Tax Breaks for Soccer Stars and Hockey Players on the Dole

Only weeks have passed since German politicians railed against welfare recipients abusing the social security system by being on the dole while living overseas, including sunny Florida. Now they have a new target: the country’s successful sports teams and their well-paid athletes.

The latest ruckus was caused by revelations that soccer club Borussia Dortmund was planning on saving taxes by taking advantage of a tax break for employees who work during the night or weekend.

Since many of Dortmund’s matches are played after 8 p.m. or on weekends and its players’ salary contracts are net of taxes, the club will lower its tax bill by hundreds of thousands of euros this year. Clubs from Hamburg and Bremen are also said to be looking into the allowances.

Although German Finance Minster Hans Eichel has admitted the move is perfectly legal, he also said it breaks the spirit of a law intended to make working nights and weekends more palatable to average workers like nurses, bus drivers and the like.

“It’s clear to everyone that these tax allowances weren’t intended for millionaires,” Eichel told Der Spiegel magazine in an interview. “We want to change the law – it can’t stay the way it is.”

No Champions League revenue

Borussia Dortmund has long been one of Germany’s top soccer powers. But since becoming Bundesliga champion in 2002, the club has fallen on hard times. Last year the team only managed third place and this season Dortmund failed to qualify for the lucrative and prestigious Champions League, where Europe’s top-flight teams compete.

As the only Bundesliga club listed on the stock exchange, losing the estimated €12 million ($13.8 million) in revenue from the Champions League matches has put Dortmund’s managers under particular pressure. In an effort to help its finances, the club announced on Monday that the players had agreed to take a 20 percent pay cut, should the team not bring in the necessary revenue by making it to the UEFA Cup and Bundesliga finals.

But the show of solidarity by the players is unlikely to deter Eichel or his boss and known soccer fan Chancellor Gerhard Schröder from revamping the rules for weekend shift tax allowances.

“The chancellor is in complete agreement with me that this situation is untenable, but that lower-income earners – for whom this law was originally meant – shouldn’t be penalized,” said Eichel.

Schröder’s government, strapped for cash itself these days, is extremely aware that Germans will have little sympathy for millionaire soccer stars and their big-business clubs as towns and cities across the country are being forced to close swimming pools, fire policemen and cut back on services due to a shortage of tax revenues.

Outrage over "Florida Rolf"

The drive to change the tax allowance rules for well-paid athletes comes on the heels of broad public outrage that the German social security system was paying welfare to some citizens that were living abroad. One recipient in particular, a so-called “Florida Rolf” whose apartment in Miami is paid for by German taxpayers, became a lighting rod for criticism over how social security is misused.

After smelling blood over Dortmund’s tax plans, Eichel may be inclined to go after other sports that are even more flagrant in their creative use of Germany’s welfare system. Ice hockey and basketball teams frequently allow their players to receive unemployment for the two to three months out of the year that there are no matches.

Jürgen Leister, a lawyer who represents the interests of sport professionals within the services trade union Verdi, told the Berliner Zeitung newspaper that the practice was also completely legal. “It does make me a little queasy, but that’s the law,” he told the paper.

Even worse, although players often have only one-season contracts, many have already negotiated options for extending them for the following year. Leister said the players only needed to be reachable by the Labor Office while they were collecting dole payments that frequently total around €3,000 a month.

“But when was the last time you heard of a pro getting a job via a placement center?” Leister asked.