European Soccer Clubs Missed $130 Million in Transfer Payments Last Year

European soccer clubs failed to pay or deferred about 100 million euros ($130 million) in player transfer fees last year because of cash flow problems, according to an official from the continent’s governing body.

UEFA last month threatened PAOK Thessaloniki with a ban unless the Greek club got its finances in order by June 30 after investigating late payments to rival teams, staff and tax authorities. Bulgaria’s CSKA Sofia, Timisoara of Romania and Real Mallorca of Spain also have been barred from European competitions because of overdue payments.

UEFA, which released figures last month showing losses among 665 teams widened by 36 percent to 1.6 billion euros, has implemented regulations to push clubs toward profitability. UEFA President Michel Platini has described the practice of carrying losses as “financial doping.” Sefton Perry, who analyzes club finances for the organization, said not paying bills is a bigger threat to fair competition.

“An even bigger cheat is when you buy a player you agree to pay in a series of transactions over the next three years and then you don’t pay or you defer it,” Perry said in an interview at UEFA’s headquarters in Nyon, Switzerland.

Some clubs also are failing to meet their tax and player salary obligations.

Scotland’s Glasgow Rangers, which has a world record 54 domestic league titles, filed for a form of bankruptcy protection three days ago after failing to pay employment tax of about 9 million pounds ($14.1 million). Rangers are also the subject of an investigation into an unrelated tax deficit of 75 million pounds dating back several years.

Spanish Strike

Last season, 200 players in Spain’s top two divisions were owed money by their teams. On Aug. 25, league officials agreed to guarantee the salaries of all the players to end a strike that had delayed the start of the season by a week, according to players’ union spokesman Juan Jose Montaner. He didn’t have details on how many had been paid since then.

Incidences of non-payment are on the increase because of Europe’s sovereign debt crisis, Perry said.

Clubs have “basically bought players and financed players on the expectancy they would get loans and things being good,” he said. “When things go bad, they don’t have the cash flow to pay.”

PAOK, a two-time Greek champion, was also fined 50,000 euros, with a further 200,000 euros suspended for a period of three years following UEFA’s probe. More teams could face fines or be barred from entering the Champions League and Europa League competitions because of their finances, Perry added.

‘Tough Sanctions’

“We’ll take tough sanctions,” he said. “We have done in the past and we’ll continue to do so.”

The lack of certainty over wages in countries including Spain, Portugal, Greece and Hungary has led some players to sign lower-paid contracts with clubs in those that have a reputation for paying on time, said Theo Van Seggelen, secretary general of FIFPro, the world players’ union.

“They’re understanding it’s better to have lower salary than bigger salary that’s never paid at all,” Van Seggelen said in a telephone interview.

England’s Premier League demands its clubs provide quarterly statements to prove they’ve paid their bills. In 2010, Portsmouth became the first team since the league was established in 1992 to seek bankruptcy protection after being threatened with closure over unpaid taxes. Sanctions for those falling behind in their payments include transfer bans and enforced player sales.

As well as being scrutinized by UEFA and national league officials, clubs are increasingly being targeted by tax authorities who need to raise funds to boost domestic economies, said Van Seggelen.

“How can you explain to your population that everybody has to pay taxes with the exception of clubs?” he said. “So we are in trouble. The whole of football is in trouble.”

To contact the reporter on this story: Tariq Panja in London at tpanja@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net

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