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Hurting French sports leagues eye broadcaster tax relief

French sports leagues and federations will be hoping that a proposed tax relief system will soften the financial blow on broadcasters suffering from the effect of the Covid-19 pandemic and incentivise them to make rights fee payments.

Roxana Mărăcineanu, the Minister of Youth and Sports of France, met with representatives of professional sports leagues and federations last week and alerted them that she will soon meet with broadcasters to discuss the system, according to L’Équipe.

The possibility of financial support comes with pay-television broadcaster Canal Plus having refused to pay its upcoming €110m ($118.4m) instalment for rights to French football’s Ligue 1 and 2 fee obligation.

It is claimed that in recent meetings between Mărăcineanuand the stakeholders from different sports in France, it was suggested that the broadcasters would benefit from a tax relief system by means of a so-called “patronage scheme”.

The leagues, including football’s French Professional League (LFP), are considered of general interest and therefore are entitled to receive contributions. For the broadcasters, reports L’Équipe, this could generate substantial tax reductions with 60 per cent deductible from contributions of up to €2m and 40 per cent beyond that (within the limit of five thousandths of annual turnover excluding the patronage tax).

It is claimed that this could represent tax relief of around €40m for Canal Plus, albeit an any annual amount would be restricted to €8m and the excess would need to be paid over five years.

Canal Plus has said that the LFP’s suspension of football fixtures due to the Covid-19 pandemic was a “perfect example” of force majeure.

Pay-television broadcaster beIN Sports, which also holds rights to Ligue 1 and 2, has yet to officially outline its position but clubs will be fearing that it follows the action adopted by Canal Plus.

On its refusal to pay the next rights fee tranche, Canal Plus told AFP: “There are no more matches, so there are no more payments. We are strictly applying the terms of the contract and we don’t see why we would do it any other way. Canal Plus is not a bank.”

The LFP has reacted with incredulity at Canal’s stance and what they consider a lack of solidarity in the circumstances. Broadcast rights payments were Ligue 1 clubs’ biggest revenue source last season, amounting to 36 per cent of total incomes, according to the Direction Nationale du Contrôle de Gestion, French football’s financial watchdog.

The league said that, in any event, Canal Plus still owes it money despite the suspension of fixtures, as 28 of the 38 matchdays had been played. This amounts to 73.7 per cent of the full product having been delivered, while the Vivendi-owned broadcaster has, so far, only paid for 67 per cent of the product. The LFP calculates the outstanding balance at €43m, including relevant taxes.