FOOTBALL CLUBS IN SPAIN: AN OUTLINE

FOR INVESTORS
JORGE PECOURT
PARTNER AND DIRECTOR OF SPORTS & ENTERTAINMENT GROUP

1. INTRO
ECONOMICS AND FOOTBALL: FOOTBALL CLUB REVENUES (2012-13)

Font:
http://blog.thomsonreuters.
com/index.php/tag/spain/

1. INTRO
ECONOMICS AND FOOTBALL: SPANISH LEAGUE AND OTHERS

Font: http://www.marca.es

1. INTRO
ECONOMICS AND FOOTBALL: FOOTBALL CLUBS AND TV(2013-14)

Font:
http://futbolfinanzas.com/comparativa-de-los-ingresos-de-television-de-las5-grandes-ligas-2014/

1. INTRO
ECONOMICS AND FOOTBALL: FOOTBALL CLUBS AND TV(2013-14)

Font:
http://www.eoi.es/blog
s/jorgebretos/2012/01/
11/guerra-derechostelevisivos-en-el-futbol/

1. INTRO
ECONOMICS AND FOOTBALL: FOOTBALL CLUBS AND TV(2013-14)

Font:
http://www.viradoense
pia.com/2013/07/losdos-grandes-del-futbolse-llevan-el.html

1. INTRO
ECONOMICS AND FOOTBALL: SPANISH FOOTBALL CLUBS AND TV(2013-14)

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http://comunidades.lne.es/blogs/r_bayon/el_reparto_de_los_derechos_
de_tv_en_el_ftbol_espaol_131412442.html?oauth_comprueba=1&hash_user=d5178e38fb876bbc45602
73e0d71ca9c

1. INTRO
ECONOMICS AND FOOTBALL IN SPAIN: FOOTBALL CLUB DEBTS

Font: http://www.elmundo.es

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http://www.futbolconpropied
ad.com/2012/11/unaverdad-incomoda.html

2. CLUBS AND LIMITED SPORTS COMPANIES

Football clubs in professional and official leagues (1st Division and 2nd A Division)
LIMITED SPORTS COMPANIES (SAD) (section 19 of the Spanish Sports Act 10/1990).

Special regime for the SAD established in RD 1251/1999 on Limited Sports

Companies.
Exceptions: F.C.Barcelona, Real Madrid, C.A.Osasuna and Athletic de Bilbao

CLUBS ARE PRIVATE ASSOCIATIONS AND NOT CORPORATIONS NO

INVESTMENT IN CAPITAL SHARES CAN BE MADE

2. CLUBS AND LIMITED SPORTS COMPANIES

Characteristics of the legal regime (SSLA 100/1990 RD 1251/1999)

Sociedad Annima Deportiva (SAD) compulsory corporate regime for sports

clubs joining official and professional leagues (with 4 exceptions).

As a Limited Company, shareholders do not respond with their personal assets,

but only with the capital provided.
Minimum share capital established in SSLA 10/1990 based on:
-

Average expenses of the other SADs participating in the league.

Accumulated losses registered in the clubs last balance sheet.

Minimum share capital has to be paid in full and in cash.

Accounting and Corporate Income Tax period July 1 to June 30 (sport season).

The SAD Directorate

budget of the SAD.

must pay, every season, a deposit of 15% of the general

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2. CLUBS AND LIMITED SPORTS COMPANIES

Limitations on share purchase (SSL 10/1990 and RD 1251/1999)

Significant shareholding purchase (5% or more) Must be communicated to the

Spanish High Sports Council (CSD), the agency in Spain reponsible for monitoring
and control of the official leagues, sports federations (among other functions).
Acquisition of a shareholding giving voting rights of 25% or more CSD
authorization is required.
The authorization will not be granted:
-

To another football club or football SAD.

To an individual or corporation with a direct or indirect shareholding of 5% or
more in another football SAD.
In other circumstances when fair play in the League could be compromised.

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2. CLUBS AND LIMITED SPORTS COMPANIES

Sportspersons labour conditions RD 1006/1985

Special conditions for professional athletes.

Fixed-term employment contract (open-ended contracts are not allowed).

An ndemnity clause allows for unilateral termination of the contract by the

athlete.
Legal compensation paid for unfair dismissal (2 months per year of service)
exempt from Personal Income Tax.
Legal compensation paid when the Club or SAD decides not to renew the labour
contract (12 days per year of service) exempt from Personal Income Tax.

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2. CLUBS AND LIMITED SPORTS COMPANIES

Most relevant tax issues related to clubs, SADs and sportspersons

Current Corporate Income Tax rate of 25% for clubs and 30% for SADs. From the
2016-2017 season, according to the SCTA draft bill, the tax rate for clubs and
SADs will be 25%.
Expatriate regime not applicable to sportspersons from January 1, 2015.
Exception: sportspersons arriving in Spain in 2014.
Clubs, SADs, sportspersons and the tax authorities - Conflicting aspects:
-

Payment of indemnity clause by a 3rd club income subject to Personal

Income Tax? (Javi Martnez and Bayern Mnchen).

Payments to sportspersons agents players salary, PIT and payments on

account.

Image rights companies (see next slide):

85/15 rule and arms length principle.

Sham transactions, business activity and income imputation.

Payments to third parties in transfer of players (Neymars case).

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2. CLUBS AND LIMITED SPORTS COMPANIES

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2. CLUBS AND LIMITED SPORTS COMPANIES

CLUB

2ND IMAGE RIGHTS

ASSIGNMET

LABOUR
RELATIONSHIP =
SALARY

IMAGE
RIGHTS
COMPANY

1ST IMAGE RIGHTS

ASSIGNMENT

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3. INVESTMENT IN SPORTS: RELEVANT CASES

Acquisition of shares: recent cases

Mlaga C.F. Abdullah Bin Nasser Al Thani

2010.

36 MM (aprox. 97%).

2011-2012 / 2012-2013 UEFA Champions League.

Valencia C.F. Peter Lim

-

October 2014

94 MM (70%) + Bankia debt refinancing.

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3. INVESTMENT IN SPORTS: ALTERNATIVES

Third party Investment in player transfers

A third party (usually an Investment Fund) acquires a % of the economic rights
arising from the federative rights of the player.
In the event of a player transferring to another club, the investment fund is
entitled to claim its % of the transfer amount.
Examples:

Falcao Atltico Madrid (DOYEN SPORTS)

Kondogbia Sevilla (DOYEN SPORTS)

David Luiz - Chelsea

Problem: Spanish Professional League versus FIFA?

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3. INVESTMENT IN SPORTS: ALTERNATIVES

% ECONOMIC
RIGHTS ARISING
FROM FEDERATIVE
RIGHTS

FORMER
CLUB

3rd PARTY INVESTOR

1st LABOUR
RELATIONSHIP
ITC

% ECONOMIC
RIGHTS ARISING
FROM FEDERATIVE
RIGHTS

NEW CLUB
2nd LABOUR RELATIONSHIP

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jorge.pecourt@cuatrecasas.com
Este documento es meramente expositivo y debe ser interpretado conjuntamente con las explicaciones y, en su
caso, con el informe elaborado por Cuatrecasas, Gonalves Pereira sobre esta cuestin
This document is merely a presentation and must be interpreted together with any explanations and opinions
drafted by Cuatrecasas, Gonalves Pereira on this subject
Este documento uma mera exposio, devendo ser interpretado em conjunto com as explicaes e quando seja
o caso, com o relatrio/parecer elaborada pela Cuatrecasas, Gonalves Pereira sobre esta questo