How much is Seb Coe paid?

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How much is Seb Coe paid for fronting up the Games? I should preface the following remarks by saying that I have no objection in principle to the idea that he should be paid something. He is not (in contrast to his fellow London Organising Committee (LOCOG) board member Lord Moynihan) a third-tier sportsman who has been over-promoted solely for reason of past service to the Tory party. Coe, who received his peerage before the Olympic bid, did of course also have a long and undistinguished career with the Conservatives, but he is where he is primarily because he is an Olympic gold-medallist and a multiple world-record-breaker, and the former holder of one of the greatest world records of all time (the 800 metre record set at Florence which lasted until 1997). By all accounts he works very hard indeed; and it seems generally accepted by people who followed the process closely that the 2005 speech he made to the IOC was instrumental in swinging the Olympic Games London’s way.

Seb Coe controls a large organisation with a significant budget. I would consider him at least as socially useful (say) as the head teacher of a large secondary school, or the vice chancellor of a modest university, and if the total amount of money that he was set to make from the Games was comparable to other public sector managers of that standing, I would see no reason in posting about it. But he is being paid rather more than that:

First, Seb Coe draws from LOCOG an annual salary of £357,000 p/a (2010-2011). This is determined by LOCOG’s remuneration committee, attended by Coe and five other LOCOG committee members. It met just twice in 2011. (The details of this salary are available in LOCOG’s accounts).

Second, according to his entry in the House of Lords Register of Interests, Coe has a a number of paid directorships, etc:

  • Non-executive Director, AMT-Sybex Group Ltd (which sells software to energy and transport businesses)
  • 0800 Reverse Limited 0800 Reverse Ltd (this appears to be a company marketing a “Battleship”-style gambling game)
  • Consultant, Chelsea Football Club
  • Speaking engagements (4 of these in the last 12 months) (Coe markets himself as a public speaker and can be booked through The Edge agency for c£10,000 per evening (Dwain Chambers gives the figure in his autobiography). This is relevant to Coe’s public activities, because the topics he speaks to (Leadership, The Art of Winning, Formulating the Perfect Team) relate to his present, publicly-funded role as Chairman of London 2012, not his past life as a private athlete.)
  • Seb Coe Health Clubs – Jupiter Hotels (he owns a number of health clubs in Leeds, Bolton, Kidderminster, etc)
  • Special Adviser, Nike International

According to the Register, Coe pays all remuneration from these sources into a company The Complete Leisure Group Limited of which he is the Sole Director.

The Complete Leisure Group appears to be a successor to “Seb Coe Ltd” (see below).

Tax

There is also the interesting question of whether he has been paying tax at the correct amount.

Just concentrating on Seb Coe Ltd first.

What the above figures appear to show is that in the two years in question (1 Jan 2007 – 31 Dec 2008) Coe was paid (ie received into his bank accounts) a total of £634,754.

Of this he has declared (just under) £20,000 as profit, and paid tax only on this smaller figure.

How did he do this? In 2008 Coe spent £41,760 on administering this company (i.e. presumably his accountant’s fee, and maybe some other similar disbursements), but in 2007 his “administrative expenses” were a whopping £587,359.

In essence, these administrative expenses have been set against both year’s income, turning a series of very high salaries into a very low profit.

It would be interesting to know why the administrative expenses were so much higher in one year than another. To my untrained eye (and as a non-accountant), the higher figure gives every appearance of an artificially generated tax loss.

I’ve attached the full accounts here for 2008 so that readers can read them for themselves. If there is a benign explanation, please do set it out in the comments box.

Now, when Seb Coe Ltd became the Complete Leisure Group here was a considerable change in the accounting model, which now confirms to those of a larger and more complex business than anything I’ve seen at first hand. Just to give one indication of its size, one of the business’s acts in 2010 was to write off £3 million in capital:

It “may” be that this figure of £3 million corresponds broadly to the real salary that Coe is now paying himself; but I’d be lying if I pretended to have the knowledge of high-end accounting to say this with any conviction.

I’ve attached the full accounts here for 2010; comments invited in the box below.

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4 responses »

  1. The accounts for Seb Coe Ltd show that he paid himself a salary in 2007 of around £330,000 (plus employer’s NI of £40,000). This makes up the vast majority of the administrative expenses.

    The “Administrative expenses” heading for a small company usually includes most staff and director salaries except those which are incurred as a direct result of taking on particular projects (those are called “cost of sales”). So this treatment is entirely normal.

    On that £330,000 salary he would have paid 40% income tax and around 10% employee’s NI. The employer’s NI figure is shown in the accounts but the PAYE income tax and employee’s NI are not, because they are deducted from the salary payments which _are_ shown. This is just the way that company accounts are presented.

    In short, these accounts look to me like the accounts of someone who is paying all the tax legitimately due on their (admittedly high!) salary. Maybe he has used some dividend payments too, which are subject to a somewhat lower tax rate, but probably not – as there is not much in the way of retained profits, which are necessary to pay dividends.

    • Thanks Leigh; it’s a pleasure to have someone else to bounce ideas off.

      In my day job I look at accounts occasionally for all sorts of reasons (and as a barrister I am self-employed) – but I don’t often look at accounts of micro-businesses (which is effectively what Coe was in 2008 and 2009, if not now), and if you or any other reader tell me that conventional accounting practices are being followed, I have no reason to disbelieve you.

      Apologies for the lengthy answer that follows, I just have a sense that you’ve spent more of your life looking at accounts than I have.

      Yes, Coe paid himself £330k gross in 2007. But even this raises more questions than it answers:
      + In 2008, the business’ total administrative expenditure was £42k (see screenshot above), including a net salary for Coe of £34k (i.e. accounts’ fees and other professional support of a total of £8k: they are in the link which I give in the body of the article).
      + In 2007, the business’ total administrative expenditure was £487k, including – following Leigh – a net salary for Coe of £377k (i.e. accounts’ fees and other professional support of a total of £110k).

      So a question to Leigh – on your reading, do the accounts give any explanation of where this additional £102k (i.e. the higher admin fees in 2008 rather than 2007, once Coe’s salary is excluded) went? Because with my inexpert eye, I can see no explanation in the accounts. And it just seems implausible to me that (say) an accountant would charge £8k in one year and £110k in the next. (I’m not saying that all of the £8k went on accountants – just that wherever it went, it’s unlikely that the real costs of running a business would have changed by 1000% in a year).

      Second question to Leigh – you’ve addressed the taxation question in terms of whether Coe was paying tax on the income that his business paid to him. But the focus of my article was on the tax owed by the business. This is the part that intrigues me: over the two years, the business has a turnover of £630k, which is treated in the accounts as a net profit of c£6k (2008 profit – 2007 loss). And save for admin fees of £530k, do you have an explanation for what the other £100k (i.e. £630k turnover minus £530k admin fees) has been spent on? Again, I don’t see any clues in the accounts.

      Last question to Leigh – at the end of my piece I give a link to the 2010 accounts. On my admittedly-naive reading, one explanation would be that the income Coe paid himself was c£2.9m. Just in broad terms, do you think that is what they show, or is there an alternative reading?

      • The accounts don’t directly explain where the £100k of extra admin expenses went, but it doesn’t surprise me particularly. Some possible expenses that I’d expect a consultant/speaker earning £330k to have:
        – a personal assistant or secretary, maybe earning £30-40k. Maybe even two?
        – flights and hotel expenses – could easily be £10-20k or more if he is flying around the world on business class and staying in nice hotels
        – some marketing expenses, e.g. listings or adverts in speaker directories, business cards, brochures, a website – £10-20k
        – an office, £5-15k
        – accountants fees would probably be a bit higher when the business is turning over more money

        Of course this is speculative, but they would all come under the heading of administrative expenses and it wouldn’t surprise me if around 25% of the business’s revenue would go on these items.

        I note that the “average number of staff” during 2007 is shown as 1, but this is something that (in my case at least) comes out of a standard template in my accountant’s software, and on at least one occasion they haven’t updated it to reflect changes in my number of staff. So I wouldn’t rule out him having a PA or other employees during that year.

        I would imagine that in 2008 he scaled down his business activity significantly in order to focus on the LOCOG job (I haven’t checked when he was appointed but I guess it was soon after the bid was won?). This would explain the big reduction in turnover, personal salary and administrative expenses. Incidentally, it also gives a reasonable justification for his LOCOG salary – he could legitimately argue “If you want me to take this job, I’ll be giving up £300k+ of other income, so I’d like my salary to reflect that.” This is a rare case of there being a very direct and measurable market-rate justification for a public sector salary.

        On the general point about tax paid by a business: taxes paid by businesses (other than VAT and business rates) are always on the net profit. Most businesses have a net profit much lower than their turnover. The £100k that was spent on other expenses will have gone towards the profits of other companies, who in turn will have paid tax on it – therefore I don’t think this is in any way suspicious or undesirable.

        Indeed, if Seb had paid less of the company’s income to himself as salary, and retained it as profit instead, he would have been able to draw it as dividends and pay less tax! So I think he’s done the right thing here by paying (effectively) about 54% total tax and NI (including employer’s and employee’s) on the £377k that was his company’s cost of employing him. He could potentially have got away with paying between 30 and 40% if it had all been done as dividends, especially if he’d managed to spread the income and dividends across two years.

        Your final point is, I think, addressed by my subsequent comment which hasn’t appeared yet. Let me know if it didn’t come through.

      • Leigh,
        Many thanks indeed to you for your comments; while I don’t particularly agree that they are mostlikely reading of Coe’s accounts, they are definitely one possible reading. And cynics like me need to be reminded that where there is a absence in anyone’s accounts – that gap can just as well be filled by a very decent history of very active tax compliance, as well as by anything else. Silence, by itself, is no grounds for suspicion.

        The reason why I don’t particularly believe that your narrative describes what Coe’s been doing is really this: while, we’ve both been ana;ysing these accounts as if they were an ordinary set of business accounts, I don’t believe that this wasn’t the reality. The business took place somewhere else – chiefly in Coe’s chain of leisure centres. The “salary” paid to Coe from that and other businesses didn’t go to him directly but into Seb Coe Ltd. In other words, in the real business reality we’re thinking about, Seb Coe Ltd was not much more than a bank account, with a set of tax arrangements around it.

        For that reason, I don’t think it’s likely that Seb Coe Ltd ever really – as you suggest may have happened – employed a personel assistant, an office, maintained a marketing function, etc through Seb Coe Ltd. Of course he would have had an administrator. But if you want to speculate about where they were employed – I strongly suspect that as the owner of a firm of leisure centres, Seb Coe had/has an office and admin support there, and that is where the majority of his business was/is done. Of course I may well be wrong, only Seb Coe knows, and I doubt he has the spare time to hang around scurrillous websites such as this one correcting the best guesses of scurrilous bloggers such as myself.

        But little bits of “evidence” that confirm this hunch include: (i) as you yoursef point out, he gives a payroll figure in the accounts, and doesn’t say that he had more than one person working for him, and (ii) save for the leisure centres, and perhaps Nike, I think most of the other businesses are pretty small beer (when I wrote the original article I looked at how much he was being paid by the other organisations, and generally it seemed to be £10k p/a or less; as I wrote in my original post – based on his agent’s website, which has since been updated – even the public speaking seemed to be around 4 gigs per year, not more).

        That said, I hadn’t thought of the correlation between the 2008 scale-down and his LOCOG role, and that part of what you wrote sounded eminently plausible to me.

        Finally, if I’m right and Seb Coe Ltd didn’t employ his own office – the accounts show payments in at £630k and tax at £44k: which would be rather less than 54% tax payment… Of course, I’m not saying that Coe “really” pays less than 10% of his income as tax, only that either interpretations are arguable on his accounts – the truth, I suspect is somewhere in the middle.

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