Taxes, sterling ´cost Premier League in players race´

English Premier League clubs are losing the battle for top European stars as the exchange rate and tax rises clobber their projected income, auditors Deloitte said on Friday.

Continental European players could see their net income plunge by a third from April 2010, when Britain’s new 50-percent top rate of income tax takes force — up from 40 percent.

“As a result, players and their agents are likely to request pay increases to compensate them for this, leaving clubs with a choice between an increase in their wage bill or potentially losing the player to an overseas rival,” Deloitte said in a report.

According to research conducted by their Sports Business Group, Premier League clubs could face wage demands up to 70 percent higher than their rivals in Europe’s other top leagues: Spain, Italy, Germany and France.

If a player negotiating a new contract this pre-season demanded three million euros (4.2 million dollars) per annum after tax, the cost to a Premier League club following the income tax increase in April 2010 would be 6.8 million euros, Deloitte said.

That is 70 percent more than the four million euros it would cost a Spanish club to give a foreign player the same net pay.

The British figure is also higher than clubs in France (6.7 million euros), Italy (5.7 million euros) and Germany (5.4 million euros) would have to pay.

“The summer transfer window opened over a month ago, but Premier League clubs are yet to make significant acquisitions from overseas,” said Pete Hackleton, senior manager in the Sports Business Group.

“Real Madrid has already spent a reported 200 million euros on three players from other big European leagues — Cristiano Ronaldo, Kaka and Karim Benzema — but we have not yet seen a significant influx of talent to the Premier League.

“The reduced value of sterling against the euro and the proposed increase in the top rate of income tax are contributing factors to this.”

Spain’s La Liga first division is the main alternative to the Premier League for top talent, Deloitte said, thanks to its tax system which allows temporary non-Spanish residents to be taxed at 24 percent.

Britain’s 50 percent tax rate will apply to any annual income above 150,000 pounds (245,000 dollars, 175,000 euros) as the Treasury seeks to claw back lost tax revenue caused by a deep recession.