PSG stay within FFP rules

The Swiss Ramble looks at PSG’s finances following the signing of Lionel Messi and states that they are still likely to be able to meet Uefa’s financial fair play targets

Despite a €99m (15%) fall in revenue in 2020, partly due to the COVID pandemic, the wage bill still rose €43m (12%) to €414m, the club’s highest ever. This was more than 3 times as much as the closest challenger in France, Lyon with €132m, representing 29% of Ligue 1 wages.

€414m wage bill is the second highest in Europe, only surpassed by Barcelona €443m (before their La Liga salary cap challenges), but more than clubs like Manchester City €401m, RealMadrid €378m, Liverpool €371m, Bayern €340m, Manchester United €324m and Chelsea €323m.

PSG have ramped up their transfer spend with a gross outlay of €560m in the 3 years up to 2019/20 season, almost twice as much as the preceding 3-year period. This included the significant acquisitions of Neymar from Barcelona €222m and Kylian Mbappé from Monaco €145m.

However, the club have not spent as much in the transfer market as European rivals. Their €560m gross spend in last three years is comfortably outpaced by Barcelona €960m, Juventus €801m and Chelsea €758m. On a net basis, their €242m is around half Manchester City €460m and Manchester United €432m.

The net result of transfer activity for last 2 years in the accounts is a cost increase of “only” €49m, with player purchases growing cost base by €140m, partly offset by €58m reduction from sales and €33m fall in amortisation. It was mitigated by €12m profit from player sales.

Before the COVID-impacted 2020 accounts, PSG had actually reported pre-tax profits in four of the last five years, amounting to €75m between 2015 and 2019. In the 4 years preceding that period (2011-14), they posted small annual losses (none higher than €5m).

However, PSG posted a huge €125m loss in 2020. Everyone was adversely impacted by the pandemic, but this was at the upper end of losses among leading clubs. That said, loss over last three years was just €53m.

Revenue dropped €99m (15%) from €659m to €560m in 2020, partly because of the pandemic, but mainly due to the expiry of the lucrative publicity deal with the Qatar Tourist Authority. The decrease was higher than €62m (14%) average at European Super League clubs.

The club will look to pay for Messi by significantly boosting commercial income. As Al-Khelaifi said, “The club will increase in every part commercially. We will give you some numbers and you are going to be shocked.” They will also look to sell fringe players.

There will also be a boost to shirt sales, though this is unlikely to be as much as many might think. If we optimistically assume an additional €1m sales at €100 per shirt, a 10% share for PSG would mean only €10m revenue. This would obviously help, but not pay for the transfer.

It is also worth noting that #PSG president Al-Khelaifi is very much in UEFA’s good books at the moment following his club’s staunch opposition to the proposed European Super League. Indeed, he has replaced Andrea Agnelli as chairman of the European Club Association.

[It should be noted that Uefa is working on revisions to its financial fair play rules].

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s

Gold standard ground boosts Tottenham's income

The gold standard in European football grounds is the Tottenham Hotspur stadium in north London, a £1bn construction project completed in 2019. Its impact on the club’s finances has become increasingly clear as the effects of the pandemic have faded. Previously, the average fan would spend less than £2 inside the ground on a typical match day, but now that figure is about £16, thanks to new facilities including the longest bar in Europe and an on-site microbrewery. Capacity has gone up from 36,000 at the club’s previous home of White Hart Lane to 62,000. The new stadium — built on land adjacent to White Hart Lane — has opened the door to a broad range of other events that have helped to push commercial income up from €117mn in 2018 to €215mn in 2022. Last year, Tottenham hosted US singer Beyoncé for five nights on her global Renaissance tour, two NFL matches, as well as rugby games and heavyweight boxing bouts. Money brought in from football has gone up too. Match day income is

Spurs to sell minority stake

Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to depl

The Political Economy of Football V2

Search This Blog