FootBiz newsletter #150: UEFA's latest political battle, Chelsea sanctions and more

For decades, the quiet lakeside town of Nyon has served as a serene backdrop for the multi-billion-euro machinery of European football. But this week, the peace in UEFA’s headquarters is being disturbed by something far more threatening than a Super League breakaway: the threat of an enormous local tax bill.

Today the Grand Council of Vaud, the Swiss canton (like a county or state) in which UEFA is based, will vote on a resolution that could strip UEFA of its coveted tax-exempt status. On the surface it may look a bit like your standard bureaucratic squabble, the same sort of local bickering that we witnessed in Foxborough recently over the costs associated with World Cup matches. In reality, it could turn out to be a high-stakes collision between sports governance, international law, and the definition of a key term: "public utility."

Under Swiss law, international sports federations that base themselves there (eg. FIFA, UEFA, IOC) enjoy their tax-free existence on one condition: they must act as "public utility" entities. To keep their billions in revenue out of the taxman’s reach and enjoy easy access to their ski chalets, organisations like UEFA must prove that they act for the greater good, whether that is developing sporting infrastructure globally, combating racism, promoting peace (ahem) or simply upholding international moral and ethical standards.

The argument spearheaded by MP Théophile Schenker is that UEFA is in breach of its social and legal contract with the Swiss authorities.

Perhaps unsurprisingly, given everything in football seems to come back to the Middle East these days, the focal point of Schenker’s protest is the Israeli Football Association (IFA). His argument is that by continuing to recognize a federation that operates clubs within West Bank settlements (territory the International Court of Justice formally designated as illegally occupied) critics argue that UEFA has abandoned its neutral, peace-promoting mandate. Six months have passed since UN experts called for Israel to be suspended from international football “as a necessary response to address the ongoing genocide in Palestine”.

Where European football’s governing body may have made a rod for its own back is with their reaction to the Russia-Ukraine conflict.

If Russia was cast out within days of the Ukraine invasion, then how and why does the IFA remain in the fold?

“The only reason UEFA has this tax exemption is because international sports federations are expected to promote peace,” said Schenker.

“By maintaining the Israeli Football Association as a member, they are not meeting that condition.”

Should UEFA end up losing their status then the financial hit is estimated at some €30 million per year. For an organization reporting €5 billion in annual revenue, that is significant but not insurmountable

But the real fear in Nyon might not be the tax bill itself.

Tax-exempt status carries a shield of privacy. Losing it means having to open its books and submit itself to audit. For the first time, UEFA’s intricate (but oft-criticised) redistribution models and executive compensation could face the kind of forensic state scrutiny usually reserved for huge corporations. Transparency, as we all know by now, is rarely the preferred modus operandi for football’s governing bodies.

Should the vote pass today, the repercussions would not be immediate for UEFA.

A passed vote (Schenker told reporters he had 65 of the 75 required votes locked in, per this report) would instruct the Vaud government to open a formal investigation into UEFA’s actions and make them justify their stance on Israel given the background of Russia’s continued absence. Should they be unable to satisfy the local investigation, could this push UEFA into sanctions on Israel? The alternative may be losing tax-exempt status.

The upshot of today’s vote will likely be felt far beyond UEFA, too. Vaud is home to dozens of international sports bodies, including the International Olympic Committee. If the Swiss courts decide that a federation’s political associations can invalidate its tax status, a legal precedent will be set. Activists targeting human rights records or environmental impact will no longer just protest outside stadiums; they’ll be filing motions in Swiss administrative courts to try and effect change.

Some activists might start to loudly wonder whether FIFA creating a peace prize and giving it to someone who then proceeded to topple the leadership of two separate sovereign states might also be cause for their tax-exempt status to come under threat?

UEFA (and indeed FIFA) have spent years mastering the art of the "neutral" sports body, claiming that football and politics shouldn't mix. But as the Grand Council prepares to vote, Switzerland is sending a clear message: if you want the tax benefits of a peace-promoting non-profit, you have to actually act like one.

By cheerful happenstance, UEFA executives Giorgio Marchetti and Roberto Rosetti are hosting a number of British journalists for lunch in London tomorrow, so even if there is news out of Vaud then we might not be reading too much about it.

Below the paywall today in the 150th edition of FootBiz (wow!); the Premier League’s controversial punishment of Chelsea, the latest on a number of World Cup issues (including why Iran’s games being played in Mexico seems a non-starter) plus Barca elections, Sheffield Wednesday latest and a look inside Argentina and Spain’s falling-out over the now-cancelled Finalissima…

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