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].

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The Political Economy of Football V2

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