This publication interviewed a senior wealth planning consultant at Lombard International about sports and wealth management.

Wealth management has become as much a part of a sportsperson's career decision as the team they are going to play for, especially as wealth in sport has risen dramatically over the last decade. According to reports, Lionel Messi is currently the highest paid football player in the world - he earned $111 million a year at Spanish club Barcelona and in sponsorship deals. With great wealth at hand, specialist planners and bankers have become a necessary part of a footballer's life to handle their affairs.

Recently, this publication reported that after around 12 months of tax planning difficulties in Spain, footballer Cristiano Ronaldo was helped in his decision to join Italian club Juventus. This was because a new fiscal law in Italy allows tax contributors moving there to pay as little as €100,000 ($116,000) in taxes on earnings made outside the country. WealthBriefing has regularly reported on the image rights' tax avoidance crackdown in Spain involving a host of big names in the world of football, including Messi and Xabi Alonso.

Ronaldo is not the only player to think about financial issues in Spain when making his footballing decisions. Lombard International recently helped a goalkeeper moving from the UK to Spain, who had some international mobility difficulties and needed professional advice. The life insurance policy he selected would have to comply with Spanish tax rules from its inception. However after discussions, the player decided to move from the UK to Italy instead. The objective remained the same for the client - he wanted to ensure that his UK life insurance policy would be compliant in Italy. This publication interviewed Nicolas Liaigre, senior wealth planning consultant at Lombard International, about sports and wealth management as well as the Italian case study.

How much has wealth planning become a factor in a footballer’s career decisions?
Wealth planning has never been as important as it is today in a footballer’s career decisions. Some time ago I was reading an FT article on the topic, entitled “A new breed of footballers” comparing today’s football stars and their approach to their career and life, to the stars of 30 years ago. Totally worlds apart. 

Today’s footballers evolve in a highly mature industry where they grow up surrounded by specialists and experts that help them in every aspect of their career. Many players are used to the idea of having experts advise them and have also learned from them. The same article was referring to the example of Mathieu Flamini, the French football player, who is about to become the first billionaire footballer, not because of earnings made whilst playing football, but by co-founding a biotechnology company that is helping to fight environmental damage. He acknowledges learning from the mentors around him that go far beyond the pitch. 

Footballers who played professionally twenty years ago and players today are worlds apart. Today’s footballers grow in a mature industry and are taught how to take into account key elements in all aspects of their life, including financial considerations. 

Is sports and wealth planning becoming a growing sector that needs to be taken care of more? What more needs to be done for wealthy footballers?
Absolutely. There are many elements that make wealth planning in sports extremely important. These include the short professional careers, the fact that sports people are very internationally mobile and have cross-border needs, a lifestyle to be maintained, health cover expenses that are more expensive as they get older. Additionally, not all athletes within the “wealth creators” population will necessarily have received a financial education and so working with an advisor is crucial.   

Football has become an internationally established business and there needs to be a more integrated approach to wealth planning for its players. Financial education needs to be recognised as a crucial component of a footballer’s wellbeing. 

What plans need to be taken out to help a footballer with tax complications from cross-jurisdiction wealth?
This is the same as for all other “wealth Creators”, who are internationally mobile. Taking the correct approach is essential, and a long-term view is always more prudent that a short term fix. 

Footballers will relocate on average two to three times during their career, and rarely know where they are headed to next. At the end of their careers they may retire in their country of origin or somewhere else. That’s a lot of moving around. As they accumulate wealth during their careers there are many solutions that could work perfectly for that given time, in that given country. The challenge is that, as they move on to the next country, such structures might become useless and too problematic as new legal and tax challenges arise. This can occur both locally in the new country of residence and internationally as some of the assets might be blocked in the given structure and might not be portable. It is therefore essential to consider the ‘mobility’ element as of the very beginning and plan for the long term using solutions that are compliant and cross-border by design. 

What do footballers need to take into account financially when moving football clubs?
As with every professional moving to a new company, agreeing to a beneficial employment contract is key to their success. All financial conditions must be considered, including signing bonuses, base salary, expenses, and additional bonuses. One key element that is specific to athletes in general and footballers in particular is image rights. 

Image rights is a recurring discussion point when negotiating contracts. Traditionally, clubs will ask for the exclusive right to have control over how the athlete would appear in media and advertising. This was in the past, in the pre-Beckham era. Today most players know the importance of this element in their finances, and how lucrative it can be. They therefore do not just give these away and in general most contracts will find a compromise that gives both the club and the player a portion of these rights. These rights are generally managed by companies, established just for this purpose and in a cross-border scenario, it is essential that these companies are properly established to manage any international relocations that the footballer may have in their career. 

Is the crackdown of tax becoming a norm in Europe – and are Spain and the UK the pioneers in a continent campaign against image rights/tax structures or will it die?
This is less of a crackdown and more of the establishment of new tax codes, more relevant to the world we live in. It is now, more than ever, a question of intentions and purpose. 

Setting up a company to manage image rights is crucial to ensure the proper management of these rights for a successful footballer. This is the main intention and should remain so. Should the main intention become tax avoidance, by nature this cannot work as there is an alignment in rules and regulation across countries, and with the upcoming ‘automatic exchange of information’ regime, international data sharing will become the standard soon enough. 

On the topic of a potential continent campaign against image rights/tax structures, pioneered by Spain or the UK, I believe that what we see is just the tip of the iceberg. Over the past five years, most European countries have made large efforts to target tax avoidance, in many industries that go beyond sports. The episodes involving Google, Amazon and Starbucks are an example of this. 

In regards to the case study – how did you help the footballer? Did you talk to all of his family? What plan did you give him? Did what you say help make his decision? 
The client had recently moved to the UK and was considered as resident non-domiciled (RND), a particular status in the UK which gives you the possibility to choose your tax regime. Non-Doms usually opt for the remittance basis which provides tax advantages but also creates administrative issues and complexity (segregation of accounts, protection of clean capital). Life insurance is the perfect tool for such matters. We had different conversations with the IFA and the client’s accountant in order to understand the needs of the client and his family. We then produced a memo which detailed the planning we envisaged, and this was reviewed by the client's father. 

A meeting then took place with the player and his parents, attended by eight different advisors who presented their expertise and solutions. We believed that it was important that while the parents were included in the decision making process, the player had to understand his own responsibility for his financial decisions. The key benefits of our solution for the client were that it is recognised by the tax authorities, portable in core European jurisdictions, flexible in terms of management, and transparent when it comes to fees and people involved in the contract.

How did you get in contact with the footballer? 
We had an existing relationship with the client and his IFA as we had worked with them both in Belgium. The IFA came to us when the client was relocated to the UK, as they knew we had the technical expertise and track record in this market to develop the most efficient solution for the client.