The appeal of having the world's best known football brand on your side is so great that it's not just leagues that are bending rules to accommodate David Beckham. A country had also gone out of its way to change regulations in order to attract him, albeit indirectly.
The Designated Player or "Beckham Rule" was introduced by Major League Soccer when the league and LA were getting closer to inking the signature of the England international in 2007. The change made it easier for clubs to sign a top player without sacrificing too much of the already quite limited MLS salary cap.
<p style="font-size:10px; margin:0 auto;">TFC's Julian de Guzman would be subjected to a higher tax in 2010 had he remained in Spain.</p> |
But long before MLS changed its rules to help secure Beckham in LA, in 2004 Spain changed its tax code to attract high earners who would help increase the profile of the country. Designed to attract corporate executives, the lowering of the tax rate to 24% for notable foreigners, made it even easier for wealthy clubs such as Real Madrid and Barcelona to furnish their stadiums with many of the best players that money can buy. In that same year Beckham joined Real Madrid, allowing the club to use this new tax law to lower their wage bill, and thus the "Beckham Law" was born.
It is now reported that Spain is looking to scrap the special tax and bring the foreign Gods of football up to the same rate as the locals, which is a whopping 43%. In Europe, that rate would bring Spain level with Italy, just below Germany (45%) but higher than England, France and Holland.
This could prove to be a major blow to La Liga clubs whose collective books would be hit for an additional $157.8 million as early as 2010. The dip in the pocketbooks might make for a very boring January transfer period in the Spanish top flight.
The clubs in Spain are already threatening a strike in protest of the proposed tax increase.
Not many will find sympathy for teams such as Real Madrid who shelled out roughly $400 million on talent this summer. The good news for those who favour greater parity in football is that the upward trend of taxation could prove unappealing enough for the big clubs, causing them to sign fewer big name stars.
<p style="font-size:10px; margin:0 auto;">Real Madrid are about to pick up a higher tax bill for Ronaldo and co. seen playing in Toronto last August.</p> |
On the players' side, they have families and other expenses, forcing some to make choices based on financial arithmetic. Many players may view this tax for a Spanish address a burden on their family's well being if their club is not willing to pick up the full tab.
This presents an opportunity for MLS and its clubs from the United States and Canada to make strides in the area of higher level player recruitment. The relatively lower tax rates in North America compared to Europe could very much appeal to players from Latin America.
Spain is usually the first destination that South American imports look to when they are ready to ply their trade abroad.
But now with La Liga becoming a more expensive destination to a player's bottom line, it can further increase the attractiveness of MLS. However, the league has some work to do, in particular the need to ease some of its own restrictions. Raising the salary cap and allowing clubs to operate in a free market without having to worry constantly about league parity can be a massive boost to player recruitment.
So long as places like Seattle, Los Angeles, Toronto and potentially Vancouver and New York keep their stadiums full, MLS will start to make a bigger splash in the international player movement pool. It certainly won't happen overnight, but the long term optics look favourable, which matches MLS' vision of incremental growth.
The Beckham Rule increased the profile of MLS, now the repealing of the Beckham Law in Spain could potentially help elevate the quality of play in the league if the clubs are prepared and, more importantly, allowed to take advantage of it.
All monetary figures in Canadian dollars.
