Football Leaks: Real Madrid signed €200m Cayman Islands deal
According to Football Leaks, Real Madrid signed a letter of intent with a Caymans-linked Luxembourg society for a percentage of commercial rights.
Real Madrid were aware that payments on a €500 million letter of intent signed with a major international equity fund in 2016 would be facilitated through two companies based in the Cayman Islands, according to information from Football Leaks published on Monday through the European Investigative Collaborations (EIC) network.
According to the information, Real Madrid signed a letter of intent on a €500m, 10-year agreement with Providence, with the fund set to receive a percentage of future profit yields on some of the club’s commercial exploitation rights (including sponsorship and those derived from the digital platform). Other rights including shirt sponsorship and naming rights to the Bernabéu and the club’s Valdebebas training complex were excluded. The first €200m laid out in the agreement covered a four-year period from 2017 to 2021.
However, according to Football Leaks and the EIC, Madrid did not sign the proposed agreement with Providence but with one of its subsidiaries, Luxembourg-based PQ VII Sarl, which reportedly has a social capital of just €20,000. Behind PQ VII Sarl are two companies registered in the Caymans.
Real Madrid director: "It seems like it's a joke"
After yesterday's #FootballLeaks revelation in @_infoLibre, the president of the union at Spain's tax authority says the operation involving @realmadrid and Providence should be investigated. https://t.co/zYTu17xvRp— Rui Pinto (@RuiPinto_FL) February 22, 2021
Spain’s EIC partner, InfoLibre, published an email attributed to Real Madrid general director José Ángel Sánchez in which the executive expressed his surprise at the nature of the letter of intent. “Two companies based in the Cayman Islands and housed in a building in George Town where there are thousands of domiciled companies are guaranteeing a payment of €200m to the club through a society in Luxembourg with social capital of €20,000! It seems like it's a joke, but I’m afraid it’s serious.”
InfoLibre also published an internal memo attributed to Real Madrid’s financial director, Julio Esquerdeiro, in which he recommended that any deal be signed off with a company “resident for tax purposes in Spain and directly or indirectly owned by the investor” and should be structured in a way that “avoids risks to the reputation and image of Real Madrid.”
On the letter of understanding, Esquerdeiro noted: “Given its structure, which can be easily identified by the Tax Agency, the exemption of retentions in the payments from Real Madrid to PQ VII SARL, as a company resident in the EU, will almost certainly be questioned by the Tax Agency.”
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