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Context of '2005: Spain Passes ‘Beckham Law,’ Giving Millionaire Footballers Massive Tax Break'

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After months of negotiations, David Beckham signs a new three-year contract with Manchester United. Beckham is to receive £70,000 a week in basic pay and £20,000 for use of his image rights, representing a 300 percent salary increase. It is the image rights issue that caused the negotiations to go on for so long. “The process of every player contract negotiation is different,” says United chief executive Peter Kenyon, “and one of the unique aspects of David’s was understanding how his global image could best be utilized to the mutual benefit of Manchester United and David himself.” [BBC, 5/12/2002] Clubs and players are keen to agree that a portion of compensation be paid for image rights, because it is taxed at a lower rate. [SportsPro, 2/25/2011] The new contract should take Beckham’s total earnings to around £11m a year. Although Beckham’s deal is not the highest in world football, Beckham receives so much from endorsements that he may overtake French midfielder Zinedine Zidane as football’s top earner. [BBC, 5/12/2002]

Entity Tags: Peter Kenyon, David Beckham, Manchester United F.C.

Timeline Tags: Football Business and Politics

The Spanish government passes what will become known as the “Beckham Law.” The law grants a tax break to wealthy foreigners earning over €600,000 who work in Spain—they will pay only 24 percent income tax, whereas Spaniards earning the same amount pay 43 percent. The initial aim is to attract talented executives, but the biggest effect is on Spanish football, as the tax break allows Spanish clubs to attract high-paid players from elsewhere in Europe where there are higher tax rates. The law gets its nickname from Real Madrid midfielder David Beckham, who joined the club shortly before the tax break came into operation. A later Spanish administration will announce the end of the law’s application (see November 4, 2009). [Xinhua News Agency (Beijing), 11/4/2009]

Entity Tags: David Beckham

Timeline Tags: Football Business and Politics

The Spanish government announces that the “Beckham law” will cease to apply on January 1, 2010. The law was passed in 2005 in order to lure top foreign executives to Spain by giving them a massive tax break (see 2005). However, most of the people who took advantage of the law were footballers, in particular England and Real Madrid midfielder David Beckham. The law’s repeal will lead to Spanish clubs having to pay foreign players more in future, creating a more level playing field for signings with clubs in other European countries. [Xinhua News Agency (Beijing), 11/4/2009]

Timeline Tags: Football Business and Politics

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