By Tony Attwood
According to the Sun, Paris Saint-Germain and Barcelona both call surprise press conference half hour apart as Neymar’s £195m switch to PSG. Of course the chances are that this is typical Fake News from the Sun, the Express and the other media outlets. But even so, the huge transfers going through at the moment raise the question, what about the Financial Fair Play aspects of the deal.
FFP: the rule that says that Uefa qualified clubs must not spend more than they earn. The one that Manchester City supporters told us en masse was about to be thrown out by the European Courts and didn’t apply to them. That one.
While the transfer rumours about Neymar have been alarming the handful of people left in football who think that football might be rescueable from ultimate financial collapse, PSG, financed by Oryx Qatar Sports Investments, has steamed ahead quite happily, much as the besieged Qatari state has done as more and more migrant workers have died in the construction of its world cup venues.
As the French newspaper Liberation reminded us in an article yesterday, the objectives of financial fair play, initiated by Michel Platini in 2010 and in force since 2011, are simple: to improve the long-term financial health of teams participating in Uefa competitions.”
And indeed I’m grateful to Liberation, not just because it is my French newspaper of choice, but also because it covers issues of football finance that British papers rarely touch. (Why don’t they, I wonder!)
Until 2013, FFP was there to ensure that the clubs paid their bills on time and that they did not have “arrears of payment towards other clubs, their players and the social or fiscal administrations”.
Then in 2013, the principle of financial equilibrium came into being consisting of the process of verifying whether a team was spending more than it earned.
However, after a series of initial protests by rich clubs, a margin of 30 million euros was set by Uefa for the seasons 2015-2016, 2016-2017 and 2017-2018.
To keep check on all this the wonderfully named Chamber of Judgment of the UEFA Club Financial Control Authority (ICFC) was set up to administer the fullness of the rule. For the rule was not just about balancing the books but also about encouraging “responsible investment in the long-term interest of football”, such as equipment, training grounds and stadium improvement work.
Those who don’t meet these requirements however can’t be automatically excluded from the Europa or the Champions League. Initially, the ICFC has to tell the club off for being naughty, and then if the club still will not realise the error of their ways, it can be sanctioned at that point.
Galatasaray is a case in point. In March 2016 they were given a two year ban from playing in either major Euro competition because of their finances in 2015-16. Other possible punishments range from warnings to a ban on recruiting a player for European competitions, and on to the withdrawal of a trophy. As well as Manchester City, AS Monaco and PSG themselves have been caught out.
Then a relaxation of fair play rules was adopted on 29 June 2015 by Uefa. This allowed a deficit to be exceeded as part of a four-year financial plan and to increase revenue forecasts at which point a club can offer a “settlement agreement”. But to have the right, to do this the club must not have been punished in the last three years.
The objective of the ICFC is to help teams have a stable financial situation and measured like this it seems to be working. In 2011, before the introduction of this rule, the losses of the European clubs amounted to 1.7 billion euros. By 2014, they were no more than 486 million euros.
But here’s the question: can the PSG recruit Neymar in accordance with this rule?
As we’ve often said, the cost of a new player is amortized over the duration of the contract of the player in question, along with his salary. So to take Neymar as an example…
The transfer fee set by the club is €222 million. Provisional annual salary: €30 million. So we have a total of €74.4 million per year (€222 million divided by 5 plus the €30 million annual salary).
PSG has also spent €16 million on Yuri Berchiche and brought in €4 million euros with the sale of Youssouf Sabaly and Jean-Kevin Augustin.
Those events put PSG roughly in FFP equilibrium. But it means it is impossible for them to buy Neymar without selling other players in order to balance the accounts and not exceed the €30 million deficit imposed by the ICFC.
But here’s the thing: in 2014, PSG were sanctioned by the ICFC in relation to the contract signed between PSG and Qatar’s tourism authority, amounting to 200 million euros annually, (half their budget). And, above all, it allowed PSG to meet the criteria of FFP in terms of deficit.
This sanction ended on 21 April but now (according to Marcelo Bechler, a journalist with the Brazilian channel Esporte Interativo), PSG has developed a way to bypass the rules of fair play.
It goes like this: the owners of PSG (Oryx Qatar Sports Investments as I mentioned), buys the ownership of the images of the player for the 2022 World Cup in Qatar, for €222 million euros and pays that to the company that manages the image rights of Neymar, who then use this money to pay for the transfer.
PSG thus don’t have to pay for the transfer nor the annual salary around 30 million euros over five years. The club owners do it through a separate company.
But UEFA’s rules also outlaw activities whose sole purpose is to get around the rules. This is commonplace: Revenue and Customs in the UK have exactly this rule and have applied it against media stars who have been known to play this type of game, some of whom have faced enormous bills. Jimmy Carr, members of Take That, Chris Moyles, the list goes on and on…
So what happens now? It is up to Uefa if it wants to take on PSG. If not, FFP is over. If they do, PSG is in trouble. Here’s how the table looked at the end of last season.
The Index of Indexes
- The In Index: All the players tipped to be joining Arsenal this summer
- The Out Index: All the players tipped to be leaving Arsenal this summer
- The Purchase Index: All this summer’s player buying by the top 10 clubs of last season
- The Loan Index: The top clubs compared in terms of players loaned out
- The one-liners that are killing football: what journalists say about Arsenal and others
- Beyond the media; how to take back football from those who tell us how to think.
- How You Tube has destroyed all sensible football debate
- Arsenal shortlist for the final signing of the season, and high praise from the Guardian!
From the Arsenal History Society