Tax-free Monaco embraced after club’s $68 million payment keeps it in French soccer

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After conflict between Monaco and the rest of French soccer left the top tier’s seven-time champions on the brink of explosion from their league, the club and the Ligue de Football Professionel reached an agreement on Friday that will allow Ligue 1’s second place team to stay in the French league. Whereas AS Monaco were on the brink of being excluded from next season’s competition because of a new rule targeting their tax-exempt status, the club will now pay an expensive, one-time fee to maintain their place in le Championnat.

“Out of concern for the equality and balance of the competition, AS Monaco are committed to paying a voluntary, fixed and definitive sum of €50 million to the LFP,” the league said in a Friday statement, “and will withdraw their plea to the Council of State.”

Monaco, having spent lavishly since Russian businessman Dmitry Rybolovlev bought the club in Dec. 2011, pays $68.4 million to stay in the league, a status the club has enjoyed since 1933. With tax rates against high incomes climbing in France, the remainder of the French league had grown tired of Monaco’s competitive advantage, the club based in a tax-free principality that operates independent of French law. That advantage has helped lure like likes of Radamel Falcao, João Moutinho, and James Rodríguez to the club, with Rybolovlev’s team alleviated of paying the personal income tax that is customarily covered by French clubs.

source: AP
Dmitry Rybolovlev purchased AS Monaco in 2011 as the club embarked on their two-year stint in the second division. His spending has vaulted them back into Ligue 1 and into a UEFA Champions League spot. (Photo: AP.)

In response to Rybolovlev’s spending, the LFP had adopted a rule that, effective next season, would exclude all clubs whose offices were not located in France. Monaco was pursuing a resolution through the French courts before Friday’s resolution, one that Rybolovlev touted on the club’s website:

“From the beginning we wanted to find an intelligent solution which would work for both sides, within a favourable climate for negotiations.

The AS Monaco FC project can help raise the level of French football and it is good that this has been understood.”

The idea that teams like Monaco and Paris Saint-Germain can help raise Ligue 1’s level underscored the early acquiescence to PSG’s rise. Part of the theory was revenues PSG would raise (or, merely inject) money into the rest of the first division either through player purchases or by raising the league’s commercial profile.

Based in the French capital, PSG is subject to the same taxation as 18 other clubs in Ligue 1. Monaco, however, doesn’t have to endure the same tax on Falcao as PSG’s paying for Zlatan Ibrahimovic. Where it’s customary to have agents negotiate such that clubs are responsible for players’ income taxes, Monaco faces a significant edge when accounting for their high-end talents.

Thanks to Friday’s $68.4 million settlement, that edge gets preserved in perpetuity. From the club’s statement announcing the agreement:

By paying a single, lump-sum, voluntary contribution of EUR 50 million, payable in installments, AS Monaco FC is demonstrating its commitment to French football and will be able to continue to pursue its project for the benefit of all stakeholders.

The shared history between French football and one of its most faithful representatives has made it possible to find an agreement that will put an end to their legal dispute, with an undertaking from both sides that this agreement cannot be challenged later.

If the point of pursuing Monaco was restoring competitive advantage, it’s unclear this agreement makes sense. The $68.4 million fee Monaco’s paying represents only a few years’ taxes on their players. In the big picture, this isn’t something that’s going to inhibit Monaco from taking advantage of their slanted playing field.

In accepting this solution, the LFP’s agreeing with Rybolovlev, even if their statement touted the need for “equality and balance.” Having settled for such a small payment, the deal does little to achieve those ends. Though it may have symbolic value in getting Monaco to acknowledge their advantage, it won’t inhibit players from moving to the club. It won’t deter Rybolovlev from growing his team. It won’t stop Monaco from exploiting their advantage on the rest of their league.

But Ultimately, it does them no good to kick out Monaco. Perhaps France would have a more equitable competition, but they’d have it at the expense of their commercial growth, something that can’t be taken lightly for a circuit that continues to attract some of the world’s best talent. With clubs like PSG and Monaco in the league, Ligue 1‘s profile could eventually challenge that of the Serie A and Bundesliga. When that challenge translates into revenues, the rest of le Championnat‘s clubs may be better off.

At least, that the end game the LFP are hoping to see. Whether that transpires, only time will tell. After Friday’s agreement, however, the experiment is set to run its course. The LFP has signed off on Monaco’s competitive advantage, accepting a large if token payment in the process. Now Monaco has to make good on their promise.

Watch Live: Swansea host Manchester United

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Swansea City welcome Manchester United to the Liberty Stadium on Saturday (Watch live, 7:30 a.m. ET on NBCSN and online via NBCSports.com) with Jose Mourinho’s side aiming to stay top of the Premier League table.

[ STREAM: Swansea v. Man United ]

Yes, it’s early days, but the Red Devils were imperious in their thumping 4-0 win against West Ham United to open their season. Romelu Lukaku and Nemanja Matic dominated and Mourinho’s men are now a powerful, well-oiled machine.

As for Swansea, they struggled at Southampton but came away with a draw, however the main storyline surrounding the South Wales side this week has been losing Gylfi Sigurdsson to Everton for over $60 million. Paul Clement will have to act fast to spend that cash wisely, but there is no doubt the Swans will miss their Icelandic playmaker.

In team news Swansea bring in Kyle Bartley and Roque Mesa as they line up in a 3-5-2 formation with Jordan Ayew and Tammy Abraham up top.

Man United are, unsurprisingly, unchanged.

LINEUPS

Swansea City: Fabianski; Fernandez, Bartley, Mawson; Naughton, Mesa, Fer, Carroll, Olsson; Ayew, Abraham. Subs: Nordfeldt, Rangel, van der Hoorn, Fulton, Narsingh, Routledge, McBurnie.

Manchester United: De Gea; Valencia, Bailly, Jones, Blind; Matic, Pogba; Mkhitaryan, Mata, Rashford; Lukaku. Subs: Romero, Lindelof, Smalling, Fellaini, Herrera, Lingard, Martial

Arsenal sends Gabriel Paulista to Valencia

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Arsenal has a thin defense, but that hasn’t stopped Arsene Wenger from thinning the squad even further.

Gabriel Paulista is headed back to the Spanish top flight after the completion of his transfer to Valencia. The Brazilian was sold for a reported $12.8 million, just below the $14 million price tag Arsenal coughed up to Villareal back in January, 2015. He will partner with Manchester City loanee Eliaquim Mangala at Valencia.

The 26-year-old made 64 appearances for the Gunners across all competitions, including 46 in the Premier League. His only goal for the club was Arsenal’s first of a 2-0 win over Bournemouth in December, 2015. His high-water mark with the club was a 120-minute performance against Manchester City in the FA Cup semifinals where Arsenal came back to win 2-1 on an Alexis Sanchez goal in extra time.

“We would like to thank Gabriel for his contribution to the club and to wish him well for his return to La Liga with Valencia,” Arsenal said in its confirmation of the deal.

Paulista was utilized more than expected last season thanks to an injury crisis at the back, and still the Arsenal squad doesn’t seem fat enough to offload defenders, but Gabriel’s over-aggressive nature and tackling inaccuracy led him to an early exit.

With Arsene Wenger now deploying a back-three, the only natural central defenders currently on the roster are Laurent Koscielny, Per Mertesacker, Shkodran Mustafi, and Rob Holding. Koscielny is suspended from a red card at the end of last season, and Mertesacker is battling a head injury. Sead Kolasinac, Nacho Monreal, and Calum Chambers have played CB for the Gunners in the recent past, but it is not their natural position.

Fabian Johnson misses Gladbach training with injury

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With John Brooks already out long-term due to a thigh injury, the United States may have another key injury to work around.

According to Borussia Monchengladbach manager Dieter Hecking, full-back/winger Fabian Johnson missed training on Friday due to an unspecified injury, and is now a question mark for Gladbach’s home match on Sunday against FC Koln. It could be nothing, but even the scare is cause for concern among U.S. fans.

Johnson has battled a few injuries the past couple of seasons, including a hamstring problem last spring that kept him out for nearly two months, including a pair of World Cup qualifiers in March.

Johnson’s absence would leave a hole at right-back for the United States. The 29-year-old has been deployed some at right wing for the USMNT, but he has been relatively poor at that position in the national setup, looking better when pushed further back where he is given more defensive duties, roaming forward with less frequency but more intent.

In place of Johnson, another converted winger in Graham Zusi has been seeing more time at right-back, but he offers less in the attack and lacks Johnson’s recovery speed, meaning mistakes by the Sporting KC veteran are punished more often.

Falcao scores again to extend red hot start

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Monaco is hoping to ride out the final two weeks of the transfer window with 18-year-old wonderkid Kylian Mbappe still in tow.

While they wait, they aren’t missing a beat.

With Mbappe out of the squad, Radamel Falcao has begun the 2017/18 Ligue 1 season as Europe’s hottest goalscorer. He bagged a hat-trick last weekend with Mbappe on the bench to give him four goals in the first two league matches. Then, with Mbappe out of the squad entirely, Falcao netted the winner in a 1-0 road win over FC Metz.

Falcao has scored five goals so far this year, and his club has a +5 goal differential. In a way, Falcao has already been worth six points thus far.

Thanks in part to Ligue 1’s early start, Falcao’s five league goals are by far more than anyone else in the major European leagues. Four players have scored a pair of Premier League goals, nobody in La Liga or the Bundesliga have scored more than one, and the Serie A season has yet to start.

The Colombian did the same thing last season. After eventually coming off the shelf from to hamstring and concussion problems to start the season, Falcao scored 10 goals in 10 Ligue 1 matches leading up to the new calendar year.

At 31 years old, Falcao isn’t a long-term solution and the club will clearly look to retain Mbappe despite Falcao’s hot start, but should they lose the young Frenchman, the club will be in good hands while they search for a replacement over the next year.