messi psg

Why PSG are not afraid of financial fair play. Even after Messi, UEFA won’t do anything

Sports

In this text, we will answer two important questions.

• Ligue 1 recently planned almost the same restrictions that prevented Barça from retaining Messi. Why didn’t PSG get hurt?

• PSG after summer transfers would not fit into the classic FFP. But why isn’t this a problem?

According to the main French sports media L’Equipe, Lionel Messi will earn 40 million euros a year in Paris Saint-Germain. This is a record for Ligue 1 – so far the richest player in its history was Neymar with 35 million. 

The total cost of Leo’s contract, including 45 percent income tax, reaches 72.7 million. 

In January, when the transfer to PSG was only flickering on the horizon, future Barcelona president Joan Laporta was indignant at the Parisians’ negotiating activity: “I don’t know if they can sign Lionel. Perhaps they can, if they continue to disrupt financial fair play. If this does happen, I hope UEFA and FIFA will react properly. ”  

Many people think about PSG in a similar style, including in the comments on Sports.ru. This is logical against the backdrop of the most powerful transfer campaign:

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Yes, Wijnaldum, Ramos, Donnarumma and Messi came formally free of charge. But let’s not forget about the commissions of agents (in the 2019/20 season they spent 27 million euros – now they are probably more). Plus, the salaries of the stars went into the huge payroll of PSG.

• Donnarumma – € 7 million net per year (L’Equipe)

• Hakimi – 8 million (La Gazzetta dello Sport)

• Wijnaldum – 10 million (main media of the Netherlands De Telegraaf)

• Ramos – 12 million (L’Equipe)

• Messi – 40 million (L’Equipe) 

Total: 77 million euros net + 63 million taxes = 140 million euros.

In the summer of 2021, PSG has not yet sold anyone except the Dutch defender Bakker (left for Bayer), so Parisian spending will only grow. The club’s latest available financial report concerns the 2019/20 season, which was interrupted due to covid – then 414 million euros were spent on salaries. I.ein one window, the Parisians increased the list by 34% (as of August 11)

Against the backdrop of huge losses (-124.2 million euros in the 2019/20 season) PSG is increasing spending. How is this even possible? Where is fair play? Let’s figure it out. 

France adopted an internal FFP – and PSG declared Messi only thanks to the pandemic

In December 2019, Ligue 1, together with the National Directorate for Administrative Control of Management (DNCG), tightened the regulations. Salaries and amortization of transfers limited 70% of the budget (amortization is when a deal is spread over the duration of the contract; for example, Hakimi for 60 million euros with a contract for five in an accounting sense costs 12 million euros per year, not 60 million for one summer) … That is, with a budget of 100 euros, it was now allowed to spend only 70 on a train. 

The reason is the explosive growth of spending. In the 2017/18 season, French clubs, trying to grow, began to spend on average 75% of their budget on salaries. This is too dangerous: only 25% remained for transfers, and for the academy, and for infrastructure, and for organizational needs, and for paying off debts, and so on. The service of transfers (depreciation + expenses on agents) also rose sharply: in 2017, the league accounted for 280 million euros, in 2020 – 631, and the growth was steady and progressive (280 – 451 – 501 – 631). The league needed to act to avoid bankruptcies (there was a risk in the distance).  

The rule was supposed to take effect from the 2020/21 season, but then the coronavirus came. With the raging crisis, when the French championship was not finished, the new main broadcaster – Mediapro – did not even think to pay under the contract, and the league had to take loans so that clubs would not become impoverished, it was unrealistic to think about a 70 percent ceiling: contracts with players remained, but income sagged tragically (as a result, the share of salaries jumped to a terrible 89% – the clubs all poured into the contracts of football players).

At first, the introduction of the spending ceiling was frozen for two years, and in December 2020, after finally assessing the scale of the problems, it was postponed for another season. The current benchmark is the 2023/24 season. Domestic French fair play will appear three years later than planned. 

If not for the coronavirus, PSG would definitely not have entered Messi into the current squad without a sale of players. The fact is that in the 2019/20 season, the income of the Parisians amounted to 559.84 million euros, and the cost of the train was 556.46 (414.08 – salaries, 142.38 – amortization of transfers). According to the Ligue 1 formula, 99.3% of PSG’s budget would go to the squad – and in order to fit into the regulations, they would have to cut costs (since you can’t just cut depreciation – it is predetermined, you would have to part with players who have more – smaller contracts).

Moreover, PSG spent much more than competitors on salaries even before the 2021 campaign. Vedomosti Parisians – 29% of all Ligue 1 salaries in the 2019/20 season, Lyon spent 282 million less (414 versus 132). 

Freezing the 70% rule is not a request from PSG alone, who needs stars (as one might think, succumbing to the influence of conspiracy theories), but a forced measure. Not a single club would fit into the regulations: from 19 out of 20 only salaries (without amortization of transfers) were taken away 70 and more percent of the budget – only from Brest 65%.  

Therefore, the league gave the clubs time until 2023. By the way, Messi’s contract is calculated just until June 30, 2023 (it can be extended until 2024).  

To summarize: if the coronavirus had not postponed the introduction of the rule (in part it resembles the one that prevented Barcelona from signing a new contract with Messi), PSG would definitely not have been able to afford Messi’s contract without a big sale. And now inside France he can do what he wants – as long as there is money.

But what about UEFA? Let’s go further. 

UEFA weakened FFP a year ago – and PSG will easily fit into such rules

To be on the safe side, let me remind you of the basic structure of the UEFA financial fair play in a very simplified way. 

• To get into the European cups, the club shows UEFA documents for the previous three seasons – and in total, during this time, it is impossible to receive losses of more than 30 million euros (investments in development: stadiums, training centers, youth football systems are excluded from the calculation). 

• At the same time, all commercial contracts must be concluded at a “fair price” – special commissions are called upon to identify inadequate non-market transactions (for this, the coverage of club projects and the cost of advertising contacts with the audience in different countries are taken into account). If UEFA considers the transaction to be overvalued, it may, on record, reduce the amount to what the auditors consider fair. 

But amid the coronavirus, UEFA has softened the rules. The organization promised not to cling to absolute figures and removed from the list of claims a loss of no more than 30 million euros – that is, a club that lost 120 million euros in three years may appear in the Champions League. The main thing for him is to prove that this negative result was strongly influenced by the pandemic (where and how incomes sank, how the covid is to blame for this).  

To mitigate the effect of the pandemic, before this season, UEFA considers the three financial periods as follows: 2018, 2019 and 2020 + 2021 in total (and the sum of the losses of the two covid seasons is halved). 

For example, for PSG this application will look like this:

2018: 31.5 million euros of net profit

2019: 27.6 million euros of net profit

2020: 124 million euros of net loss 

2021: still unknown 

Let’s say the average loss in 2020-2021 will be 150 million euros. Then the application balance of PSG will be -90.9 million euros.

PSG ”, armed with the history of a long-suffering telecontract (the underplayed championship, the departure of a new broadcaster with a promised league income of over 1 billion euros, as a result – lost income due to the search for a new broadcaster), will easily achieve UEFA’s understanding and compassion. 

Interestingly, PSG, unlike many top clubs, has no debts to banks (only 197 million poured in by the owners).

To make the position of Paris look even more convincing, the club plans to sell players with the least chances to start. The target, according to L’Equipe, is 180-200 million euros, but it seems too ambitious. The market is not ready for such prices and, moreover, knows that PSG urgently needs sales, and this immediately weakens the position in the negotiations.  

Hypothesis: UEFA will in no way punish PSG because of the Super League and is already saying goodbye to FFP – it will be replaced by a new control system 

Another important point is not to prove with numbers – it is rather an author’s assumption based on the statements of the leaders of PSG and UEFA.  

It is difficult to imagine a situation in which UEFA President Aleksandr Čeferin, who in the spring thanked PSG for their help in the collapse of the Super League (“Nasser, thank you from the bottom of my heart. You showed that you are a wonderful person”), will suddenly unleash a war against his closest ally at a time of crisis … PSG boss Nasser Al-Khelaifi has become the head of the Club Association – and if UEFA goes against him, he will have both the motivation and the opportunity to sink Čeferin. Because neither Agnelli, nor Perez, nor Laporta refused from the Superleague – and they are only waiting for such a luxurious gift as the punishment of PSG.  

This is doubt number one. 

The second is the impending death of financial fair play as we know it. Nobody at all hides the abandonment of the previous model, which means that it is inappropriate to resist with it.

“The rules have to evolve and adapt to the conditions in which clubs exist,” reflected Andrea Traverso, UEFA’s financial stability manager in March. – The break-even principle takes into account the previous work of the clubs – several years before a specific season. And the pandemic is changing everything around us so much that looking into the past is useless. The rules should probably be focused on the present and the future to better encompass high salaries and the transfer market. Finding the right solution is not easy.

“I read that we are planning to cancel the FFP. But I assure you: this will never happen, – said UEFA President Alexander Čeferin. – It is thanks to FFP that about a hundred clubs have avoided more serious problems. But we have to adapt and change some things. We need to encourage investors who are passionate about football.

UEFA stated almost in plain text: we will no longer look at the absolute figures of losses, we will not prohibit owners from investing in clubs (abandoning the principle of “fair contract value”), and so that clubs do not burst, we will control the proportion of costs for salaries and transfers. Most likely, we are talking about the same model that Ligue 1 developed: you cannot get into the Champions League if you spend more than 70% of what you earn on the squad.  

So UEFA is making a compromise with the big clubs, which have long demanded freedom of investment. 

“Financial fair play should not discourage investment. This is common sense. I want people to invest in our sport. We need to change the rules, UEFA needs to work on it, Al-Khelaifi said in early June.   

And even if PSG have problems, UEFA will not fight them. They are now partners.

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