Post by QPR Report on Apr 26, 2009 9:04:34 GMT
Didn't really occur to me: Changes in exchange rate affects player prices, etc.
Telegraph/DUncan White
Despite Arsene Wenger's fears clubs are adapting to new economic situation
Is Arsene Wenger right to forecast the end of Premier League dominance?
He is certainly right to have concerns about the impact of the recession. As he has pointed out, there are two key factors that will damage English football in relation to its European counterparts: the weak pound and the increased top tax rate.
The pound has lost about a quarter of its value against the euro and, as high earners, footballers will now be taxed at the 50p tax rate introduced in last week's budget – which is at least five per cent higher than the major competitors: Spain, Italy and Germany.
English football enjoying new golden era despite global recession
Amazon is a weak pound winnerThe weak pound means buying foreign players will get more expensive. It will cost 25 per cent more in transfer fees and wages than it did this time last year: a £10 million player will now cost £12.5 million and £100,000-a-week has become £125,000-a-week. Either selling clubs and arriving players will have to temper their demands or the clubs will have to spend more.
Salaries for foreign players could also be driven up by the new top tax rate – Ruud Gullit famously used to make all his wage demands "netto" and it is common for foreign players to negotiate purely on their "after tax" rate. That means the club paying more to compensate for the 10 per cent rise.
Take Kaka. The Brazilian is reported to be on €9 million per year at Milan, which works out at roughly €175,000 per week. So if you wanted to match his wages last summer that would have meant £121,000 per week. If you wanted to do the same this summer it has gone up to £159,000 per week.
Dan Jones, of Deloitte's Sports Business Group, is more optimistic than Wenger and believes clubs have begun to adapt to the new exchange rate. "I think there was a process of adaptation in the January window," he said. "But English football – with the exception of a handful of continental clubs – is so far ahead that clubs will still get their man. It just might mean finding other ways of factoring in the exchange rate."
That could mean deals like the one Michael Ballack is on at Chelsea. His salary is apparently correlated with the euro-pound exchange rate, with scope for a 10 per cent swing in either direction. Aside from these more complicated contracts, players, like so many high earners, will find innovative ways of paying less tax. But the bar has been raised.
Where there is good news for the Premier League is that the weak pound encourages foreign investment – buying a football club is 25 per cent cheaper than it was a year ago. "English clubs may have been put at a disadvantage in the transfer market but it makes for a better climate for foreign investors," said Keith Harris, of Seymour Pierce. "We have a fuller pack of knowledge about the extent of the financial crisis now and with investors having to pay less in their home currency, it is encouraging for potential takeovers."
www.telegraph.co.uk/sport/football/leagues/premierleague/arsenal/5220519/Despite-Arsene-Wengers-fears-clubs-are-adapting-to-new-economic-situation.html
Telegraph/DUncan White
Despite Arsene Wenger's fears clubs are adapting to new economic situation
Is Arsene Wenger right to forecast the end of Premier League dominance?
He is certainly right to have concerns about the impact of the recession. As he has pointed out, there are two key factors that will damage English football in relation to its European counterparts: the weak pound and the increased top tax rate.
The pound has lost about a quarter of its value against the euro and, as high earners, footballers will now be taxed at the 50p tax rate introduced in last week's budget – which is at least five per cent higher than the major competitors: Spain, Italy and Germany.
English football enjoying new golden era despite global recession
Amazon is a weak pound winnerThe weak pound means buying foreign players will get more expensive. It will cost 25 per cent more in transfer fees and wages than it did this time last year: a £10 million player will now cost £12.5 million and £100,000-a-week has become £125,000-a-week. Either selling clubs and arriving players will have to temper their demands or the clubs will have to spend more.
Salaries for foreign players could also be driven up by the new top tax rate – Ruud Gullit famously used to make all his wage demands "netto" and it is common for foreign players to negotiate purely on their "after tax" rate. That means the club paying more to compensate for the 10 per cent rise.
Take Kaka. The Brazilian is reported to be on €9 million per year at Milan, which works out at roughly €175,000 per week. So if you wanted to match his wages last summer that would have meant £121,000 per week. If you wanted to do the same this summer it has gone up to £159,000 per week.
Dan Jones, of Deloitte's Sports Business Group, is more optimistic than Wenger and believes clubs have begun to adapt to the new exchange rate. "I think there was a process of adaptation in the January window," he said. "But English football – with the exception of a handful of continental clubs – is so far ahead that clubs will still get their man. It just might mean finding other ways of factoring in the exchange rate."
That could mean deals like the one Michael Ballack is on at Chelsea. His salary is apparently correlated with the euro-pound exchange rate, with scope for a 10 per cent swing in either direction. Aside from these more complicated contracts, players, like so many high earners, will find innovative ways of paying less tax. But the bar has been raised.
Where there is good news for the Premier League is that the weak pound encourages foreign investment – buying a football club is 25 per cent cheaper than it was a year ago. "English clubs may have been put at a disadvantage in the transfer market but it makes for a better climate for foreign investors," said Keith Harris, of Seymour Pierce. "We have a fuller pack of knowledge about the extent of the financial crisis now and with investors having to pay less in their home currency, it is encouraging for potential takeovers."
www.telegraph.co.uk/sport/football/leagues/premierleague/arsenal/5220519/Despite-Arsene-Wengers-fears-clubs-are-adapting-to-new-economic-situation.html