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Volume 10 No. 23


Premier League clubs made more than £150M profit last year yet paid less than £3M in corporation tax "for an effective tax rate of 2%," according to Paul Gallagher of the London INDEPENDENT. What is "equally startling" is that a profit of £150M made by eight clubs is "all that the Premier League has to show for a turnover of about £2.2B a year." Five clubs, including ManU, Newcastle United and Tottenham Hotspur, paid no tax at all "despite a combined surplus of more than £70M." Blackpool, relegated from the Premier League last year, paid more than £100,000 on profits of £21M  -- a rate of 0.5%. The club "was able to pay minimal tax on its substantial profits because of the effects" of a £6.7M loss the year before. The club also donated more than £5,000 to charities. Of the other profitable elite clubs, Arsenal "had the biggest potential tax bill" -- £7M on group profits of £36.6M -- but paid less than £500,000 while deferring more than £6M. West Bromwich Albion topped the company tax table, paying £1.8M on £18.9M profits. U.K. political party Liberal Democrats Deputy Leader Simon Hughes said: "Whatever the accounts of these clubs say, everyone knows that the Premier League is awash with money. This and many other examples that have emerged over recent months demonstrate that the government should conduct a serious review of our corporate tax regime." The Labour MP and former Sports Minister Gerry Sutcliffe said: "Even though this isn't illegal, it's not right. I will be raising this issue with the Culture, Media and Sport Select Committee this week, as a matter of urgency" (INDEPENDENT, 12/2).

England and the New Zealand All Blacks rugby went head-to-head at Twickenham on Saturday, but their commercial teams will be waging a battle "just as intense and at times controversial: the fight to bring more money into rugby," according to Roger Blitz of the FINANCIAL TIMES. With an eye on the 2015 World Cup in England, the Rugby Football Union has "embarked on a sweeping modernisation of Twickenham stadium, added new sponsors and looked at new ways of growing merchandising revenues." The New Zealand Rugby Union has also "stepped up its commercial operations." In October, it announced a five-year deal worth about £5M ($8M) a year with insurance company AIG that puts its logo on the "hallowed All Black strip." Some feel this is "tantamount to selling the soul of rugby’s most feared and venerable team." The RFU has also "taken plenty of flak" after forsaking England’s traditional white strip for a purple outfit against Australia last month. Commercialism "is not a straightforward sell" in the rugby world, where "traditions are strong and values cherished." Both unions are "aware of the perils of alienating their core audiences while trying to engage new ones." RFU Chief Commercial Officer Sophie Goldschmidt said, “The balance is very important to us." NZRU CEO Steve Tew said, “Most people sat back and looked at the AIG deal in context. They know we can’t remain competitive and build the game unless you’re driving some revenue” (FINANCIAL TIMES, 11/30).

Six major Chinese sports brands are offering discounts of up to 80% off original retail prices "in a desperate attempt to unload excess inventory," according to WANT CHINA TIMES. The clearance sales mainly stem from "excess inventory built up since the Beijing Olympics in '08." In the first half of the year, 42 Chinese clothing enterprises collectively held inventory amounting to 48.3B yuan ($7.8B), of which 3.72B yuan ($597M) "comes from top domestic brands" such as Li Ning, Anta, 361 Degrees, Peak Sports Products and Xtep. To clear stock, Li Ning has held numerous sales since last July, selling products at 60%-70% off the original price for 10 consecutive days in first-tier Chinese cities such as Wuhan and Qingdao. Peak "has been the fastest builder of inventory among the major sports brands," having increased its excess stock by almost 26% to 529M yuan ($85M) in the first half of the year alone. Of the six major brands, "only Xtep has maintained a profit for the first six months of '12, with the performance of the other five brands dipping between 9% and 29%" (WANT CHINA TIMES, 11/29).

Bundesliga club Eintracht Frankfurt "released its financial numbers for the '11-12 fiscal year in which it lost €11.1M ($14.4M)," according to the DPA. During the '10-11 season, which was the club's last Bundesliga season before it returned to the top flight this year, the club "generated a small €53,000 profit." Frankfurt expects a €326,000 ($424,000) loss for the current season. Club Chair Axel Hellmann said that the club "is financially healthy because the team immediately returned to the top flight after only one season in the 2nd Bundesliga and has high equity." However, the club's equity decreased from €15.9M ($20.6M) to €4.8M ($6.2M) due to the club's losses in the 2nd Bundesliga. Hellmann said, "It was highly important to return to the Bundesliga. Even more important is to stay in the league as this would guarantee us a higher share of the increased TV money next season" (DPA, 11/30).