French clubs plan to stage strike

French clubs plan to stage strike

Published Oct. 24, 2013 2:31 p.m. ET

Furious over a government tax plan to impose a super-tax on players' salaries, French football clubs have unanimously agreed to scrap matches over one weekend at the end of November as a protest.

France's professional clubs held an extraordinary general meeting Thursday to decide the next steps in their campaign against the government's plan to implement a so-called 75-percent tax law on income above 1 million euros ($1.38 million) per year. The law would mainly affect the clubs rather than the players, as it is geared toward making employers bear the tax burden.

Under the decision announced Thursday by Jean-Pierre Louvel, president of the Union of Professional Football Clubs, the league round scheduled for Nov. 29-Dec. 2 will not be played.

''It's a historic moment for French football. The whole of football has taken a very important decision,'' Louvel said. ''We're talking about the death of French football. That's why we are fighting and we will continue to fight.''


Representatives of the clubs will meet with French President Francois Hollande next week to further discuss a solution to the situation. Louvel did not rule out further action being taken after the weekend of cancelled games.

The last time games were boycotted in the French league was in 1972, but that was at the initiative of the players, the clubs' union said.

The decision received the backing of French league president Frederic Thiriez, who was also present at the meeting.

''The decision unanimously taken today shows that the tax that the government wants to impose has awoken all of our sensibilities,'' Louvel said.

The tax was a campaign promise from Hollande, who pledged to rein in what he said was excessive executive pay out of line with the struggling economy. The tax is only supposed to be in place for two years, starting retroactively this year, and the government expects it to net 420 million euros ($580 million). It would cost clubs 44 million euros ($60 million) over that period.

''It's not the players who are taxed but our businesses,'' Louvel said. ''How can you tax businesses that have been in difficulty over the last three or four years? And why have they been? Because the taxes we've been paying are too high. And people ask why we're not competitive with other leagues.''

Clubs will launch campaigns throughout November to help fans further understand their decision. On the days when matches won't be played, the stadiums will be open for fans to visit and some entertainment will be provided.

The promise of a tax hike was the most memorable promise of Hollande's campaign, and polls have shown it was widely popular, even if it generated heavy criticism from business leaders and sports organizations. Hollande's initial proposal called for individuals - in the case of football, the players - to pay a 75 percent tax on all income over 1 million euros. That tax was rejected by a court this year and the budget currently before parliament would instead put in place a 50 percent tax, paid by the employer. With payroll taxes, the clubs' effective tax rates on high salaries will be much higher, and it is still widely referred to as the 75-percent tax.

This tax is capped at five percent of the club's annual revenue.

The amount it will generate is tiny when compared to France's 2 trillion-euro economy ($2.8 trillion), but the government says it is more a symbolic measure than one meant to plug budget holes.

Defending French champion Paris Saint-Germain, with massive backing from Qatari investors, won't be too bothered by the measure. Neither will Monaco, which benefits from tax exemption on players' salaries.

But it would hit about a dozen clubs and the likes of Saint-Etienne, Lyon and Marseille would see it as a major blow, particularly if they fail to qualify for the money-spinning Champions League. It would have a ripple effect because top clubs will have less money to buy from the lower leagues, forcing those transfer prices to be pushed down.

''Most of the clubs don't make money, they lose money, so how is it possible for the clubs to pay taxes when they don't have money left?'' Saint-Etienne president Bernard Caizzo told The Associated Press.

Marseille would end up paying an extra 8 million euros ($11 million), Lyon and Lille an additional 5 million euros ($6.9 million). Players already pay about 60 percent tax on their salaries.

Last year, French clubs paid about 700 million euros ($965 million) in social charges and image rights, more than they received in television rights.

''When a (company) is losing money you try and help, not try and give a big kick on the head,'' Caizzo said.

French clubs already end up selling many of their top players to other leagues that offer higher salaries - such as England's Premier League - and the new measures could force them to sell even more.

''French football is the most (taxed) in Europe, when we get 100 euros, we pay 70 euros to the state. Not in England, not in Germany, not in Italy, not in Spain,'' Caizzo said. ''Many clubs won't be able to afford this and could disappear.''