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Currencies Direct: Wimbledon proves FX-factor as athletes consider cost-benefits of competing in UK
A yearly ritual in SW19, the first weekend of July saw two tennis pros at the top of their game—Roger Federer and Serena Williams—withstand all competition to take home the Wimbledon championship prize, which this year stood at £1.15million.
But with today’s tennis stars hailing from all corners of the globe, Currencies Direct – Europe’s leading provider of currency exchange services – says that fluctuating foreign exchange rates greatly affect just how far an athlete’s winnings will go once converted into their native currency.
Take, for instance, this year’s winners. In a rain-delayed contest, Roger Federer bested Andy Murray to win the £1.15 million prize money. In Federer’s native Switzerland, this amount would have been approximately 1.71 million Swiss francs. However, had the winnings been the same when Federer last won Wimbledon in 2009, he would be returning to Basel with 2.02 million Swiss francs – almost 300,000 Swiss francs / £200,692.70 more.
Meanwhile however, dominant American Serena Williams overcame the world’s #2 ranked Agnieszka Radwańska to win her fifth Wimbledon title and fourteenth grand slam! So when converted into dollars, Williams’s £1.15m takings approximates $1.79 million USD – nearly $60,000 more than had she received that same amount at her last Wimbledon championship in 2010.
In 2011, Serbian Novak Djokovic defeated Rafael Nadal to win his first ever Wimbledon men’s championship. It was a banner moment for the rising star, who took home £1.1 million in winnings. Meanwhile, Petra Kvitová of the Czech Republic beat Maria Sharapova, taking home the women’s crown and her own £1.1 million prize package. But did they get a good deal?
Djokovic’s winnings would have netted him 122.87 million in his native Serbian dinars. However, had he won in 2012, his coffers would have swelled to the tune of approximately 157 million Serbian dinars. Additionally, Kvitová’s winnings tallied 29.59 million Czech koruna in 2011, but had she won this year, the 22-year old Czech would have won 35.33 million Czech koruna.
An economic calamity can sometimes be beneficial for athletes competing abroad. In 2008, at the height of the US financial crisis, the US dollar was in dire straits. In July that year, the US dollar was trading at almost 2:1 against the pound when Venus Williams defeated her sister Serena to win the 2008 Wimbledon women’s singles championship. Her winnings—£750,000—
Fluctuating FX rates are an increasingly important consideration as abstruse tax regulation in the UK has resulted in many foreign sportspersons engaging in more rigorous financial planning before deciding whether to participate on British soil. It appears that many professional athletes are realising that the potential winnings do not offset the costs of competing in the UK.
Melina Moussali, head of dealing at Currencies Direct said:
“Exchange rates are becoming an increasingly important factor in international sporting competitions. At present, the British pound is strong, which means competing in the UK will be especially beneficial for some – particularly those from the eurozone. A strong pound translates into greater earnings once converted back into native currency.
“But it’s not just exchange rates affecting athletes’ winnings. Britain arguably has the most draconian tax laws for foreign athletes wishing to compete in the UK. Not only must athletes pay tax on half of their prize money, but foreign athletes are also subjected to a tax on appearance fees and international endorsements while they’re competing in the UK. Consequently, foreign athletes are beginning to seriously consider whether or not competing in the UK makes financial sense.”
Earlier this year, Spanish star Rafael Nadal made headlines when he declined to participate in the AEGON Championship (Queen’s Club), an event he had won in 2008. With sponsorship deals from Nike, Babolat and others, Nadal claimed that UK tax burdens means he actually loses money when competing at Queen’s. Usain Bolt famously declined to run in 2010’s London Grand Prix, declaring he would incur huge costs by participating. Equally, in 2008, European football body, UEFA admitted that London was snubbed for the host venue for the 2010 Champions League Final due to dissatisfaction with British tax regulation for foreign players.
1. Currencies Direct ( http://www.currenciesdirect.com ) is one of Europe's leading non-bank providers of currency exchange payment services. Since its formation in 1996 Currencies Direct has evolved and positioned from being an innovative service provider of foreign exchange for consumers and high net worth individuals into a dynamic and pioneering 'business to business' fully integrated treasury solution service provider. Headquartered in the City of London (United Kingdom) with operations in Europe, Africa and Asia, Currencies Direct is part of the Azibo Group, a privately owned investment company.
2. Prices are determined based on the Currencies Direct exchange rates on 11 July 2012 available at http://www.currenciesdirect.com.