The Offshore Game was a project set up by the Tax Justice Network to look at the role of offshore finance in football.
Our interest in this area was sparked by the fact that there had been relatively little scrutiny of the financial affairs of football clubs, despite the large amounts of money flowing through them, and the huge popularity of the game. And just as ordinary people all around the world lose out when multinational companies and wealthy individuals use secrecy to hide tax abuses and other corrupt practices, it is football fans who are left to deal with the wreckage when dodgy owners drag their clubs into danger.
In England and Scotland clubs have crashed in spectacular style after they were loaded up with debt. Often their owners, hiding behind secrecy jurisdictions walked away, without being held to account for their financial recklessness. In some cases, owners and players have connived to dodge paying their taxes – while fans shoulder the costs of austerity and the risks to the club they love.
We sought to give fans the tools to hold their teams to account, to help them understand who owns their dreams, and what they are doing with them.
The Offshore League
The main output of our project was a report, The Offshore Game, published in 2015, looking at offshore finance in the English and Scottish football leagues. Our findings were featured in a two page spread in the Guardian here.
Overall, we found £3bn in debt and equity from offshore companies invested in clubs.
This finance was found in 34 teams – 25% of British professional football clubs.
All levels of football were represented, from giants Manchester United to League 2 Shrewsbury Town, although clubs more heavily reliant on offshore finance tended to be in the English Championship and Premiership.
Not all offshore pounds are equal. To create the Offshore League the team also looked at the secrecy of offshore financial centers from where their money came from. To do this we used the Financial Secrecy Index developed by the Tax Justice Network. We combined the amount of money coming from offshore, with the secrecy of the source of the funds, to create an index of the most secretively financed clubs in the game.
The top four clubs in our study in 2015 were Man City, Bolton, Bournemouth and Spurs – of which Bolton have since suffered one financial blow after another…
A detailed strand of work looked at the collapse of Rangers Football Club. Rangers, one of the world’s most famous football clubs, went into administration and then liquidation in 2012, with large unpaid tax debts. These were partly the result of the club’s involvement in an offshore tax avoidance scheme used to pay players at the club. The scheme was the subject of a long running legal dispute which finished at the Supreme Court in 2017. The court found in favour of HMRC in the so-called “Big Tax Case”.
Researchers from the Tax Justice Network looked at the inquiry into allegations of rule breaking by Rangers in connection with the tax avoidance scheme which was initiated by the Scottish Premier Football League. That inquiry, which was initiated after the collapse of Rangers, but concluded before the Supreme Court decision, found that the club had not gained a sporting advantage through the operation of the tax avoidance scheme, as it had been found to be lawful.
Our report, Doing SFA for Fair Play, was based on access to previously confidential information. We found that the judge and panel presiding at the inquiry had been misled as to the nature of the tax avoidance schemes by senior Scottish Football executives with long term links to Rangers Football Club – which could have opened the door to consideration of much more serious consequences, including title-stripping.
In addition, the report identified a clear breach of the licensing process through which the Scottish FA allowed Rangers to take part in potentially lucrative European ties – despite their financial position failing the relevant criteria. Although it was the subject of media coverage and great online debate at the time, it is only in May 2018 that the Scottish FA has charged Rangers over the issue; and as yet, there has been no independent investigation of the SFA itself.