How France's 'Millionaires Tax' could prove disastrous for PSG and Ligue One

PSG

Callum Farrell examines how the French Government's 'MIllionaires Tax' could slowly reap havoc on PSG and French football as a whole.

This summer Paris Saint-Germain received a huge boost from its owners, who are not just an investor from the Abu Dhabi royal family, but the actual state of Qatar.

The Qatari government and the Qatari Olympic Committee bought the club a year ago, taking a tiny dent out of their annual revenue of $100 billion.

They brought in stars such as Ezequiel Lavezzi from Napoli, Thiago Silva from AC Milan and his old team mate and Swedish international Zlatan Ibrahimovic for a total of €83 million.

However, the press coverage and celebrations of the propulsion of PSG to the elite of football couldn’t have been more terribly timed.

On the 6th May this year Francois Hollande was elected President of France with his Socialist government and he came in with a number of sweeping reforms to tackle the financial situation in the country.

One in particular which will send Noel Le Graet, the French Football Federation president, into a cold sweat will be the proposal to increase the income tax on those earning over €1 million a year to 75%.

It raised a response from the football club and players unions who said that the “reckless tax” would have a “disastrous effect on the competitiveness of French football”.

PSG have found a way around the tax increase by making up the difference, meaning that Ibrahimovic’s pre-tax salary will hit almost €80 million a year. But what is their solution to pass the Financial Fair Play rules?

Zlatan won’t be the only players who will require the club to make up the shortfalls in their pay packet, especially with Thiago Silva there, and the numbers soon don’t add up.

They are boasting claims that they’ll be winning the Champions League in five years but with the current situation it is hard to see how they’ll even qualify to take part in the tournament.

However, the tactics that the Parisian club are adopting are not available to any other team in Ligue 1 and 2.

Recently the television rights for the league have actually dropped in value and the four seasons between 2012 and 2016 will bring in revenue of €606 million a season compared to the €668 million for the four previous seasons, mainly because of Orange and Canal Plus pulling out of any deal.

The financial situation for most clubs is precarious as it is without this added drain on income.

If the legislation is implemented then small provincial French clubs are going to have to adopt a completely different wage structure. A player on a salary of €1 million a year will be earning €19,230, about £15,511 (a wage just between the average for Premier League and Championship players).

Clubs in Ligue 1 and 2 will need to adopt PSG’s lesson and quadruple these wages if they want to keep hold of their players from the clutches of their European neighbours who have much more favourable rates.

The French leagues have a problem as it is with losing young prodigies and established players so it’s expected that the new tax laws could effectively plunge the footballing community into a semi-professional structure dominated by a few mammoth clubs with billionaire owners which would be excluded from European competition.

This would be an incredible loss to the rich history of a country which has produced fantastic players in the shape of Zinedine Zidane, Michel Platini and Raymond Kopa.

image: © psgmag

Register for HITC Sport - Daily Dispatch