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How Spurs scores over PSG for Qatar

Qatar Sports Investment has set its sights on the English Premier League. The state-backed fund, which owns Paris Saint-Germain and a slice of Portuguese title challengers SC Braga, wants to get a piece of the richest league in football, and has been eyeing up a potential investment in Tottenham Hotspur. QSI is also talking to outside investors about selling a stake in PSG itself, with a mooted valuation of over €4bn.

Which is the better bet, PSG or Spurs? According to Football Benchmark, the two clubs should garner a similar valuation — it gave the French club a roughly 10 per cent premium over the London side in its annual enterprise value estimates last year.

Spurs have a few important attributes that PSG lacks. For one, the club owns its new state of the art stadium, which is already bringing in extra revenue through other events, such as hosting some of the NFL’s international fixtures, boxing matches, and some big music acts including Lady Gaga. PSG, meanwhile, rents from the Paris government, and is threatening to leave the Parc des Princes unless it can buy the ground and expand it.

Premier League broadcast revenues are far higher than those in the French league too. Anyone looking to build long-term football investments will want exposure to that income stream. From a soft power perspective, Qatar will want to keep pace with its neighbours Abu Dhabi and Saudi Arabia, who both have teams in English football.

Recent experience suggests that Spurs is also a pretty tightly run ship. The club’s wages to revenue ratio in 2020/21 was 57 per cent, according to Football Benchmark, putting it on a par with clubs in Germany and Portugal, and well below the levels typically seen in the Premier League.

That same year, PSG’s wages to revenue ratio was 88 per cent, one of the highest in football. Since then, the number has shot up. Last season, with the arrival of Lionel Messi and contract renewal of Kylian Mbappe, wage costs soared 45 per cent, taking the wages/revenue ratio to 109 per cent and pushing the club to a post-tax loss of €369mn.

But PSG has its own advantages too. It has a captive market in one of the world’s most desirable cities — while Spurs has to compete with a long list of London rivals. PSG’s near total dominance of the French league in recent years effectively guarantees Champions League qualification, something most English clubs battle hard to achieve every season in an increasingly competitive league.

Thanks to its long-term partnerships with retailer Fanatics and Nike’s Jordan subsidiary, PSG has also morphed into a global luxury sportswear brand rather than just a football club. How many other European teams could justify a flagship clothing store on New York’s Fifth Avenue?

It’s easy to see why Qatar would want to buy into the Premier League, perhaps the bigger question is why it has taken so long. With the World Cup now out of the way, and a number of EPL assets on the block, it looks to be only a matter of time before Qatar gets its foothold.

 

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