’s global value lies in such melodrama.
Read more about F1’s finances - including the bias in favour of the wealthiest teams - in this previous edition of Sport inc. Drive to thrive
W for wipe-out?
While on the subject of motorsport, W Series is said to be in financial difficulty. The overall budget for the ten race series for female drivers is far less than that of a single F1 team. It is highly reliant on the backing of its chair Sean Wadsworth, who might possibly be tired of dipping into his pocket while waiting for Liberty Media, F1’s owner, to wake up to the value to be had from splicing the two race series more closely together.
Right now Liberty probably reckons that F1 sells itself each race weekend and doesn’t need to own the women’s races. The clichéd, glamorised imagery used to promote W Series has at times verged on the uncomfortable, but this minor quibble aside, the venture deserves more road.
Feeling shirty
How do you view Denmark’s kits for Qatar 2022, their logos bled into the background colours, including the third black version declared by manufacturer Hummel to be ‘the colour of mourning’? A masterful political statement about the World Cup host’s human rights record, or a cynical marketing exercise? Me, I’m all for it.
If you’re thinking you might fancy darting over to Qatar to catch a match, the FIFA website is showing every fixture as ‘currently unavailable’. Although I’ve always thought stadia would be filled (even by bussing in migrant workers - a trick used for athletics in Qatar), I find it hard to believe that’s true. Denmark’s black shirt would set you back €89.95 online if you fancy taking a punt on last minute ticket availability and making your own show of solidarity in Doha.
A pie and a pint
To the (actual) cottage at Fulham’s Craven Cottage to speak at a conference on the preparation of students for careers in the sports industry. The club’s imposing new stand hanging out over the River Thames still can’t outdo the iconic building in the corner that gives the ground its name. I was especially taken by the cottage’s football-themed stained glass in the doors leading out to the seats. Reminded me of Coronation Street’s Rover Return. Fancy one of Betty’s hotpots with your pre-match pint?