Long known for their “Galacticos” model, PSG have dramatically changed their strategy in the last couple of years, following the departure of Lionel Messi, Neymar and Kylian Mbappé, replacing their expensive superstars with younger, hungrier players, as manager Luis Enrique has implemented his playing style.
Despite all the upheaval, PSG have once again won the league
this season, which is their 11th title in the past 13 years (and their fourth
in a row), while also reaching the final of the Coupe de France against Reims.
Success in Europe’s leading competition would be the icing
on the cake for the club’s owners, Qatar Sports Investments (QSI), a subsidiary
of Qatar's sovereign wealth fund Qatar Investment Authority (QIA).
They acquired PSG back in 2011, instantly making the club by
far the richest in France and one of the wealthiest in the world.
Big losses
However, they have posted huge losses in recent years, which
means that they have struggled to comply with UEFA’s Profitability and
Sustainability Regulations (PSR). Indeed, many fans of other clubs simply don’t
understand how their big spending can possibly be in line with the targets. PSG had actually reported pre-tax profits in
four of the five years before COVID struck, but they have lost an enormous
€889m in the five years since then. PSG’s
€889m loss in the last five years is just about the worst in Europe, only
“beaten” by Barcelona’s €1.1 bln (having excluded any gains arising from their
economic levers).
PSG reported another sizeable pre-tax loss in 2023/24 of
€56m, but this was only around half of the previous season’s €107m, mainly due
to profit from player sales quadrupling from €45m to a club record €181m. Revenue only slightly rose from €807m to
€808m, but this was another high for the club. However, this was offset by
operating expenses, which increased €79m (8%) to break through the billion
Euros barrier.
There was good growth in most revenue streams, led by
broadcasting, which rose €12m (8%) from €166m to €178m. Gate receipts increased
€5m (9%) from €68m to €73m, while sponsorship and advertising was up €8m (2%)
from €373m to €381m.
French clubs normally strive to maintain a decent bottom
line and 2023/24 was no exception with nine clubs reporting a profit, led by
Lille €19m, Lens €9m and Toulouse €8m, while another three clubs restricted
their losses to less than €8m. PSG
alone generated around a third of all the revenue in Ligue 1 – more than the
bottom 12 clubs combined. More tellingly, their €808m was also higher than
their three closest challengers put together: Marseille €287m, Lyon €264m and
Nice €162m. They account for 32% of all
Ligue 1 revenue, while the next highest is La Liga 28%, then a big gap to the
Bundesliga 20%, the Premier League 13% and Serie A 13%.
Player trading is an important element in the business model
of many French clubs, so five of them made more than €40m last season, led by
Rennes €99m, Lyon €76m and Monaco €55m. However, they were all far below PSG’s
€181m.
PSG’s €391m commercial income is now the fifth highest in
Europe, only behind Real Madrid €482m, Bayern Munich €421m, Barcelona €421m and
Manchester City €407m. PSG’s commercial
income accounts for very nearly half of their total revenue (49%), which is
again one of the highest in Europe, only behind Juventus 56%, Barcelona 55%,
Bayern Munich 55% and Lyon 51%.
PSG have hugely benefited from their share of the deal
signed in April 2022 with investment fund CVC Capital Partners, who paid €1.5
bln for a 13% share of the commercial subsidiary set up by the French league to
support football development. PSG
received €83.5m in 2022/23, while last season’s payment was €17m lower at
€66.5m. The final tranche of €50m will arrive in 2024/25.
Broadcasting
French football has a major issue with its TV rights, which
means that clubs in Ligue 1 are facing a significant reduction in their
broadcasting income. This is a big
problem for PSG, as TV rights in France are much lower than the other major
leagues. The revised €585m for Ligue 1 is the only deal in the Big Five leagues
that is worth less than €1 bln (and a lot less at that).
PSG have compensated for the low domestic TV rights with
money from the Champions League, where they earned €122m in 2023/24 after
reaching the semi-final, before being eliminated by Borussia Dortmund. PSG have earned over well half a billion
Euros from Europe (€553m to be precise) in the last five years, which is more
than four times as much as the next highest French club, namely Marseille €134m
This season the Swiss Ramble estimates that PSG have already
earned €120m for reaching the Champions League semi-final, made up of €18.6m
participation fee, €56.1m prize money and €44.8m value pillar. If they get past Arsenal and win the final,
they would receive an impressive €145m.
Given the relatively small capacity at the Parc des Princes,
PSG have been looking at how they could expand their stadium to further boost
revenue. QSI had tried to buy the
stadium, but it has proved impossible to reach an agreement with Paris City
Council, so the club is looking for opportunities elsewhere. The club has therefore decided to build a
new stadium with the most likely location being Massy, though other names have
been mentioned, including Poissy and Montigny-le-Bretonneux.
PSG’s wages rose €38m (6%) from €621m to €659m, which was
somewhat surprising, given the departures of Messi, Neymar, Verratti and Ramos
the previous summer. Following the
rejuvenation of the squad and Mbappé’s move to Real Madrid, the expectation is
that the wage bill should be lower this season. As it stands, PSG’s €659m wage bill is still
comfortably the highest in Europe, well ahead of Manchester City €480m and Real
Madrid €469m.
PSG have benefited from significant financial support from
their owners, Qatar Sports Investments (QSI), as evidenced by the €250m capital
injection in 2022/23, which took the total funding in the last eight years to
nearly €1 bn.
Looking at PSG’s PSR calculation for 2023/24,the Swiss
Ramble reckons that they were just about within the €60m allowable loss after
taking into consideration the permitted exclusions, which also include the €10m
FFP fine.
In December 2023 QSI sold a minority 12.5% stake to American
private equity firm Arctos Partners, which reportedly valued PSG at €4.25 bn.
It does seem that the club has finally opted for a more
balanced approach, which also looks at financial sustainability, as well as its
sporting ambitions. The decision to focus on youth, as opposed to a bunch of
overpaid mercenaries is long overdue, and seems eminently sensible, given the
huge pool of natural football talent that is available in the Paris region.
The problem is that PSG are playing in a league that is
essentially broken; whether it is broken beyond repair, only time will tell.
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