Why Transfer Pricing is Relevant to Premiership Football

Mon Jun 15 16:24:38 EDT 2009
By Pim Fris and Tom Coriano with Dr. Graham Poole

The saga over the failed £100m plus transfer of Brazilian superstar Kaka´ from AC Milan to Manchester City in the January transfer window highlighted yet again the absurdities of Premiership football. In recent years, a staggering procession of billionaires has bought clubs, most with the aim of turning a sleeping giant into a champion. Of course, only one club at a time can be champions, and it comes as no surprise that several of the most famous clubs in English football are reported as being technically insolvent. This has given rise to concerns that Premiership football has lost touch with reality and that at some point, possibly as a result of a benefactor getting bored or running into financial difficulties, one or more will come unstuck. Albeit in different circumstances, this is what happened to the once great Leeds United. This article from Tax Planning International Transfer Pricing -- by NERA Associate Director Dr. Graham Poole, Special Consultant Pim Fris, and Analyst Tom Coriano -- examines how various concepts and analytical methods used in transfer pricing could provide a sensible framework for restoring a semblance of sense and balance to Premiership finances. Specifically, the application of these approaches to what are essentially related party transactions could curb the distorting effects of utility-maximizing behavior by club owners.