The SPL yesterday released a statement concerning the Employee Benefit Trust payment Celtic made in 2005 to Juninho, in response to what sounded like unfounded allegations made earlier this week.
The league noted, “we have seen reports regarding an EBT in relation to a former player of Celtic FC. The SPL has investigated the arrangements and documentation in that case and has determined that there is no evidence of any breach of SPL Rules”.
Many good employers have understood the benefit of assisting individual members of staff during times of crisis or personal hardship. One very practical way of doing this is to lend them money, which happens in businesses up and down the country every day. When the nature of these transactions involve either a company of sufficient size, a lengthy repayment period, or a high value loan, a formal structure is needed to establish the terms of the transaction, not only for the benefit of employer and employee, but also for the tax authorities – who authorise tax-free payments of this kind.
These tax rules were not established to allow wealthy individuals to escape their social duty.
Not long after Rangers first operated an Employee Benefit Trust Celtic were approached and offered consultancy to establish a similar scheme. The promised benefits were huge, vast quantities of cash would no longer go to HMRC and would be freed up to spend on new players.
Celtic were not convinced.
Loans would need to be repaid and if not, contractually binding transactions would need to be documented in accordance with SPL and SFA rules, and this very documentation would make them liable for tax. For Celtic, EBTs could only be used in limited circumstances, would be unable to deliver a significant impact on the business, and would introduce a further layer of professional costs.
“How can these work?” That was the question. How on earth can a club pay millions of pounds into a Trust none of which is contractual? Players, and their agents, like to have things written down. If you write it down and inform the authorities, you’re taxed on it. Celtic were not prepared to enter any written agreement and not declare it to their auditors, HMRC or the football authorities.
What was the cost of this principled stance?
In season 2004-05 former World Cup winner, Juninho, arrived at Celtic from Middlesbrough on a straightforward contract, his only contract with the club, which was correctly registered with the football authorities. He only lasted eight months before agreeing to terminate his deal. Celtic made a payment of around £750k into an EBT the player had from before his time at the club.
Celtic informed HMRC of the details of their EBT transaction with Juninho and were told this was regarded as income, not a loan, and that they would need to pay tax. Celtic then paid tax due on top of the £750k which went to Juninho. It was a pointless and expensive exercise for Celtic, but they dealt with it honestly and openly.
The club’s understandings of EBTs from five years earlier were confirmed, this was not a way to avoid taxation by filtering part of a player’s income away from PAYE. Board members of any other club which understood how to make this work were clearly a lot smarter than our guys. They were also able to buy players and win leagues while our board were hammered daily for their prudent values.
I bet directors at that other club are sounding pretty contrite now, humbled by the emerging news. There will be no self-serving vainglorious rabble rousing.
Far from Celtic being subject to criticism on this matter, scrutiny of their actions will only reveal the stark cost of following the rules when others don’t.
Congratulations to the campaigners who for 23 years sought Justice for the 96. We all watch the game in a safer environment because of the loss endured by the families bereaved at Hillsborough. Yesterday’s report condemns the actions of many: some senior police officers, sections of the media, one or two of who should never work in the industry again, and a former MP, whose actions were truly appalling, and who remains a knight of the realm, but those running the game, those responsible for Health and Safety standards, and various governments have a responsibility to bear.
Dangerous crushing inside and outside football grounds was a fact of life in the 1980s, including at the Janefield St entrance to Celtic Park.
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theweegreenman
Right now, it is two warships and the marines on their way to Tripoli.
Good Article about La Liga.
No tenemos dinero… Beneath the glamour Spanish football is going broke
by Kane Prior
Spain is currently in recession and facing an uncertain future. A decline in GDP last quarter of 1% follows an expected annual decrease this year of 1.6%. Spain isn’t doing as bad as Italy (who is expected to decline by 2.1%) and is nowhere near Greece’s level (who is set to decline for the 5th consecutive year) but fall much further in other measurements.
Unemployment in Spain is incredibly high, with nearly a quarter of the population out of work (surpassing even Greece) while their government boasts a budget deficit of 6.6% of GDP and has little hopes of bringing it back down to controllable levels.
The icing on the top is that long term government bonds (a nice way of measuring how secure the markets believe a country is) have had interest rates at around 7% for the last few months, the same level that caused Portugal, Ireland and Greece to accept bailouts from the rest of Europe as they couldn’t afford to borrow money with such high interest rates.
This is why many now predict Spain to become the next country to need a bailout. But what does that mean for their much lauded football league, one of the country’s most lucrative industries?
For the top two clubs, Real Madrid and Barcelona, arguably nothing. These two giants can boast the biggest revenues in the footballing world, with both earning more than €450 million in the 2010/11 season. More than ever the rest of the league has become a distraction for them, as they win by ever increasing margins and the title repeatedly ends up being decided by “el Clasicos”.
Their financial strength can be shown in Barcelona recently wrapping up a record breaking shirt-sponsorship deal and Real Madrid planning a $1billion dollar holiday resort in the United Arab Emirates, although Barça’s overall net debt still stands at over €300m.
Below Barça/Real, trouble
For the rest of the league cracks are starting to appear. Just a year ago, nearly half of the clubs in La Liga were still without shirt sponsors when starting the season, after companies entered offers way below the value of previous year’s deals.
Then there is the uneven TV revenue distribution which see’s the top two take the lion share of the revenue, leaving little room for change in the league. For example third place Valencia was estimated to earn less from TV revenue than an English club battling relegation from the Premier League last season, a sad state of affairs.
The debt levels in the league are too high as well; with overall debt totalling around €3.5 billion for the last 4 years (the highest of all the top European football leagues) while Spanish football debt coverage is the only level below 50% in the major leagues.
This has seen clubs like Valencia have to sell off its star players (David Villa, David Silva etc) just to lower uncontrollable debts of €382 million in 2010/11. This isn’t a one-off either; Malaga have shown the speed a club can go from riches to rags as they were forced into selling their star player – Santi Cazorla, after a cash crisis enveloped the club.
Other clubs don’t have the luxury of selling off expensive players, with Real Zaragoza, Real Betis and Racing Santander all entering the dreaded administration in the recent past. While Villarreal are also showing the economic effects of living beyond their means (with debt coverage at 22% during the height of their success), years of overachievement has seen the club collapse into relegation and have its financial future questioned.
More recently it has emerged that Spanish football clubs owe the government €752 million in unpaid taxes, with Atletico Madrid the worst offenders: €155 million in unpaid taxes. This has seen the national government and league governing body announce new rules to fix this mess, where over a quarter of club’s TV revenues could be set aside for unpaid tax payments. UEFA is also looking at witholding Atletico’s European prize money for failure to fulfil financial commitments.
This all has an effect on the clubs in question; net spending in La Liga this summer was down 70% on last season – €116m spent in total according to El Confidencial – 55% of which was covered in the transfer of three players (Alex Song, Jordi Alba and Luka Modric) alone.
No money more problems
The debt problem reflects the big economic problem in Spain, as collectively the nation spent far beyond its means for years without thought for the future. In fact while other countries like Greece can blame their government for handicapping their economy with uncontrollable debts, Spain actually had a budget surplus pre-crisis and still only has a public debt to GDP ratio of around 60%, lower than Germany’s.
Spain’s debt problems stem from private debt, as consumers and companies overspent (fuelled by a property boom) and left the country in debt to foreigners. Private debt alongside public debt accounts for 92% of GDP, among the highest in Europe and a major reason why the country may now need a bailout. A bailout would leave the country cut off from the international markets and under fiscal control from the likes of Germany and Central Europe.
Looking further down the road, if Spain were to need a bailout, it could result in a break-up of the EU. This would have wide-ranging consequences for Spanish football. Spain could require a new currency. Changes in visa laws and exchange rates would adversely affect players and employees. And changes in movement of labour and transfer dealings between clubs would alter dramatically.
Finally, if any potential EU break-up did prove messy, it could result in some clubs going out of business if they are forced by the government to pay their debts too quickly or experience a vast decline in revenue.
As extreme as that sounds, it is certainly a possibility. This sort of uncertainty can only harm Spanish clubs, as any serious investment is kept on ice until clubs can guarantee their futures.
Spanish football is currently experiencing both highs and lows, with the success of the national team and its two biggest clubs glossing over both the financial cracks in the system and the ongoing economic crisis faced by the whole country.
All hope is not lost though; UEFA’s Financial Fair Play rules and increased regulation by the Spanish football governing body could improve the finances of the country’s football clubs, while a more unified Europe is currently just as feasible as any Europe-wide break up. All it takes is a bit of acción!
St Johnstone cancel training today after 7 players were sent home ill
CharlieAdams..,
good mhan
‘Apostophe abuse is like a new s’igning’. Mark Hatele’y.
HH!!
ApostRophe even!
Jeez oh!
HH!!
TET,
I dont think they are the same person, there are subtle differences in their politics, but generally they are all fascists
Another fine article Paul. We have so much to thank the culture of – dare I say it – presbyterian rectitude, fostered by Fergus and Brian Quinn!
96YNWA.
This mob are absolute roasters! He has ‘pledged’ to stay for 5 years. lol!
Rangers have moved to clarify confusion surrounding youngster Barrie McKay’s future at the club.
It was widely reported earlier this week that the 17-year-old had signed a new five-year deal with the Ibrox side, however Scottish Football Association rules states that the registration of a player under the age of 18 cannot exceed three years.
Rangers claim they were aware of the ruling and say McKay has “pledged” his future for five years.
A statement from the club read: “The club can confirm it has agreed a long-term contract with Barrie McKay.
“Reports in the press suggested the SFA would reject McKay’s five-year deal as rules prevent players under the age of 18 from signing a contract of that length.
“For the avoidance of doubt, the club is well aware of the rule and at no time confirmed Barrie had signed a five-year contract.
“Barrie has pledged his future to Rangers for the next five years – as stated on the Rangers website on Tuesday evening.”
Asonofdan
They will not be missed. Last I heard the Americans had 3 aircraft carrier groups around the Suez.
Getting really worried about the ME. The people there have suffered so much in recent years.
My Dear,Dear Friends….
‘theweegreenman’……..
And ‘theweegreenfaerie’
My Profoundest Apologies…!
Might I Enquire As To Whether Your ‘Darby & Joan’ Luncheon….
Is An ‘EXCLUSIVE EVENT..?”
Or Could Bold Canamalar & Saint Julian..
Just Trundle Up…..Oan ‘Spec…?
(ThumbsUp?)
Tada! All changed. My apologies to anyone who was annoyed at my username, to me it was always just a song that took the mickey out of a hun.
Paul 67 –
I’m sure, ahem … Scotland’s Sports Journalist of the Year could have put everybody at ease over the details of the Juninho EBT.
Someone of that standing would surely have investigated the matter for the benefit of his reader.
canamalar
???
The Bhoy Blunder,
thought it was funny as a novelty the first time I heard it, but the novelty wore off and it became offensive, poor lassie IMO
your action proves to me your no a hun
hail hail
‘No case to answer’
Read it and weep stupid huns.
Michael Diamond @mpdiamond7
Looks like Barcelona are pricing #Celtic tickets higher than Benfica and Spartak. Must love the Celtic brand! :-P http://pic.twitter.com/DMBl5nHA
TET,
email you sent :o)
canamalar
Now I got you.
Slow this morning, went for a haircut, decided to have a shave as well, pure magic so it was, hot towels the lot, nearly fell asleep, still sleeping it seems :>)
All for 11 euros.
Kilbowie Kelt:
http://www.youtube.com/watch?v=1dPDO3Tfab0
“Desiderata” by Max Ehrmann WITH Barbers “Adagio for Strings”.
Marriage made in heaven- and who says Americans don’t do culture?
nae problem samson :o)
My wee greenpeople..
Ooops!
Posted my last submission before noticing your 12:32 submission…
Blushin’ Noo….!
Away Oot Tae See A Man Aboot A Dug..
Afternoon CQN,
So the SPL investigated the Juninho arrangements and found nothing untoward.
So i take it from the silence over the darkside’s contract arrangements that there WILL be a case to answer!
Surely if they can make a statement about one and not the other, it just must be a matter of determining how many were involved and for how long?
Too simplistic?
Tic tock!
Booker T
Absolutely – note the announcement earlier this week that the meetings this week were not to discuss the merits of the case but rather to deal with procedural matters.
The evidence is stacked up, they might as well put them out their misery.
HH
booker t
12:55 on 13 September, 2012
Correct. ……. They’ve got it coming to them …….. Wattie must be sweatie
…. in his cardie
I can remember the excitement I felt at Phil Mac’s first tweets and articles about the huns not having registered players properly and the real possibility of titles being stripped.
pearlanddeancsc
TSD
I can confirm that theweegreenman and I are man and wife and we’re Celtic daft. Our secret’s out!
HH
traditionalist88,67heaven,
The statement yesterday said far more about them than it did us.
Not one journo drafting an article to that effect!
Lazy in the extreme.
TICK
TOCK
TICK
Just been informed, via text, that the DR in one of their ‘articles’ today have referred to the Bummer as a ‘Rangers’ great’!!!!!!!
HH!!
Just picking myself up off the floor CSC.
Paul67
You mention the shocking behaviour of a former MP and still knight of the realm in your article.
There seems to an inference their that perhaps his title should be stripped like Blunf and Goodwin.
Surely that cannot be done. The title is his to own and sell as he wishes. You cannot start stripping titles off peepil where will it all end?
I’m away now, the even weer {is that the right spelling?} green man wants the computer for games, but i’ll be back tomorrow.
HH
Has Ogilvie resigned yet?
“When I use a word,” Charles Green said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
Lewis Carroll ‘Ally’s in Hunderland.’
Paul67
Good article and thanks for (again) clarifying this (how many times is that now!?). Copied to a word doc for future reference!
The Bhoy Blunder
12:44 on 13 September, 2012
Tada! All changed. My apologies to anyone who was annoyed at my username, to me it was always just a song that took the mickey out of a hun.
____________________________
A good change.
Your previous user-name did not do what you suggest above.
The insult was to the guy’s sister, who was only guilty of choosing badly in her private life.
Few of us are in a position to fault her for that.
Not me, for sure.
Good luck.
______________________
Wonkyradar,
Lovely setting to a special poem.
Thanks.
Yesterday I read interesting article on Russian website on Rangers in Fourth Division.
This EBT funds and them is misunderstanding.
One of the photos on the website reveals that EBT must stand for Extraterrestrial Blue Traveler. If you check the trunk you will know it has not much to do with funds.
http://fans-edge.info/wp-content/uploads/object_54.1347239405.42141.jpg