Following a disappointing match against Real Madrid on Saturday, things do not seem to be getting any better for FC Barcelona. Some of the top players for the Catalonian squad are under fire by Spanish tax authorities for improper imaging rights. Sergio Ramos, Gerard Pique, Xavi Alonso, and Andres Iniesta are all players involved and may face further litigation. Essentially, companies were created to manage each player’s image rights. By receiving income through these companies, players would then be allowed to pay income taxes at a much lower rate than the personal income tax rate that applies to player salaries. Through legislation, this idea isn’t necessarily illegal; however there is only one issue. These types of companies are created solely for the purpose of paying lower taxes, and there has been no “real” activity shown by these firms.
So what does this mean for the entire club? Authorities have not yet brought on charges of tax fraud or other related crimes however they are insisting that the players pay the difference between corporate and personal income tax rates over the last four years. After all is said and done, players have decided to reach a settlement to avoid ruining their personal image. While this situation may come to a content resolution, this story still raises questions about player validity and corruption within the entire FCB organization. As a fan of sports in general I would be very downtrodden if my favorite team or club’s reputation was in doubt, especially regarding issues with ethical and moral connotations. In fact, I have experienced this phenomenon recently through my University. I am a North Carolina Tarheel, and the report regarding phony classes for athletes at my school have affected the student body deeply. As FCB continues on their quest for greatness, it will be interesting to see how the club’s fans react to this matter. From a business perspective, it is in the best interest of the club for their players to pay low taxes. However, could this create distrust with the club’s massive fan base? Furthermore, does this story reveal evidence that FCB is more of a business than a club?
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FC Barcelona: Club or Business? 