Usain Bolt won’t run in Britain
Usain Bolt, who signed the biggest sponsorship deal in athletics history earlier this week with Puma, has said that he will not race in Britain until tax laws are changed. Bolt was referring specifically to the “Agassi tax rule” which allows the UK government to take sponsorship money from athletes competing in Britain.
“There was a tax case to do with the famous tennis player Andre Agassi, and in his prime, he was a test case in the United Kingdom. It was all about whether his sponsorship income, he had a massive sponsorship from Nike, when he played in the UK, at Wimbledon, could be taxed in the UK.” explained tax attorney Francesca Lagerberg. “And what the courts said was yes, not only could they tax it, they could take a huge amount of that sponsorship income into the UK tax net.”
Agassi lost a 2006 appeal that he owed tax on endorsement money he received from Nike and Head. The Law Lords ruled that because he endorsed their products at UK tournaments, like Wimbledon, he would have to pay tax on those earnings. Earlier the Court of Appeal had ruled that because Nike and Head were not UK based Agassi would not need to pay tax on those earnings.
Bolt officially ended his season earlier this month due to a back injury, but the world’s fastest man said that he had already ruled out competing in the London Grand Prix which was held earlier this month.
UK Athletics, the organizers of the London Marathon, and the All England Club are all calling for the law to be changed. Their concern is that the tax rule will lead to more world class athletes opting out of competing in the UK.
According to Nick Bitel, head of the London Marathon, there are already tennis players that won’t play in certain tournaments in the UK.
“Players won't play the Egon Championships, in women's case, Eastbourne or other tournaments because it doesn't pay for them to do it because of the tax regime," says Bitel.
The PGA is also fearful that some of the best golfers will avoid the Ryder Cup in October due to the tax rules that take significant portions of their earnings.
Although the British Treasury refused to comment specifically on the Usain Bolt case they did state that it is fair to tax athletes on sponsorship earnings. The rule is set so that HMRC can claim tax on an athlete’s worldwide endorsement earnings. If 25 percent of an athlete’s competitions occur in the UK, 25 percent of their global endorsement earnings are taxed. This rule applies even if the sponsorships themselves exist only in other countries. If Usain Bolt were to limit his Puma endorsements to the United States exclusively, and compete in events in Britain, he would not need to pay tax on his endorsement earnings to HMRC.
There is more at stake than just having top athletes miss major competitions. Young aspiring British athletes are missing out on opportunities to compete against the world’s best.
"To be the best, you want to run against the best, so you need to experience running against Usain Bolt and people like that," said an athlete from the Lee Valley Athletics Centre.
Also at risk is the loss of spending in the UK by players and fans. Visit Britain claims that players and fans from outside of the UK spend over 3 billion USD a year. Should top athletes boycott events in the UK that number will drop dramatically.
The 2012 Olympics in London is already exempt from the tax law.
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