Sunday, 19 May 2013

The Monaco-France football tax spat mirrors France's dilemma for the future

Monaco football club stadium
Sport often mirrors society in general and it is doing so again in the form of AS Monaco football club's tax spat with French football authorities. The club, which has been playing in the French league for almost 100 years, is taking legal action against them in the French State Council because of a long-running battle over the principality's status as a tax haven, which allows them to attract world-class players and management with the offer of tax-free salaries. The decision to do so was taken after other French league clubs threatened to block the club's entry to the country's Premier League next year, and the French Football Association made matters worse by suggesting that Monaco pay €200 million in tax and move their headquarters to France to be able to continue playing in France. That was the straw that broke the camel's back as far as Monaco were concerned.

Monaco says that these moves breach European law and that they break a 50-year-old tax convention between France and Monaco, and the French say that the current status quo gives Monaco an unfair advantage.

There are grounds for these French fears of course. The French government under Fran├žois Hollande has slapped substantial taxes on club profits and players' salaries, and this is sure to lead to an exodus of some of the league's better players to more generous clubs in countries such as Britain, Spain, Germany and Italy. Monaco does not have these problems however, because the club is now overseen by Dmitry Rybolovlev, a Russian billionaire who has big spending ambitions and has recently shown an interest in a long list of top players and managers in other countries.

The result of this is that AS Monaco is one of just two clubs in France with major buying power and big European ambitions, the other being Qatari-backed Paris Saint-Germain, the club which managed to lure David Beckham to finish his career with them. PSG unsurprisingly won the French championship with the help of several major signings, and the fear of all the other cash-strapped clubs is that French football shall be no more than a two-horse race next season.

That's how things stand, so be it, but all this begs a much wider question, that of how Hollande and his government can possibly reconcile their current economic policies with success in a country where 'business' and 'money' are dirty words. France has taxed business and the rich very hard since Hollande came to power, there have been threats to nationalise companies, and many prominent (and rich) personalities have left the country for tax reasons. The same goes for some companies and for senior highly-paid personnel, who have been relocated abroad. The result is that foreign investors are wary and that business confidence is at an all-time low.

The France-Monaco row has shone a harsh and analogous spotlight of reality on some crucial choices facing France. If French industry and foreign businesses in France are to invest in order to grow and succeed in international markets they need to be given the chance to do so instead of being trussed up in a fiscal straightjacket, and the same goes for its football clubs, which are of a lower standard than their European counterparts. If they are to be successful and attract investment and the public they too need more help, not hindrance.

This episode shows that if France and its people, like its football clubs, want to remain competitive and be successful, the country will have to change its way of doing things. The alternative, of course, is to accept the country's decline.

Ultimately, France and French football will be forced to choose, because the country can't continue to have its cake and eat it. Either France wants to succeed in a world which is much bigger than it is and which imposes its rules, or it doesn't.

In which case it shall be obliged to resign itself to ever-increasing mediocrity both on, and off, the football pitch.

1 comment:

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