FC Barcelona Star Lionel Messi Tax Troubles, an Audit and a 100-Million-Euro Contract
Part 2: THE RECORD CONTRACT
In early 2017, shortly after Lionel Messi's wedding in Rosario, Román Gómez Ponti, FC Barcelona's chief legal representative, wrote an email to CEO Óscar Grau. It consisted of a single word, written in the subject line: "ALELUYA" - with the final A repeated 69 times. Grau replied: "Thanks to ALL for your dedication and effort. The extension of Leo Messi ... was important for the survival of FC Barcelona." President Bartomeu wrote to Messi's father Jorge: "Congratulations to everyone! Leo remains where we all want him to be."
To ensure that their superstar would remain tied to FC Barcelona beyond 2018, Bartomeu, his deputy Jordi Mestre and club CEO Grau drafted three core contracts, all of them written in Catalonian. The first was a 14-page employment contract, countersigned on behalf of Lionel Messi by his father; the second a 15-page contract with the company Leo Messi Management S.L., pertaining to the player's image rights, likewise signed by Messi's father; and the third a contract with Messi's foundation in Barcelona.
The amount of money the three contracts oblige FC Barcelona to pay is unprecedented.
If one assumes that Messi will fulfill the contract and remain a key player for Barça for the next four years, and if one-time payments like the signing bonus and loyalty bonus are broken out over the duration of the contracts, then the player is guaranteed to receive 106,347,115 euros per season. If FC Barcelona achieves a "treble" - which entails winning the Champions League, the Spanish league title and the Spanish cup all in a single season - and if Messi is crowned FIFA player-of-the-year that same year, then he stands to earn an annual salary of 122,515,205 euros.
Paying Messi's Tax Debts
The club is making it possible for him to earn almost half-a-billion euros in four years - despite the fact that Messi has already seen his 30th birthday come and go and currently finds himself on the home stretch of his career. How is such a thing possible?
In professional football, bookkeeping is often close to unadulterated magic. In the case of Messi, it is even able to transform tax debt into guaranteed salary earnings.
When FC Barcelona signed its contracts with Messi at the end of June 2017, the two sides agreed to annul the bonus payment of 23.1 million euros. In the previous year, it had been a core element of the effort to make the club responsible for Messi's tax back payments. Now, though, that sum became part of Messi's new fixed salary.
Or, to put things more plainly: The club, which has for years enjoyed millions of euros worth of tax concessions from the Spanish state, has now formalized in this monster contract its willingness to compensate the state for the latest tax debts of its star player, a man who has already been convicted once of tax evasion.
Club executives described the vast scope of the contracts in internal calculations. In one instance, they worked out that expenditures on Messi would account for 40 percent of the team's future payroll. Another document noted: "The player needs to be aware of how disproportionately high his salary is relative to the rest of the team."
Messi's father knew that he could ask for pretty much whatever he wanted for his wunderkind. The global football market has become so overheated in recent years that it would not be difficult to find a Chinese, Russian, Arab or American investor willing to meet the Messi family's demands.
Even Real Madrid, FC Barcelona's greatest rival, seems to have tried to wrest the Catalan team's star away on one occasion. The documents obtained by DER SPIEGEL tell the tale of an offer for Lionel Messi that has thus far remained secret.
NEGOTIATIONS IN THE SKY
On the morning of June 22, 2013, Iñigo Juárez, the lawyer tasked at the time with taking care of affairs relating to Lionel Messi, sent an email to the player's father Jorge. Juárez wrote that he had met with Real Madrid representatives in his capacity as Messi family liaison - and the lawyer added that the team in the Spanish capital was eager to buy the striker out of his contract with FC Barcelona. Messi had only just extended his contract with Barça in February 2013.
The contract stipulated a termination fee of 250 million euros. Real Madrid, Juárez wrote to Messi's father, was prepared to pay that sum as a transfer fee. According to Juárez, Real hoped to sign Lionel Messi through the end of the 2021 season and intended to pay him an average of 23.125 million euros per year for the eight seasons in question - after taxes.
The team also showed generosity when it came to image rights: Messi would be allowed to hold on to all income resulting from the contract he signed prior to the summer of 2013, Juárez wrote, a total of 20 million euros per season, according to his calculations.
"They want to quickly know what the future holds," Juárez wrote, "after all, they are willing to spend all that on your son." Real Madrid apparently proposed that a meeting take place in the coming days. "I told them that you were traveling," Juárez wrote.
But Real Madrid seems to have had an answer to that hurdle as well. And quite an extravagant one at that.
The plan according to Juárez called for chartering two private planes. The first was for the Messis, their lawyer, Real President Florentino Pérez, the team's sports director and a team lawyer. The plan called for negotiations to take place in the air, with the plane then landing at a predetermined location. One plane would take the Real officials back to Madrid while the second would be used by the Messis.
The team executives had brought along two incentives, Juárez wrote. One was for Messi's father: "Your commission is fixed at 5 percent," the lawyer continued, or 16 million euros over eight years, before taxes. The other one, according to Juárez, had to do with the tax evasion investigation into Lionel Messi by public prosecutors in Barcelona, an investigation that had just been made official at the time. "They tell me that they would exert pressure on Rajoy to reach a solution for your son that is as advantageous as possible," Juárez wrote.
Mariano Rajoy had been prime minister of Spain since 2011. Was he under Real Madrid's thumb?
"I don't consider that to be particularly credible," Juárez added. Indeed, while it has repeatedly been claimed that Real Madrid's influence reaches to the highest levels of Spanish politics, written evidence is sparse. When reached for comment, Iñigo Juárez answered that the publication of internal emails is a violation of the law. Real Madrid wrote that the account is "totally false."
The episode with Real Madrid gives an indication as to the possibilities that were open to the Messi family. There seem to be no lines they won't cross, even up until today. If Juárez's account is true, Messi's father even negotiated with a Barça fan's greatest enemy to drive up his son's value.
Ultimately, of course, Lionel Messi remained in Barcelona. In May 2014, the club gave him a significant raise over the raise he had only just received the previous year. According to a draft contract DER SPIEGEL has obtained, Messi's gross guaranteed earnings rose to an average of 29.9 million euros per year.
Either go with the flow or lose out: The market for top players these days doesn't allow for weaknesses. And FC Barcelona executives were well aware in 2016 that if they wanted to have a chance of keeping Messi in Catalonia, their next offer would have to reach unprecedented dimensions. Barça likewise promised Jorge Messi an agent commission equaling 5 percent of his son's gross earnings, or more than 24 million euros in the best-case scenario.
But there was something fishy going on in summer 2017.
After Messi's father and FC Barcelona executives had all signed the contracts last summer, the club wanted to issue a statement that it had reached an agreement to keep "the best player in history" on the team until summer 2021. Messi himself was scheduled to sign his contracts as soon as he had returned from his honeymoon.
Furthermore, FC Barcelona wanted to fix a transfer fee that a club wishing to buy Messi out of his contract would have to pay: 300 million euros. Making such a fee public was "standard," CEO Óscar Grau wrote to Jorge Messi. But the father was opposed to the plan. Naming the 300 million sum "contributes absolutely nothing," he replied. He noted that he was concerned that additional details from the negotiations could be leaked or handed to the media. "It would bother me if numbers leaked out because it would only stoke unrest," Jorge Messi wrote.
FC Barcelona had planned an event on July 18 on the VIP stage at the Camp Nou stadium to announce the contract extension to the global press. Messi, fresh off a PR tour through Japan, was to sign the contract while seated next to the three team executives. In closing, President Bartomeu was to hand him a jersey reading "Leo 2021."
"We are waiting for you to confirm the date," Grau wrote to Jorge Messi on July 14. But he got no response. With time running short, Grau wrote again two days later. "It surprises me that you haven't replied," he wrote. "We would like to hold the event before we depart for the U.S.A." The team was scheduled to fly to New Jersey on July 19 for a tournament.
But Lionel Messi didn't sign.
It is possible that his father Jorge had gotten wind of the approaching excesses on the global football market. The summer in which Messi's contract was extended was like a goldrush. In early August, teammate Neymar transferred to Paris Saint-Germain for the record fee of 222 million euros while FC Barcelona bought Ousmane Dembélé from Borussia Dortmund for 145 million. Manchester United spent around 160 million on transfer fees, while AC Milan invested almost 200 million in new players. Manchester City forked out 250 million euros for new personnel.
The market had exploded.
That was good news for Jorge Messi. Such inflationary tendencies strengthened his negotiating position and led to higher income. It also allowed him to make additional demands.
Although the contract had been signed on June 30, negotiations were apparently reopened. It was only in the last weekend of November that Messi publicly signed his contract, almost five months after the "ALELUYA" email. And suddenly, club president Bartomeu was allowed to publicly mention the transfer fee, which had more than doubled to 700 million euros, apparently in response to Neymar's transfer to Paris. Jorge Messi wrote DER SPIEGEL that the contract was the result of "negotiations which took into account all relevant circumstances currently affecting the market."
After all the pressure from the tax authorities, the loan bargaining, the bonus pledges, salary negotiations and post-negotiations, one thing can be said with some certainty: When it comes to shaping a contract, Jorge Messi is almost as masterful as his son is on the football pitch.
DER SPIEGEL began its efforts to establish contact with the Messis to discuss the foundation, the audit and the record-breaking contract in early November. They did not reply. Following additional written requests for comment, a PR representative who advises one of the Messis' companies got in touch just before Christmas. He promised to speak to the lawyers, but never ultimately provided an answer.
Only after DER SPIEGEL sent a long list of questions at the beginning of last week to Jorge, Lionel and Rodrigo Messi, the player's brother, did the family respond. Jorge Messi answered for himself and on behalf of Lionel. "Me and my son have duly fulfilled our tax obligations," he wrote, adding that all payments from FC Barcelona have been properly declared by both sides. Rodrigo Messi, who is responsible for the Messi foundation in Barcelona, answered that the charitable entity has never violated the law and "has always replied timely to any request from the Spanish authorities."
The Messis did not supply comment on why Lionel Messi made a 12-million-euro back payment to the Spanish tax authorities and why the club ultimately covered the player's tax debt. FC Barcelona issued a statement saying that all money wired to Messi's foundation was for charitable purposes. "The interpretations that you or other people can make of these donations do not change this position at all." Team executives Bartomeu and Grau likewise declined to comment on why they paid their superstar's back taxes.
It would likely be incorrect to accuse Messi of being responsible for the business conduct of his confidants, for all the tricks used to heap pressure on his employer and for disregarding existing agreements because the market suddenly made it possible to rake in even more money.
The many emails and contracts show that Messi's business matters are taken care of almost exclusively by his father, his brother Rodrigo and a handful of selected lawyers. But doesn't he carry some degree of responsibility for their behavior?
After being convicted of tax evasion, the judges gave Messi another chance, through which he only barely avoided serving time. Yet even long before the verdict, he could have sorted out his business affairs with the help of independent, professional advisers. Instead, though, Messi continues to place his trust primarily in his father - with whom he sat at the defendants' table.
Rafael Buschmann, Jürgen Dahlkamp, Nicola Naber, Gunther Latsch, Jörg Schmitt and Michael Wulzinger
- Part 1: Tax Troubles, an Audit and a 100-Million-Euro Contract
- Part 2: THE RECORD CONTRACT