On release clauses in Spain, if you never understood them

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On release clauses in Spain, if you never understood them Empty On release clauses in Spain, if you never understood them

Post by Mr Nick09 Tue Jan 07, 2014 9:15 pm

Miguel-Ángel Gil Marín this past week announced -- and "announced" is the word -- that Real Madrid had offered €45 million ($61M) for Atlético Madrid forward Sergio "El Kun" Aguero. He also said that Chelsea had made a huge €60M ($81M) joint bid for Aguero and Uruguayan center back Diego Godín. But don't worry, he added proudly, we said no. And that was that. That was also pretty much the point.

Soon the story appeared on the BBC in London. And soon after it appeared in the Spanish press, tagged with that favorite line, get-out clause and must be true credibility ticket rolled into one: according to sources in England. The story was made all the more real because it was backed up by quotes that were absolutely categorical. Not just any quotes, either, but quotes from Atlético's chief executive and majority shareholder -- son of the former owner Jesús Gil y Gil. And he should know.

He should indeed know. In fact, he does know. The trouble is, sometimes it's not enough to know what someone said; sometimes it's a good idea to ask why they said it. What exactly do they know? Why did they chose to "reveal" it? And are they telling the truth?

Real Madrid publicly denied that it had made a bid. Chelsea do not publicly comment on transfer stories but privately it denied it too. There was no follow-up, no second bid, no battle. Not yet, anyway.

There was also something not quite right about the claim. Aguero's official buyout clause is €45M. Which begs two questions. One, if his buyout clause is €45M why would you turn down a €45M bid? And two, how could you turn it down? After all, isn't that what a buyout clause is for? If someone offers that amount, you have no choice, right?

Right. And wrong. That's sort of how it works, but not exactly how it works.
Spain's buyout clauses have often been set up as a deterrent -- symbolic, gigantic figures to warn off suitors. Sergio Busquets has just renewed his deal with Barcelona for example and his buyout clause is now €150M ($204M). But they do also have a practical use. They form part of a legal framework and also a gentleman's agreement between clubs. Which is why the price is not always the price. Because clubs are not always gentlemanly about it.

Under the terms of that basic agreement, clubs accepted that another club which paid the buyout clause could sign a player without resistance. If it's €45M, you pay €45M and you take your player, no mess and no fuss. It is, essentially, a price set at which you say you will sell.

But you don't necessarily have to sell at that price; that agreement has a legal foundation that is a little different. At an informal level, the modus operandi has been altered since Real Madrid walked off with Luis Figo for the symbolic but just about manageable figure of 10,000M pesetas. The buyout clause remains, but the application of it is different.

Now most clubs are saying: this is the buyout clause, sure, but if you make a hostile bid, a bid that we do not welcome, we will force you to apply the clause legally. And when you apply the law legally, that is a different issue. When you apply the law legally, it is a different price.

That means one of two things, both of which increase the price. Firstly, it can mean adding the VAT at 18 percent. In the past, clubs have agreed to include VAT in the invoice for a player's transfer (which of course can be claimed back from the state). Now, if the bid is hostile, they will not. In other words, the buying club will have to pay the clause plus the 18 percent. So, Aguero's price rises from €45M to €53.1M ($72M).

The other option is for a club to simply refuse to sell -- until, that is, it is forced to. That's where the legal buyout clause kicks in, Decreto Real 1006/1985. But that decree is exactly what it says it is: a buyout clause. A player (not the club) deposits the money, the value of the buyout clause, at the Spanish league and unilaterally breaks his contract. That money, of course, would be given to him by the buying club in order to buy himself out. The problem is that as soon as that money hits his account it counts as income -- even if it is then deposited elsewhere. And so it is liable to taxation at 44 percent. In other words, the €45M is the amount left after taxation. That is to say that Aguero's overall cost is €80.2M ($109M).

The other factor that's significant is that the buyout clause is a Spanish agreement. When it comes to international transfers -- to bids from aboard like the one supposedly from Chelsea -- it is irrelevant. Except as a symbolic price, a reference point from which you can negotiate.

All of which reinforces Gil Marín's position.

Or appears to. Because the other things buyout clauses offer clubs is protection. In a sense, they are a sleight of hand. Every player has a price, every club too. With or without a clause. When you set a buyout clause, you set a price at which you would sell a player and, just as importantly, you give yourself an excuse. When fans complain that you have let your star go, you simply respond: we couldn't do anything about it, they paid the buyout clause.

And that is the key here. Sergio Aguero recently renewed his contract with Atlético Madrid. In return for doing so, his buyout clause came down from €60M ($80M) to €45M. Fans feared that meant he was making himself more affordable for future clubs; signing a new deal might look like committing yourself to Atlético for longer but, they feared, it was actually a prelude to a departure. The same process had happened before with Fernando Torres.

It is not just about the player. Publicly, the club would never say so but the drop in the buyout clause suits it too. It offers a price -- a more reachable price -- at which other clubs know that they would negotiate while setting that price high and also providing the excuse. The trouble is, some fans started to suspect as much. Some feared that Atlético -- already seemingly in a slow but steady decline -- was preparing the ground for its best player to go.

Which is exactly why Gil Marín spoke out. Who stands to gain when a club loudly announces a huge bid -- and one it has bravely, heroically turned down? The club itself. Gil Marín.

Amid fears that Aguero was going to depart and criticism of the chief executive for preparing that departure, Gil Marín defended himself. He tried to shift any future blame elsewhere and to underline his resolve: if Aguero goes, it will not be our fault, we will fight to keep him until the law says we can fight no more. He tried to rehabilitate himself and his club in the eyes of the fans. Basically, he boasted. If the reaction from the other two clubs involved is anything to go by, it was an empty boast. A lie.
This week Miguel-Ángel Gil Marín did not so much announce that he had turned down huge bids for Sergio Aguero as announce that he will not sell the club's best player. Even though the inescapable reality is that, one day, that is exactly what he will do.

Read More: http://sportsillustrated.cnn.com/2011/writers/sid_lowe/01/29/atletico.buyouts/index.html#ixzz2pkX8tk4H
Mr Nick09
Mr Nick09
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