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How PSG plan to get round FFP and where that plan has gone wrong.

By Tony Attwood

For Paris Saint-Germain the issue of the Neymar transfer is not just one of getting the player.  It is a case of getting the player and not getting debarred from, or penalised within, the Champions League.

Of course PSG know a bit about FFP since they have already come under fire from Uefa for previous wrong doings, so one might expect them to have come up with some clever ploys.  But…

Under FFP clubs are allowed by Uefa to lose €5m over three years.   Expenditure on such issues as building a stadium, developing youth facilities (as Manchester City have done with great aplomb) and similar matters is not included in the costs spent.  This is why Arsenal suffers at present, for while Manchester City has an owner that will plough billions into youth and stadium development, Arsenal have an owner who will not put money into such ventures, and so the funding has to come out of current income, thus diminishing the club’s resources for use on transfers.

Uefa also lets owners spend a further €30m of their own money over any three‑year period.  Again this helps clubs like Manchester City, Chelsea and the like who have an owner willing to do this.  Indeed under revised FFP regulations, which more or less made them useless in stopping countries, airlines and billionaires do what they want, new owners of clubs can go even further.  Seemingly all they have to do is lodge a viable business plan with Uefa and all will be hunky-dory.

So when we come to Neymar going from Barcelona to PSG there is going to be no problem with tiny details like 200 million euros funded by the Qatar Tourist Authority.  Except…

Maybe there could be, and if Uefa does get exercised by this deal they might do to PSG what they did to Manchester City (even though, rather amusingly, lots of Manchester City supporters told us they could not and would not since the whole procedure was a fantasy of our imagination, and about to be thrown out by the European Court of Justice – which it wasn’t.)

Man City you might recall were told to trim their Euro squad from 25 down to 21 with eight of those registered players being “homegrown”.  So could PSG really suffer the same fate?

Now Barcelona and PSG hate each other beyond measure following the bizarre match between them in which the strangest refereeing of all time allowed Barcelona to beat PSG 6-1 in March this year.  Which means co-operation between the two clubs might be unlikely.  But this is what is needed.

To overcome FFP accounting rules in PSG’s favour, use would have to be made of the regulation that allows transfer fees to paid over the length of the player’s contract.  So Neymar gets a five year contract, and PSG pay Barcelona 20% of the money due each year for five years.

But this is not automatic.   It only applies if Barcelona agree to it.  The great benefit for PSG is that they can then sell a player a year and make up the loss and see all the accounting safely through FFP.  There is no benefit to Barcelona however – they let PSG off the hook, and only get their money slowly.

So if Barcelona says no and demand all the dosh in one go, Uefa is bound to look, and then penalise PSG.  And PSG know that Barcelona have Uefa in its pocket – the refereeing in the 6-1 defeat showed that without any doubt, and so they know that Uefa will go along with Barcelona’s wishes – whatever they are.

However in another twist Mundo Deportivo is suggesting Neymar could be part of Qatar’s World Cup publicity stunts and that Qatar Tourist Authority would then pay him £200m. In short Neymar buys his own transfer out of Barcelona.

Now Uefa these days will do anything Qatar says, under orders from Fifa, but Barcelona could still object to this and a lot of other clubs would see this as a way of bypassing all regulations by any club sponsored by embargo ridden Qatar and also raise objections.

In short that takes us into dubious territory.

So refusal by Barcelona to do the deal over five years and instead demand 100% payment on day one, could cause problems, although even without that Uefa could decide to investigate.  And ultimately it could ban PSG from playing in the Champions League.  And that would cause Neymar to throw a tantrum.

And there is one other thing.  According to the contract Neymar has, he is due a loyalty bonus if he stays with the club until 1 August 2017, which he did.  And Barcelona have suggested they are not paying it.

What jolly japes.

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20 comments to How PSG plan to get round FFP and where that plan has gone wrong.

  • Chris

    Tony,

    there is one angle that is ignored

    here, definitely, we have a player who does all to get out of his contract. And he is an active actor of going around FFP rule, because he buys himself free.
    In my opinion, in this case, it is Neymar as well who ought to be banned from playing for a certain amount of time – after all a player was stuck 6 months 2 years ago because the club did not do the paperwork correctly (some german in Turkey I believe). Why should he then not be punished as well ?

    I doubt this will ever happen. However if nothing happens, Pandora’s box is open : buying club pays a third party to pay the player for some advertising rights, player comes to the office with a case load of money and walks free. How is this going to play out for Alexis ? there are 29 days left in this mercato, do you think it is not enough to organise that ?

    This opens up a whole new avenue on how to destroy an opposing team. Get the ‘advertisers’ on board, chose your target, maybe choose 3 in the same team, have them come to the office on the last day with suitcases full of money and say their goodbyes. They walk right into the new team and the old team is depleted.

    The thing is, basically, football is telling kids that there is nothing like a contract, that you can always buy yourself free.. not that politicians have not done so blatantly lately…but kids don’t care much for politics, so the example may not be influential. But in this case, the message is not good.

    Guess the buy-out clause has died….or contracts will add a clause that prohibits a self-buyout clause.

    I think this is going to cause quite some bedlam.

  • LeMmy

    Shenanigans Corruption the whole game is as bent as a butchers meat hook . So, Man C PSG Barca R. Madrid ad Chelsea just go and form your own Corrupt league and leave the rest alone.

  • Neymar is a money monger! Barca should forget about. They should buy Cotinho & Dembele or Dybala. We can CONQUER six trophies per seasons ahead.

  • Andy Mack

    It’s a little unfair to blame Stan for a failure to invest his own money compared to Chavski and $iteh, as they’re both owned entirely by one owner each.
    Whereas we’ve the issue that Stan only owns 65 odd percent and the dodgy Uzbek and a few other people own a fair chunk of the shares.
    Even IF Usmanov is willing to invest proportionally, the others probably aren’t. So it would be Stan and maybe Usmanov investing disproportionately for their share holding…
    If Usmanov didn’t agree then Stan would effectively be funding the guy that he wants out of the shareholding altogether…

  • Nickw

    FFP is the biggest joke in football , it clearly doesn’t work as there are too many loopholes for seriously rich owners to exploit. It would be less embarrassing if they just scrapped it rather than pretending it actually did anything to deter excessive spending.

  • Chris

    reading the papers, there is an information i found. By having their sponor/owner pay Neymar directly, PSG are saving around 150-200 million euros in taxes they’d otherwise have to pay. No mention so fatr of any taxes neymar would have to pay, but considering he is a pro in tax evasion as well as in football, I guess that has been taken care of.

    Talk about fairplay and civism….

  • Ajay

    I don’t see why clubs owned 100% by an individual can not invest his/her money into players for their club no matter what the amount in a season. After all it is their club and money that they have earned through successful business they run world over. And being successful in their personal life to the point where they can wholly own football clubs, I am quite certain they will know how to recoup the money spend and then some. Is it fair to other clubs, no. But in a world where the world’s richest 62 has more wealth than 50% of the world population all of this shouldn’t come as shocking or troubling. I think smaller clubs will have to change their approach all together. They are going to have to improve the quality of their scouting network so that they start finding uncut diamonds, get them to sign huge release clauses and get the bigger clubs to play ball. Or they have to improve their football academy or start one if they do not have one already. But the disparity in transfer spending is going to keep widening.

  • Swapneel

    @Andy
    That’s a valid point, but I doubt it would have changed much, looking at his history with other clubs, it’s seems for him business comes first then sports.
    Not that it is wrong but it seems more suited to other businesses than sports.

    Found a old article on how his other sports team are doing in US
    https://angryofislington.com/2013/05/08/stan-dont-deliver-how-does-kroenke-treat-his-us-sports-clubs/

    At best I can think of is, if he had complete ownership of Arsenal he might have invested a bit in initial 2-3 years, anyways this wasn’t necessary with Wenger’s brilliance at work (Yes we didn’t win a much after 2005, but that never on Stan’s agenda at the cost of millions he would had to invest)

  • Swapneel

    @Ajay
    If I am not wrong that money is assumed as loan given to the club, which ultimately shows in debt.

    What happens when owner leaves one day, next owner has to pay that debt.

    Correct me if I am wrong on above points.

  • colario

    Instead our Stan took 6 million from the club.
    It is said elsewhere that President Teump is America’s answer to Robin Hood.
    President Trump is intent on robbing the poor to pay the rich.
    Our Stan voted for him so it is said.

  • para

    I’m getting the strong feeling that it is all too late now.

    We have let football(and basicaly every other area of society/life) become entrenched to the core.

    Soon the only other option will be to destroy it and start a fresh, but it is like a snowball rolling down the mountain becoming bigger and bigger and leaving a trail of destruction in it’s wake. 😈

  • MikeT

    Tony

    I think you are getting a little confused.

    Amortisation of the transfer fee is a given. It bears no relevance to how or over what term a transfer fee is paid. Some clubs pay all transfer fees up front some like Arsenal for the majority of their fees over the length of the initial contract

    If the fee is a £200 million and a 5 year contract is singed then £40 million is accounted for each year. After 1years his book value will be £160 million. If he signs a new 5 year deal then that £40 million sum is reduced to £ 32 million.

  • Ajay Nair

    Hi Tony
    While I would like to see what you say implemented, I have the following differing view points

    1. Accounting treatment of the 200M will happen over 5 years even if the payment is made today. This off course is not including Neymars wages which I believe will also work out to 200M over 5 years. Therefore PSG will have to bring in a further 80M revenue per year for the next 5 years. We will see the results only when their books for 17-18 will be published in 16 months time.

    2. FFP at its core is highly anti competitive and so while I hate it ManShitty will probably win in the European Court of Justice. At best UEFA may be able to ask that the losses be funded by actual funds brought in by the owners rather than any form of public money.

    3. Look at it from this point of view, if I wish to develop a Cola brand vs CocaCola, the only option I would have is to spend maybe 100Billion doing it but nobody would prevent me from doing it. It works the same way in football. How will a West Brom etc. ever compete against ManUtd without a similar wage bill or the ability to pay huge transfer fees.

    I hope you see that while I wish that FFP is rigorously implemented it is not justice since it removes the ability to compete and as a result hurts Football as a whole. It should be removed and I believe it will happen sooner rather than later

  • Ajay, I think you might have missed part of the ECJ original ruling on FFP. Not for the first time the ECJ has ruled that team sport is a special case when it comes to competition, because of the structure of leagues etc, and therefore the competitiveness rules that apply in business cannot be transferred to team sport. ECJ also accepted the need for governing bodies which set rules which may themselves be anti-competitive. For anyone to overthrow FFP in Europe they would need to show why the previous ruling of the ECJ is faulty, and I can’t imagine how that would be done.

  • Josif

    Silent Stan apparently donated million dollars for Trump’s campaign. I guess it’s fair to say he likes Trump more than he likes Arsenal.

    Let’s return to the subject.

    Neymar… Buy-out clauses in the Spanish football are a tricky thing. They’ve been established as a way out for workers (in this case, footballers). If a club outside Spain buy a player, they have to give money to the player to pay for his own clause so they don’t have to pay VAT. Spanish clubs deposit the money at Spanish FA so they can negotiate the contract terms with a player. Basically, PSG won’t sign Neymar from Barcelona but as a free player.

  • Andy Mack

    colario, 3 points;
    1) 6m is a drop in the ocean when you look at the money involved.
    2) It’s supposedly for a service which I have no doubt his operation has supplied, but the question is really was it £3m per years worth of service (which I doubt).
    3) It’s even a tiny amount if it was a genuine dividend for Stans outlay.

  • Andy Mack

    Swapneel, it may well have been the case that he’d have invested nothing more if he’d been the 100% shareholder, but until he’s actually in that situation, we’ll never know.

  • Andy Mack

    Ajay, no one has any great following of any Cola company (unless they’re very odd) whereas a football club is a major emotional part of peoples lives (which is only slightly odd 😀 ), so that’s not really a fair comparison.
    The point of a FFP was to stop it becoming a toy of extremely wealthy people where it no longer existed after they lost interest (by walking away leaving the club to go bankrupt as they can and have with other ‘toy’ businesses).
    We’ve seen this happen with Yacht, sports car and sports-motorbike manufacturers but for many a football club is much more than a business.
    We’ve also seen it with a few smaller clubs (where they invested less and usually had less to invest than the big clubs mentioned here) such as Pompey which plummeted down the leagues and was lucky to survive as a club at all.
    So for this reason alone I’d support a much tougher FFP process.

  • Ajay

    @Swapneel
    True that it would reflect as a debt. No arguments there. But why would somebody lend huge sums of money and then leave with out getting back the loaned amount. And the way I look at it clubs like Chelsea and Man city and PSG which are wholly owned by a person or a country, they operate differently. For them the club they own represent much more than the city it’s in, the fans etc. For them it’s about bragging rights and to get that they will do whatever required. It’s for this reason alone the Nigerian tycoon Aliko Dangote wanted to buy Arsenal. He felt there wasn’t any investment in players which means he will change the way the club spends for their players. Not a great way from our point of view but they live in a different world. I firmly believe in organic growth. Let the club earn from it’s operations and then spend from it. All of this crazy numbers will drop but it’s a distant reality with more rich people wanting to buy clubs far from sporting reasons because gone are the days when the super rich could get by bragging about the car or the house they own, it has got to be something much more than that…

  • Andy Mack

    Ajay, I worked for a Gulf ‘GCC’ company and believed that they would do whatever was required so that they didn’t lose face. The company was closed down in 1999/2000 because the shareholders wanted to make a point to each other (nothing to do with business reasons). They were amazingly generous bosses when it was a ‘Cash’ gesture but when it was number on paper then they would go ‘all out’ to win and if something stopped that then they could be like children.
    These guys have so much money that the amount they put into their football team is a miniscule amount (refer to the Neymar deal to appreciate how much the can easily do).
    Common sense says you’re right but experience tells me that you’re wrong that they wouldn’t run away after putting their money into a club.

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