European Commission to Discuss Soccer ‘Luxury Tax’ With FIFA

The European Commission will discuss soccer’s transfer system with world ruling body FIFA after a report said the richest teams such as Real Madrid and Manchester United should pay a so-called luxury tax on fees.

The commission said in a news release today it will discuss the report by Brussels-based consultancy KEA European Affairs with FIFA and soccer groups in April. A share of the biggest fees should be redistributed among smaller clubs to address soccer’s “competitive imbalance” in which a few clubs dominate, the report says. The U.S.’s National Basketball Association has a “luxury tax” for teams above a certain payroll, the report adds.

The European Union’s regulatory arm, which helped rewrite transfer rules with FIFA in 2001, is seeking to encourage a review of the 3 billion-euro ($4.1 billion) player-trading market after a seven-fold boom in spending since 1995.

“The European Commission fully recognizes the right of sports authorities to set rules for transfers but our study shows that the rules as they are do not ensure a fair balance in football or anything approaching a level playing field,” Androulla Vassiliou, the European commissioner responsible for sports, said in the news release. The transfer system should help develop young players, Vassiliou added.

Under rules introduced under the supervision of then European Competition Commissioner Mario Monti in 2001, teams who developed a player between the ages of 12 and 23 now share 5 percent of a transfer fee when he is traded. That amount should be raised to 8 percent, with a higher percentage for fees above a certain threshold, the KEA report says.

Real Madrid, the world’s biggest soccer club by sales according to Deloitte LP, broke the transfer spending record when it paid Manchester United 80 million pounds ($126 million) to sign forward Cristiano Ronaldo in 2009.

A few clubs such as Real and United dominate domestic competition. In England, Spain, Portugal and Italy, 92 percent or more of league titles were won by the three most successful teams between 2001 and 2012, the report says.

To contact the reporters on this story: Alex Duff in Madrid at aduff4@bloomberg.net.

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

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