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EPL Image Rights Payments Back In Focus Following Report Regarding José Mourinho

A report that ManU Manager José Mourinho channeled £10M ($12.67M) into an "opaque offshore trust" has dragged the "sensitive subject of image rights payments by Premier League clubs back into the spotlight," according to Ahmed & Houlder of the FINANCIAL TIMES. U.K. tax authority HMRC, which has been "urged to launch an investigation" into Mourinho’s tax affairs, has already said that it will "review its deal with the Premier League at the end of this football season over how much money clubs can pay their stars" for their "image rights." The clubs argue that "large payments for using their players in sponsorship and marketing deals" are part of modern football. Collectively, the 20 clubs in the Premier League earned nearly £1B in commercial deals in the '14-15 season, according to Deloitte. Accounting firm Saffery Champness partner Peter Hackleton said, "Manchester [United] has 80 commercial partners involving products ranging from wine to training kits. They need to have access to the players." In one example of how much money can be allocated for image rights, it emerged in '10 that Wayne Rooney earned £760,000 a year for his rights. But HMRC has "questioned many of the deals, under which money is paid to the companies holding the rights, rather than directly to the players or managers." For U.K. players, an image rights contract "could mean big savings on national insurance contributions for both the individual and the club," with a further deferral of income tax for the player. But for foreign players, "the savings could be much bigger as part of the payments could be made offshore." For the past three years, half of the Premier League has signed up to a deal with HMRC "that they will only pay" a maximum of 20% of a player's income in an image rights deal. Football agent Jon Smith, the author of "The Deal: Inside the World of a Super Agent," said, "Clubs are not madly keen on doing anything other than paying the salary in a straight line. But they recognize that -- to get the greatest talent in the world -- they have to do these things." Smith said that "savvy players actively pushed their agents" to maximize their net -- or post-tax -- incomes. He said, "A new word came into being in the 90s with players: 'netto'" (FT, 12/6).

RONALDO TO FACE CHARGES?: ESPN.com's Dermot Corrigan reported the president of the union at Spain's tax authority said that he expects Real Madrid forward Cristiano Ronaldo to face charges in court over his financial arrangements, "just as Lionel Messi had in the summer." A group of European media outlets reported that Ronaldo has directed at least €150M ($161M) in income through the British Virgin Islands tax haven since '09, and that the Spanish tax authorities "have been investigating his affairs for 12 months already." The reports have also accused Mourinho and "a number of other high-profile football figures." Both Ronaldo and Mourinho are represented by Jorge Mendes' agency, Gestifute, "which has strongly denied any wrongdoing and said all of its clients are fully compliant with their tax obligations." The Gestha union, "which represents lower-level workers at the tax authority," released a statement saying the ongoing investigation into Ronaldo "had showed evidence" of serious tax offenses that could merit a "prison sentence." Gestha President Carlos Cruzado was later asked if Ronaldo would follow Messi in ending up in front of a judge to face tax fraud charges. Cruzado: "That is what you would expect" (ESPN.com, 12/6).

MORE FROM MADRID: MARCA reported following the recent revelations concerning Ronaldo, Mourinho and Mesut Ozil, the Football Leaks scandal has "uncovered another Real Madrid player" who has reportedly misappropriated image rights payments -- Luka Modric. Since joining Los Blancos, the Croatian has "used a company in Luxembourg with his wife, Vanja, named as manager and his son, Ivano, also named in order to protect income from that particular revenue stream." It is believed that Modric "moved the monies to the central European country to enjoy its low taxation" (MARCA, 12/6).

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