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Can PSG get away with £198m fee for Neymar?

Paris-St Germain are expected to complete their deal to sign Neymar from Barcelona for 222m euros (£198m).Some people, including Liverpool manager Jurgen Klopp, have questioned how this transfer could be allowed under European football’s governing body Uefa’s Financial Fair Play (FFP) rules.Remember, the £198m is only the initial outlay – PSG will have to pay the Brazilian star wages that could double that amount over a five-year contract, as well as hefty fees to his father who is his agent and insurance premiums to protect their investment.Barcelona president Josep Maria Bartomeu threatened to report PSG to Uefa for breaching FFP rules. But Uefa would still not be able to block the deal. In a statement, it told the BBC: “We are not in a position to stop clubs from buying players, but the clubs will face sanctions if they fail to abide by Financial Fair Play rules.”Uefa introduced break-even FFP rules in 2013 to stop clubs accumulating too much debt and to prevent wealthy owners from injecting too much cash into their clubs.Money up frontThe rules state that over a three-year period a club like PSG, which is owned by the Gulf state of Qatar via its Oryx Qatar Sports Investments fund, can spend 30m euros more than it earns.It is possible that PSG has accumulated lots of profits over the past two years to make it easier for them to make such a big outlay in the current year. Uefa allows spending on things like stadiums, youth development and women’s teams to be excluded from the calculations.Barcelona are insisting on getting the whole transfer fee up front, but that will not mean it has to all be accounted for in the current year.”For FFP accounting purposes, the transfer fee will be divided over the length of the player’s contract,” says Daniel Geey, a sports lawyer at Sheridans.”So if it’s a five-year deal, that will count as around £40m of transfer spending per year.”

But £40m a year plus wages is still a hefty outlay, so how might PSG balance the books?There has been much talk of the club recouping the outlay by selling lots of Neymar shirts, but Mr Geey is not optimistic.”It’s a complete misnomer that clubs make a fortune from shirt sales increasing after big transfers,” he says.Kit deals tend to involve a big outlay up front with only limited profit-sharing of 10% to 15% after a certain number of shirts have been sold, he explains, so many millions of extra shirts would have to be sold to make serious inroads into the extra spending.Of course, it may mean the club receives more money from Nike when it comes to renegotiate, but its current deal runs until 2022.Prize moneyPSG is presumably confident that such a high-profile player will help it to sign other commercial deals and there is no limit to the number of official products they could have.We do not know what deal will be struck over Neymar’s image rights, but if PSG can get a proportion of those it will help with meeting the FFP rules.Then there is money to be earned on the pitch. PSG is already making a considerable amount of money in the Champions League – in the last five years it has reached the quarter-finals four times and been knocked out in the round of 16 once.Last year, a team getting to the semi-final was paid an extra 7.5m euros (£6.7m), the losing finalists earned 11m euros (£9.9m) and the winner 15.5m euros (£14m). And that’s just prize money, there are other pots of cash distributed to successful teams.The club came second in the French league last year but had won the title for the previous four years so there is not much scope for extra prize money there.They may argue that their huge acquisition will make French football more popular and lead to more lucrative television deals from around the world, but that would be a big impact for a single player, although it might help them sell expensive hospitality packages at their stadium the Parc des Princes.Of course, PSG could always balance the books by selling a few of their existing players, but losing them would not help their Champions’ League ambitions.PSG fell foul of the FFP rules in 2014 when Uefa ruled that a £167m commercial contract with the Qatar Tourism Authority was unfairly generous – effectively, the governing body ruled that Qatar had been using the contract to bypass the FFP rules.They were given a £20m fine, their spending was capped at £49m and they competed in the 2014-15 Champions League with 21 players in their squad instead of the usual 25.

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Source: BBC News

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My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups. I am an author of various websites including Franchise UK https://www.franchise-uk.co.uk

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