After two years in the wilderness of France’s second tier competition, AS Monaco Football Club are primed to return to their former Ligue 1 status as one of the leagues powerhouses.
Led by Russian billionaire Dmitry Rybolovlev, whose investment group owns two thirds of the club, Monaco currently sit atop the Ligue 2 standings, having already guaranteed promotion.
With former Chelsea, Juventus and Inter Milan coach Claudio Ranieri at the helm and an enviable chequebook ready to be utilised, there is a great deal of excitement among Ligue 1 supporters as to the potential for a second European heavyweight to rival that of Paris Saint-Germain.
However, both the French Football Federation (FFF) and the French Professional League (LFP) seem determined to set back Monaco’s rise unless they are well renumerated, given the club’s financial advantages of operating in the tax-haven Principality of Monaco.
This is by no means a new source of confrontation for the club and is indeed an issue that has seemingly arisen during periods of great success for Monaco.
It was during the club’s successful UEFA Champions League run in 2003/04, where Monaco eliminated both Deportivo La Coruna and Real Madrid, when the FFF released reports as to the financial benefits the club enjoyed as a result of its favourable tax exemptions.
The FFF claimed that Monaco saved approximately €8 million per year due to the near tax-exempt status.
In the last few years, the issue has seemingly taken a backseat while Monaco struggled financially as well as on the field, culminating in the 2011 relegation to Ligue 2.
However, after winning promotion back to Ligue 1 the issue has once again raised its head in a rather ugly manner.
In March, the LFP voted to alter the league’s statutes which would in essence force Monaco to move their administrative offices to France before 2014 or risk expulsion from the French Federation.
In a meeting only two weeks ago with the club, the FFF’s president Noel Le Grat spectacularly demanded (allegedly) €200 million for the privilege to play in France’s premier competition without the club having to relocate.
Needless to say, the Principality outfit were outraged, issuing a statement on the club’s website which outlined the details of the meeting and announced they would be proceeding with legal action.
The essence of the confrontation is based on a perceived view that Monaco is not operating on a level playing field to the French based Ligue 1 clubs.
There are no questions as to the benefits of the Principality’s near tax-exempt status however one should not jump at the assumption that this equates to distinct advantages as an operating football club.
The club does not boast a typical income structure in that gate receipts provide little to boost the Principality side’s income stream.
Operating in a sovereign state with a total population of only 36,000 obviously has its limitations.
Needless to say, Monaco has never set the stands alight with its highest average season attendance over the last 15 years registering at just over 11,000.
In its last five years in Ligue 1, Monaco was ranked either 19th or last in average crowd attendance.
Even in Ligue 2, granted their attendance has dropped even further, however they only ranked 13th in their current promotion winning season with an average of just above 5,000.
Clearly their match-day income would not even come near the likes of PSG or Lille who average over 40,000 spectators.
When you then look at the revenues clubs are generating from match-day sales, you may start to wonder how relevant the FFF’s reported €8million ‘advantage’ that Monaco carries actually is.
A Deloitte publication form January 2013 titled, ‘Captains of industry – Football Money League’, profiles some of Europe’s highest-earning clubs (quite an interesting read for those interested in club operation and revenues).
Two of the French clubs that feature are Olympique Marseille and Olympique Lyonnais. The Ligue 1 clubs’ proportion of match-day to total revenue are not as high as many of the Spanish, English and German clubs (closer to or above 25 percent of total revenue).
Even so, Marseille and Lyon account 13 percent and 14 percent of total revenues respectively to match-day revenue. In real terms, this equates to €18.1 and €17.7 million respectively.
Given that Monaco’s attendances were approximately 25 percent of the likes of Marseille and Lyon at the best of times (closer to 15 percent in recent years), the FFF’s €8 million advantage looks less and less beneficial to the club.
From a completely objective view, some would argue that this is simply a bad business model.
However, since its introduction into the French Federation in 1924 the club has continually proven its ability to successfully operate a football club despite demographic limitations as well as contribute towards French football through its player development, broadcast appeal and favourable European results for the LFP.
Now that they have the backing of Dmitry Rybolovlev behind them, Monaco is predicted to once again become a leading force in Ligue 1.
The potential for AS Monaco to develop over the next few years to a level that could rival Paris Saint-Germain as another of Europe’s heavyweights would surely whet the appetite of any French and indeed European football enthusiasts.
Any newly found interest is sure to contribute towards favourable broadcasting deals and improved European rankings for Ligue 1 over the years.
So why are the FFF and LFP seeking to complicate such progress?
The club’s history is not only entrenched within the French Football Federation but has played a large part in the Federation’s history.
Boasting seven Ligue 1 titles and five Coupe de France cups, Monaco’s youth system has produced some famous French internationals including the likes of Lilian Thuram and Thierry Henry.
Founded in 1924, it was in fact the FFF who first invited the club to turn professional in 1933.
As the Principality of Monaco is not a member of UEFA, the club has never had any realistic alternatives of existence beyond the French Federation.
The club’s existence in Monaco was never built around potential tax-benefits, despite the current financial advantages that are enjoyed.
Thus after 90 years of contributions to the essence of the FFF and LFP, the recent demand for €200 million as ‘compensation’ for Monaco not moving their administrative operations seems harsh at best.
In a recent article in France’s Le Monde, Antoine David, a University of Nice professor and lawyer specialising in sports law insisted that AS Monaco’s legal standing was solid.
“The Court of Justice of the European Community and the Treaty of Rome stipulates that companies have the right to settle in any country in Europe, and even if it is for tax reasons,” he said.
A claim supported by Olympique Lyonnis’ President, Jean-Michael Aulas, who fears, “We may be legally attacked by Monaco, which could cost us dearly.”
Legalities aside, I question whether it is worth the effort, resources and negative press surrounding the FFF and LFP. Particularly given the potential that a second French powerhouse could provide for the league.
One just needs to look at the Bundesliga of recent seasons and the strides it has taken in strongly establishing itself among the top three European leagues.
Even more so this year as the world’s footballing community awaits an all-German Champions League final.
Given the substantial possibilities that Monaco’s investors provide, it is unsurprising that many in the footballing community outside of France are questioning the merit of the Federation’s stance.
Unfortunately for French football, it seems there is still much to be said in this ongoing dispute with a peaceful solution not in sight.
…C’est la vie.
Ballymore
Guest
"If Monaco want to compete in Ligue 1 and not pay their taxes, fine. But they cannot use anything that the French workers have had to pay for in their taxes. i.e Roads to get to the stadium, plumbing at the ground, and should their be trouble in the stands, the French police should only look after the side who is paying taxes to pay their wage." Does the same apply to foreign teams playing French teams in Europe? Maybe we should apply these rules to Wellington when they play away next season in HAL?
Wanderer
Guest
If I was Marseille, Lyon or Lille (perhaps Saint-Etienne) I'd be very VERY worried about Monaco.
Franko
Guest
Again Chairman Kanga, you are spot on. (I don't know how we got here from Monaco, but anyway) Merkel would indeed nationalise or at a minimum have an 'add value' on commodities here. That is, Gina can dig up the dirt, but it has to be processed in Australian factories, turned into steel and sold as goods. Imagine 2GB and Bolt if Australia even attempted that. Give me the French and German systems anyday. And back to the football - If Monaco want to compete in Ligue 1 and not pay their taxes, fine. But they cannot use anything that the French workers have had to pay for in their taxes. i.e Roads to get to the stadium, plumbing at the ground, and should their be trouble in the stands, the French police should only look after the side who is paying taxes to pay their wage. It's not as if this Russian can't afford to pay tax, he just doesn't want to!
Chairman Kaga
Guest
Everyone takes holidays in August. Then people return to work 1st of September in good spirits, by around October the 1st the anger sets in and the nation then goes on strike! Democratie, libertie! Funny how they still have plenty of manufacturing in France but have bupkuss in Australia now. Something to do with actually keeping the companys owned by the French than some multinational/American corporation with no loyalties to anywhere but it's directors shareholdings. A lesson the Ford folk are waking up to today in Oz and the General Motors Holden people soon enough. I suppose we can all go and work in a coffee shop or drive tourist buses. We need to be nationalised here if we want to keep people in work. A good start is to nationalise Hancock Prospecting PTY LTD for the people of Australia and imprison the recalcitrant director who is attempting to rob the people of the country. That is what the strongest and most feared leader in Europe would do today.
nickoldschool
Roar Guru
You're spot on Franko. The French right wing is more lefty than our Gillard etc. since the country has moved to the 35hrs week, most French have chosen to continue work 39hrs per week and get what we call RTT. Which means the average Frenchman has around 9-10 weeks holiday paid per year! How can you be competitive with other countries when you work less and are still paid fairly well? You just can't. And it's now, IMO, too late to reform the country. Every time a politician, a rightist or socialist, has tried to bring a reform, people who were against it have paralysed the country and been on strike. I still ink France is a great country but it has gone too far in his ideals. To be idealistic is one thing, doesn't mean we shouldn't be wise. Not a forum about politics so will stop here but could give hundreds of examples which are just insane if you look at them from outside the country.
Franko
Guest
+1 It makes me laugh to think of Sarkozy being labelled right-wing in Europe. Here is a guy that wanted to legislate the price of commodities (I think the price of bread is legislated in France, as it is a basic human right and shouldn't be left to the markets). Over here Sarkozy would have been a communist.
Franko
Guest
But it's not 'the way we've always had it' because there was no Financial Fair Play before. It was fair when the Royals were bank rolling Monaco and Canal+ owned PSG, any club could get a wealthy backer and inflate their team. Russian oligarchs could have bought Biarritz, got Deschamps to player manage, filled the team with stars and won Ligue 1, this was before and this was possible. Now, it is impossible for a Sheik to buy say Biarritz then buy Ronaldo, Kaka, Messi and Rogic and win ligue 1 because they wouldn't be able to balance the books with their pultry income from gates and merchandise. Biarritz would have the same problems as every other club in France. Now Monaco are asking for an unfair advantage because they don't want to play on the same level playing field as the rest of the comp. Everyone has to adhere to FFF. Essentially when Monaco pay a player 1 million Euros, that player gets 1 million Euros, if they can recoup that through gates, sponsors etc. great good luck to them. But a rival club would have to pay nearly 2 million euros for that player to still get paid his 1 million. Therefore they would have to generate twice as much as Monaco in income.
Chairman Kaga
Guest
Wondered why France has the highest standards of living, superb public schools and public transport the envy of the world? There is a cost for all that. You could on the other hand go the American system which is you pay for everything and the public purse puts in a park bench if you are lucky. Where would you rather live?
nickoldschool
Roar Guru
Agree. I heard Monaco's historic president Jean- Louis Campora say the other day that Monaco will never play in the Italian serie A. "It is inconceivable that the club could go and join another federation other that the French federation. It's totally impossible. That is why we believe that the measures taken by the league are measures of exclusion," he told RMC Sport.
nickoldschool
Roar Guru
I agree in essence with what you are saying. But we have lived in this system for ever that's why most ppl accept it as we all benefit from things that other don't or can't and vice versa. I used to live in the French basque region for a while and every week i was driving passed the Spanish border to Irun to get my petrol in Spanish stations as it was much cheaper than in france ( I think it's still the case btw). I could do this but all French living further from the border couldn't. Unfair. On the French news maybe A week ago I saw that there are more and more Swiss nationals buying houses in France as a '2nd housing' but actually living full time in France as its cheaper for them to live there, they send their kids to French public schools where everything is free, they use our free medical system and so on. That's what we had and have in Europe. Is it unfair? Yes. But we are used to it. Am a parisian and life long PSG supporter and I have often felt gutted when I saw Monaco enrol the Hoddle, Hateley, Anderson or Marco Simone that we all loved when he was playing for us in paris, much less when he left for Monaco. We didn't have the money to keep this kind of guys. Probably feeling resigned tbh.
Nicholas Carroll
Roar Guru
Monaco has come out and said that a move to the Serie A, or infact joining any other Federation, would be impossible. I believe that was more of a media-developed alternative.
Chairman Kaga
Guest
The problem with moving to Italy is everyone knows it is corrupt there. It is instituitionalised in an almost comical way.
nordster
Guest
The question here isnt about Monaco having an unfair Advantage...but in how the French govts absurdly high, class war tax rate is Disadvantaging their own French clubs.
Football United
Roar Pro
If the FFF try kick monaco out it will be there loss as they would be the only ones who could challenge PSG at the moment. I think monaco would be happy enough playing in Italy anyway if it had too.
Franko
Guest
Another interesting point Nic, is that if you move from France to Monaco you do not get taxed the same as if you move from another country to Monaco. This is the reason many French move to Switzerland, Leichtenstein or Belgium before moving to Monaco. Therefore it is in Monaco’s best interests to recruit players from other nations.
Franko
Guest
Interesting to note that a 'company' can settle anywhere it chooses in Europe even for tax purposes. How would the ligue feel is Lille moved it's hq a couple of km's over to Belgium where they would be taxed substantially less? What if Abramovich made the financial HQ of Chelsea Gurnsey or the Isle of Man? It’s Monaco’s promotion has not come at the right time for France, as austerity measures are rolled out people do not really want oligarchs throwing money to pampered footballers. Ancelloti is to be taxed at Comrade Hollande’s 75%, why shouldn’t Ranieri?
Chairman Kaga
Guest
Great article, was wondering what Monaco have been up to lately. They were a powerhouse in the French league a while back. I was fortunate to spend some time in Monaco during the mid 1990s. It was surreal they had a team there playing at such a high level. In Australian terms, it would be the equivalent of having a successful and rather old AFL club located in Lorne. You have to remember that in Monaco, there are hardly any people milling around for a large chunk of the year. They are out doing millionaire things, like flying jets and running private wars in Africa. Probably the safest place on in the world to live, zero crime with cameras up and down every street. The dodgy activities are all white colar stuff, like laundering of money and tax avoidance. Their stadium was beautiful, one of the cutest little grounds I have come across. It had a gym and swimming pool built into it that the you could use which was handy. It is only up the road from Nice, which is a decent sized city of Geelong size. A lot of the fans came from there, as Nice's club was a bit up and down. After getting my tax bill and seeing people like the middle class welfare scumbags rip off the system, I dream of moving to Monaco, or somewhere like that. I am over being over taxed.
nickoldschool
Roar Guru
Thanks for bringing the subject here Nic! It is a very touchy subject as all sides are IMO right: does Monaco have an unfair advantage due to their particular financial status? Yes. Has it always been like this? Yes. That's the thing. Monaco has always benefited from his status and has always been able to enrol the best players as they could guarantee high salaries tax-free. When you know how heavily taxed France is you understand it was an unfair advantage. Until recently presidents were only complaining about it when they were loosing their best players or Monaco was dominating the championship. With Monaco in Ligue 2, everyone was ok with it. bring a wealthy Russian and a Ligue 1 promotion and suddenly Monaco is again the devil. I understand the 19 other Ligue 1 presidents who want Monaco to be treated and taxed the way they are. The issue I have is that in my mind the tax-free system Monaco have is inherent to who they are and is a perk we have all lived with for ever, whether people are footballers or bakers. This is monaco, that's why F1 drivers, golfers and stars choose to live there. It's ok with me.