FanPost

Arsenal and the French Millionaire Tax

Last night, I heard a rather unexpected name coming out of my radio while driving home. I had NPR's (or whatever it is in the evenings) World News on and was quite surprised to hear anything about Zlatan Ibrahimovic. Apparently, he created something of a national outcry. Not over his coming to Paris Saint-Germain or his transfer fee but the wages he is being offered. The Swede is set to make a stunning 14 million Euros a year. In response to the outrage, French president Francois Hollande reiterated one of his election stances: a 75% tax on those making 1 million Euros or more in a year.

To put that into context, Ibrahimovic would end up being paid only € 3.5 million. That would be less then what many of Arsenal's squad players make right now. Of course, under the new tax, any player making around € 3.5 million ( a fairly standard wage for Arsenal's squad players) would have their earnings drop below €1 million. The purpose of such a tax would be to alleviate the national debt, help fund France (and, by extension, the Euro zone) during the current economic crisis and discourage such astronomical spending. Among the non-millionaire majority, this law is quite popular and seems rather likely to pass.

Of course, this will affect football dramatically. It cripples PSG's ability to attract expensive players without spending enough to buy their own small country. Generally speaking, this would probably be good for football in general. It prevents PSG from spending like Manchester City and artificially inflating the price of players and their wages. It also would likely introduce more parity to Ligue 1.

However, this could be really detrimental to French soccer teams. I am pretty confident that players in France make upwards of €1 million a year. However, with the tax, the amount of money in the actual pocket of the players making €1 million drops down to a measly €250,000. That is a standard MLS wage. This measure is meant to last only a few years so perhaps there won't be a mass exodus, but if it does happen, you can bet that players will be heading out in search of more substantial pay. Especially young players. The huge drop in actual earned income could send these less established players looking elsewhere to line their pockets.

As pointed out by SteakBaller, taxes are progressive. That means that only the amount above €1 million would be subject to the 75% tax. Everything under that amount would be taxed at a lower rate. However, that does mean that players would still take a sizable hit.

That is where Arsenal would likely come in. Thanks to Arsène Wenger, the Gunners have long plumbed France for strong, young talent. Such talent would become much more available thanks to the tax. Not only will many a player be interested in going abroad, but clubs may be more willing to let them go. In order to keep their players, French clubs will have to raise their wages significantly. Cutting off the wage bill and getting a transfer fee would likely be in their best interest. The likes of Ibrahimovic won't be let go but a Laurent Koscielny might. These players won't have clubs like Manchester City chasing after them. Instead, expect many such players to go to mid table clubs, clubs that can't make bids stinger than Arsenal. With proper scouting and just a little bit of spending, Arsenal might just be able to secure quite a few quality players.

Of course, this tax does not just apply to footballers. CEO's, politicians, etc. will be taxed as well. If the tax does come into effect, it will be closely watched by the other Euro nations. Particularly Spain. Coupled with this new tax was the threat of a meltdown in Spain's economy and the corresponding bailout caused by outstanding debts. If the tax succeeds in France, it might be picked up by Spain. Italy also is feeling a bit fragile and might be tempted into the tax. This, of course, affects the teams in La Liga and Serie A. Such a tax would limit the ability of Barcelona and Real Madrid to command huge transfers while putting the other clubs at considerable risk. Serie A might handle it better but they would likely suffer in international play. With 3 of the 5 strongest leagues in Europe dropping in their ability to pay wages, the English Premier League could gain tremendously. (I am under the impression that the Bundesliga is already fairly frugal, though they would also be effected positively.) Not only would this help Arsenal but smaller clubs like Everton, Aston Villa, and Cardiff would be more able to get better talent without going beyond their means. This would create an even more competitive, read: stronger, EPL. The drop in spending would also curb inflation. With players getting smaller amounts from their paychecks (the vast majority of them cannot suddenly leave Ligue 1, Serie A, or La Liga) the norm would hopefully dwindle. If clubs are smart, they will restructure the wage system to match what players made under the tax once it has been removed. That would save a tremendous amount of money and have a trickle down affect of reducing wages (or at least the growth of wages) for years to come.

side note: This might also help American soccer and MLS. As stated above, the league is extremely frugal. If clubs were forced to compensate for the wages lost, they may look for cheaper talent. That makes for a situation where MLS gains quite a lot.

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