MotoGP Money Woes: Spies Ordered To Pay Agent, Capirossi Fined For Tax Evasion

Behind the glamorous facade of MotoGP lies a hard-nosed world of contracts, money and taxes the fuels the show. It is not a side that is revealed very often, but two recent news stories have revealed MotoGP's darker side.

The first story was turned up by Roadracing World magazine. Papers filed with the courts in the US revealed that Ben Spies and his management company Speez Racing LLC have been ordered to pay $1.9 million in damages and costs against Spies' former manager Doug Gonda and his company, Protac Inc., Roadracing World's research has turned up. The dispute arose as a result of a conflict between Speez Racing and Protac about, among other things, Spies not obtaining a ride in MotoGP for the Texan for 2009. Speez Racing also alleged that Protac had not been involved in the contract that Spies signed with Yamaha for 2009, and that there had been problems with logistics for three international races caused by Protac, as well as alleging a string of other breaches of contract.

The dispute was argued before an American Arbitration Association Commercial Arbitration Tribunal, and at the end of the proceedings, the Tribunal found in favor of Gonda and his company Protac, Inc. As a consequence, Gonda was awarded $1.9 million in damages and costs. Most interesting about this amount is the way it has been calculated. Roadracing World reports that the award was based on 15% of Spies' income from racing for the period from 2009 to 2011. A rough calculation (subtracting estimated arbitration costs from the award) suggests that Spies will be earning approximately $4 million per year in salary, bonuses and sponsorship and endorsements, an amount that puts him well behind what MotoGP's Fantastic Four are paid, at about the kind of money a second factory team rider could expect to earn.

Former managers aren't the only people to be chasing riders' money. The Italian tax authorities have once again hit Loris Capirossi with a fine for back taxes, alleging that the Italian veteran is not resident in Monaco, as he claims, but in Italy instead. The evidence presented by the Italian authorities included payments made for Capirossi's villa in Riolo Terme drawn against one of his bank accounts in Italy. In his defense, Capirossi has shown payments made by his mother, using a credit card from one of Capirossi's accounts.

This latest fine - a hefty one, at around 2 million euros - is part of a long-running dispute between Capirossi and the Italian authorities about where Capirossi actually runs his life and his business from. Capirossi has been pursued for tax evasion before, and like Valentino Rossi, his prosecution is just one piece in a massive campaign by Italy's tax services to persuade Italians to pay taxes. Other high profile figures have also been targeted, such as world famous opera singer Luciano Pavarotti, soccer manager Fabio Capello and former Renault Formula One team boss Flavio Briatore. Recent reports have suggested that tax evasion could be as high as 25% in the country, and the authorities hope that by targeting such prominent celebrities, they can persuade ordinary citizens to pay tax. It is clearly a bad time to be an Italian celebrity.

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It's a bad time to be a high income earner in Italy. Capirossi, Rossi, Briatore, and Capello all have to work in Italy. If you're an English-speaking Italian movie star for instance, you can tell them to go screw themselves and you can live the rest of your life in Hollywood (if Hollywood actually has lower taxes than Italy :-P). If you're an international motorsports star or an Italian soccer magnate, you have no choice but to pay Italy's tax demands b/c you must be in the good graces of the Italian government in order to perform your job.

The moral of the story is don't earn any income in Italy b/c they will do everything in their power to claim that all of your income belongs to the Italian taxing authorities.

That's crazy because from what I could tell the biggest or most accused Italian (and richest) happened/s to run the country...

If any athletes deserve their dough its motoGP racers. They earn every dime IMO.

Too bad about Spies. Honoring commitments is important for a long career. Seems Mary Spries messed up big time, and Ben let her do it. Not smart.

... I would say without knowing the exact details it is impossible to say whether these actions are justified or not. I just hope it will not destract the guys from racing.

The sad thing is, for Capirossi, the Italian government in late 2009 created a tax amnesty for offshore funds held by Italians. Therefore, Italians could repatriate funds by paying a nominal amount of flat tax ie 3-5% and have their money effectively "cleaned". Any wealthy Italian with offshore funds who lives part of the year in country and did not take this "get out of jail free" card is...well...not getting the best advice. Why risk a roughly 50% tax levy when you can take the small hit and carry on smelling like roses? And the fact that he has been hit on more than one occasion?

Loris, if you are reading, I'll handle your interests for a nominal fee...