A Uruguayan soccer club led by a U.K. racehorse owner has an unusual sideline: trading elite South American players who never appear in a game.
Deportivo Maldonado SAD, which plays in Uruguay’s second-tier championship, was set up in 2010 when Malcolm Caine and London-based lawyer Graham Shear became president and vice-president, according to company registry documents obtained by Bloomberg News in Montevideo. Maldonado had previously operated as a member-owned club since 1928.
Routing transfers through Uruguay can ease the tax burden of investors who own player transfer rights, which is common in South America, according to Ariel Reck, a lawyer in Buenos Aires who works on transfer deals. Soccer ruling body FIFA’s regulations allow players to be registered with three clubs in a season and play for two, Reck said.
“Of course, this isn’t FIFA’s idea but it’s very difficult” to distinguish between sporting and financial reasons, Reck said by phone.
In what it called an unprecedented move, Zurich-based FIFA said on March 5 it fined four Argentine teams between 15,000 Swiss francs ($17,160) and 50,000 Swiss francs for trading six players through Uruguay’s Atletica Sud America for “reasons that were not of a sporting nature.”
Caine, who co-owns a horse called Curbyourenthusiasm with soccer player agent Jonathan Barnett, said in an e-mail that Deportivo Maldonado operates “in exactly the same way as any professionally run football club” and its trades are approved by FIFA and Uruguay’s soccer federation.
Unlike some other clubs, Deportivo Maldonado “pays its players in accordance with the contractual obligations and fully accounts for and performs all tax and other statutory requirements,” Caine said.
Deportivo Maldonado earned 10.1 million euros ($14 million) since 2011 by trading Brazil’s Alex Sandro to Porto and loaning Paraguay’s Marcelo Estigarribia to Juventus, according to regulatory filings. In January, it loaned another Brazilian, Willian Jose da Silva, to Real Madrid. There is no record of the three players appearing for Deportivo Maldonado, which last season averaged 208 fans at its homes games, according to data on soccer website transfermarkt.com.
Maldonado’s player-trading income is about double the average first-division team in Uruguay over the same period, transfermarkt.com data shows.
Caine didn’t directly respond to e-mailed questions about Alex Sandro, Estigarribia and Da Silva being traded without appearing in a match for Deportivo Maldonado, and didn’t return phone calls seeking more information.
He said in another e-mail that his group is helping develop Deportivo Maldonado as a club, and hasn’t made any profit on its investment yet.
“Our investment includes infrastructure, managerial, technical know-how, medical and other facilities as well as player development, training and player transfers,” Caine said.
Pictures on Deportivo Maldonado’s website show club facilities, including a two-story prefabricated building and concrete steps for seating at games. Maldonado is a town in southeast Uruguay with a population of about 60,000 -- about 140 miles from Brazil’s border.
Shear, a lawyer at Berwin Leighton Paisner in London, didn’t respond to two e-mails and two calls seeking comment. Shear has previously represented Media Sports Investments, which was involved in a dispute in 2007 when it owned the transfer rights of Argentine striker Carlos Tevez at Premier League team West Ham.
The other people who became Deportivo Maldonado’s directors in 2010 were U.K. citizens David and Leon Caine, and Uruguayans Carlos Fernando Bruschi and Mauro Caballero, documents show.
In one of its latest trades, Deportivo Maldonado loaned Da Silva to Real Madrid. The 22-year-old striker hadn’t appeared in a game for Maldonado and last played for Santos, his agent Nick Arcuri said by phone. Santos is among the biggest clubs in Brazil’s first division.
Real Madrid negotiated the loan with Maldonado’s English investors, said Arcuri, who declined to disclose his client’s arrangement with them. The Spanish team has an option to sign Da Silva, who has a market value of 1.5 million euros according to transfermarkt.com.
Da Silva scored three times for Real Madrid’s B team in a 3-2 win at Recreativo Huelva on March 15.
In an effort to stop transfers via Uruguay, the government last year increased the tax rate on player trades to 12.5 percent from 4 percent, Fernando Sobral, the treasurer of the Uruguayan soccer federation, said by phone. Still, investors don’t pay capital gains tax if they route income offshore through a Uruguayan company, Reck said, adding they would pay a 35 percent rate in Argentina.
“I don’t know if FIFA has the appetite to stop” these transactions, Reck said. “If it’s difficult for the FBI to follow money around, imagine how hard it is for FIFA.”
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