A report by Bloomberg claims that well-known Racehorse owner Malcolm Caine and London-based solicitor Graham Shear took over as Deportivo Maldonado's president and vice-president in 2010, and it seems that they have hit upon a brilliant way to raise cash for a venerable old club that has been going since 1928.
The report claims that Caine and Shear use Deportivo Maldonado as a routing club for player transfers, thus easing the often-huge tax burden when players are transferred back-and-forth from clubs in South America and Europe.
Under FIFA rules, players can only play for two different clubs each season - but they are permitted to be registered with three clubs, and it seems that's at the heart of what has been going on at the club.
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There is no suggestion that anything illegal is going on: indeed, Bloomberg's report quotes an email from Caine that insists that the club, "pays its players in accordance with the contractual obligations and fully accounts for and performs all tax and other statutory requirements."
That quote is crucial, because other clubs have been caught out: the low tax rate has meant other Uruguayan clubs have been found doing the same thing - and one of them, Atletica Sud America, was at the centre of a deal which saw a quartet of Argentine clubs fined as much as 50,000 Swiss francs each (around £34,000) for trading players to and from Atletica for, "reasons that were not of a sporting nature."
Deportivo Maldonado insists that all its trades have been approved both by FIFA and the Uruguayan FA. But the report on these transfers will still raise eyebrows in the world of football, given that the players have in several cases not played for the side, as the report explains:
"Deportivo Maldonado earned 10.1 million euros (£8.45m) 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."
None of these deals were clandestine, with both transfers formally completed via the Uruguayan club:
[PORTO SIGN SANDRO FROM SANTOS]
Figures from football industry website transfermarkt.com suggest that second division Deportivo's player trading income is "double that of the average first division club," according to the Bloomberg report, which goes on to explain how the clubs, agents, and owners of the players' registration rights share the tax benefits.
The problem is such that Uruguayan authorities have tried to end the trades, as the report adds:
"In an effort to stop transfers via Uruguay, the government last year increased the tax rate on player trades to 12.5 per cent from 4 per cent, 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, [Argentine football lawyer Ariel] Reck said, adding they would pay a 35 percent rate in Argentina."
The report claims that 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," but he did say via email that he is trying to develop the club and is yet to take a profit after making investments in, "infrastructure, managerial, technical know-how, medical and other facilities as well as player development, training and player transfers."
The whole idea of third parties, or companies, owning players' rights is fairly rare in Europe, but it's far from unknown - and can often have a direct effect on major transfers.
Atletico Madrid's Radamel Falcao, for example, ended up moving to newly-promoted Ligue 1 side Monaco last summer despite offers from a number of bigger clubs - among them Chelsea - purely because the men who owned his registration simply insisted upon taking the biggest offer, regardless of the impact on the player's career.
In English football, the most notable example of a player's registration being owned by a third party was the saga which saw Carlos Tevez play first for West Ham - whom he helped save from relegation, sparking a huge legal battle with Sheffield United that lasted years - before joining first Manchester United, then Manchester City.
And as fate would have it, one of the lawyers involved in that saga - who was representing Tevez's agent Kia Joorabchian at the time - just so happened to be the same Graham Shear who is now vice-president of Deportivo Maldonado.
It really is a funny old game. And especially when the lawyers get involved.
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