Elite Soccer’s Culture of Graft

By Sean Williams

On Tuesday Cristiano Ronaldo, smiling and bedizened in a black coat and diamond earrings, arrived at court in Madrid, Spain, to receive a $21.6 million fine for tax fraud. It is roughly what the Portuguese star, worth around $450 million, makes each quarter. And while the 33-year-old—who’s also currently under investigation for an alleged rape in Las Vegas—may be a particularly distasteful example, it’s just the tip of the international tax-evasion iceberg in modern soccer, which thanks to whistleblowers and investigative journalism is now slowly being revealed.

Ronaldo, a five-time FIFA world player of the year who last summer moved from Real Madrid to Italian giant Juventus, has become a human billboard since bursting onto the global stage as a teenager with Manchester United. He owns businesses in footwear, fragrances, gyms, a creative agency, hotels and underwear. He endorses watches, shampoo, online gambling–even steelworks. His sponsored social media posts can fetch hundreds of thousands of dollars. His legs are insured for $144 million.

The star’s tax strategy is similarly diffuse. In accusing the player of four counts of tax evasion between 2011 and 2014, a Madrid state prosecutor said Ronaldo “intentionally” did not declare income, falsely reported income as coming from real estate, and funneled cash through a Virgin Islands-incorporated firm to “create a screen in order to hide his total income from Spain’s tax office.”

The deal cut with the Madrid court includes both the hefty payment to the Spanish state, and 23 months in jail. But first offenders with a custodial sentence below two years in Spain almost always avoid time behind bars. The same day, former Real teammate Xabi Alonso visited the same court, accused of defrauding the taxman of $2.3 million. His case continues.

Spain’s current interest in these prosecutions stems from a peculiar history. In the early aughts the country enjoyed an economic boom. Soccer, by far its most popular sport, spent big. Real Madrid threw hitherto unseen amounts of cash at the game’s biggest stars, christening what was soon known as the “Galactico”—Spanish for “galactic”—era. Real smashed transfer records for Zinedine Zidane, Luis Figo, Kaka and other household names. In 2003, it prised David Beckham from Manchester United. The international superstar would become one of the first to benefit from—and thus unintentionally nickname—a Spanish Tax Decree passed in 2005 that aimed to attract top international talent.

But Spain’s economy tanked amid the global financial crisis in 2008. Two years later, the government began amending the “Beckham Law.” Authorities have since spied out tax arrangements they believe are defrauding the state–Croatian Real Madrid midfielder Luka Modric, Colombian Radamel Falcao, Brazilian Marcelo Vieira, and Argentines Angel Di Maria, and Javier Mascherano have all faced charges. The Argentine FC Barcelona striker Lionel Messi and Brazilian former teammate Neymar da Silva Santos, now of French champion Paris St Germain, also faced high-profile cases.

Beyond the sports world, of course, major corporations worldwide bounce profits from territory to territory, paying minimal amounts of tax. But part of this tax fraud reckoning is also specific to soccer, a sport whose ingrained corruption is now starting to be recognized. Since a 2015 investigation into graft at FIFA, the sport’s highest international body, hackers, whistleblowers and journalists have unearthed hundreds of examples of fraud involving soccer’s biggest brands. A series of stories from published by German outlet Der Spiegel and others, relying on over 18.6 million leaked documents from the website Football Leaks have hinted at elaborate tax dodges by players’ agents in the UK, offshore shell companies to funnel money to managers, and “backroom” deals with officials and businesspeople from Gulf nations, including a “billion-euro deal with Qatar Tourism Authority reported to have violated European soccer’s Financial Fair Play regulations.

In 2016 London club Chelsea reportedly created a firm in the British tax haven island of Jersey solely to deposit 10 percent of newly signed French midfielder N’golo Kante’s salary. Kante, who last year led his country to World Cup glory, refused. British media hailed Kante as a “hero.” He is “perfect,” international team-mate Blaise Matuidi told a press conference, sardonically. “He doesn’t cheat. Just a bit when he plays cards.”

Kante is the exception. Last April the Mirror reported that almost 130 Premier League soccer players owed a combined $326 million in tax back payments, having poured cash into a failed London tax avoidance scheme. Six months later UK tax authorities announced that a probe of almost 200 footballers had netted the British government $430 million in extra tax. As with Spain’s post-2008 economic hangover prompting greater tax vigilance, these British scandals have been particularly galling given the country’s current economic predicament over Brexit, and given skyrocketing ticket prices cutting off match day experiences to most all poorer Britons.

The problem extends well beyond tax dodges highly-paid players in European countries, thanks to the sport’s overpopulation of hangers-on and ten-percenters waiting to capitalize on young men who are, for the most part, bureaucratically naive. Grim stories abound of young players in Africa conned by bogus scouts and talent agents. Few in FIFA or other governing bodies appear truly keen to combat corruption.

As Ronaldo left the hearing in Madrid for his private jet, where he would later post a photo to his 76.3 million followers captioned by a thumbs-up emoji, he told a crowd of reporters that “everything was perfect.” The U.S.-based rape investigation still hangs over the star’s head, relating to a 2009 encounter at a Las Vegas hotel over which Ronaldo paid an American woman, Kathryn Mayorga, $375,000 as part of a non-disclosure agreement. In November, Der Spiegel cast serious doubt on the player’s professed innocence when it reported on a damning set of documents, “most of which,” the magazine wrote, were obtained through Football Leaks. That case will take some time to conclude.

On January 16, police in Budapest arrested Rui Pinto, a Portuguese national, believed to be behind the Football Leaks information. Pinto’s lawyer, William Bourdon, who previously represented Edward Snowden, has suggested he will offer a very particular line of defense: that precisely because Pinto’s revelations led to the investigation of cases like Ronaldo’s, he must be protected under a Hungarian whistleblower law. “It will be a historic decision for a judge to make,” Bourdon told The New York Times.

That so much of soccer’s bad behavior would have remained shrouded in secrecy without Pinto says much about the way the world’s most popular sport is run. Now Pinto’s case, as much as Ronaldo’s, will test “The Beautiful Game’s” accountability.