Sports Image Rights: Cristiano Ronaldo & Jose Mourino accused of tax evasion!
By Prof Dr Ian Blackshaw
Association Football, Soccer, is not only the world’s favourite sport, but is also its most lucrative one.
According to the 2016 Deloitte Annual Review of Football Finance, which was published in June, 2016, Soccer is reputed to be worth €22 billion in Europe and is expected to exceed €25 billion in the 2016/2017 season.
Football players and managers earn more off the field of play than on it through the commercial exploitation of their image rights and also extremely valuable endorsement deals. In fact, according to the 2016 Forbes' world’s highest paid athletes’ list, Cristiano Ronaldo, the Real Madrid forward, came out on top with total earnings of US$88 million, of which US$32 million was attributable to endorsements and image rights deals.
Several European newspapers have accused Cristiano Ronaldo and Jose Mourinho, the Manchester United FC Manager, of tax avoidance of millions of pounds sterling derived from the sale of their image rights, based on revelations made by ‘Football Leaks’. Ronaldo is alleged to have ‘hidden’ £125 million in tax havens in Switzerland and the British Virgin Islands. As regards ‘the special one, Mourinho, he is alleged to have hidden more than £10 million in tax havens. Both have been accused of ‘aggressive tax avoidance’.
Of course, tax avoidance, where tax payers arrange their financial affairs in such a way as to legitimately reduce their tax burden, is perfectly legal; whereas tax evasion, where assets that should bear tax are hidden from the tax authorities, is not and, in fact, is a criminal offence that may involve a custodial sentence. The use of off-shore image rights companies in low or no tax jurisdictions to avoid or reduce tax is a practice that has been recognised as perfectly legitimate since the English Sports Club tax appeal case in 2000, which involved two former Arsenal players, Dennis Bergkamp and David Platt.
Both Ronaldo and Mourinho have denied any wrongdoing, claiming that their tax affairs are quite legitimate and in order!
It will be interesting to see how this high profile affair finally works out for the ‘accused’!