The financial mismanagement of Europe’s footballing clubs has been made worse by the ruinous impact of the COVID-19 pandemic. Paris Saint-Germain, on the other hand, have spent around 250 million euros on transfer fees, wages and renewals this summer but have still yet to secure Kylian Mbappe to a new contract, and there is a potential for UEFA's FFP rules to leave them at risk. PSG’s transfer business for this summer gives a throwback to their recruitment in 2017 which witnessed arrival of club’s jewel crown – Neymar from FC Barcelona and Kylian Mbappe from AS Monaco, reigniting their passion of being Champions of Europe which they nearly missed out in 2019-20 to Bayern Munich.
Euro 2020-winning goalkeeper Gianluigi Donnarumma from Italy became the latest marquee signing of French heavyweights Paris Saint Germain last week, arriving on a free transfer from Serie A side AC Milan along with Sergio Ramos and Georginio Wijnaldum who had completed their own moves earlier as free agents after leaving Real Madrid and Liverpool respectively. Even though, the trio might arrive without the need for shelling out any transfer fees but as per reliable estimation, around £28 million has been added to the club’s annual wage bill within a month.And then there was the capture of former Real Madrid’s Moroccan full-back Achraf Hakimi from Inter Milan, costing about £60 million with add-ons.
PSG is basically said to be taking advantage of UEFA’s decision to relax FFP regulations under the guise of implementing ‘Emergency Measures’. As per those measures,
- The financial year 2020 will not be covered under FFP rules, be rolled into 2021 and be assessed as a single financial window.
- The limit of incurring losses up to a maximum of €30 million (£26 million) over a rolling three-year period would no longer apply.
- Owners of European clubsare permitted by UEFA’s to put additional money into their clubs
UEFA’s ‘emergency measures’ have given PSG an opportunity to effectively utilise their financial muscle and flourish this summer, by cashing on the perks of being state owned (Qatar Investment Authority) and forever flush, making them less reliance on match day revenue and their finances well-insulated. PSG has been ranked as the seventh richest football club in the world as per Deloitte report and so far, they are less likely to violate FFP rules
Firstly, the losses amounting to €124 million (£106 million) in 2019-20 as their total operating income fell by €101 million (£87 million) is being cushioned by profits earned in two seasons prior to 2019-20 amounting to €72 million (£62 million), while the wage bill stood at €414 million (£354 million)
Secondly, Hakimi’s transfer fees will be amortized over the entire duration of his contract i.e, five years. Therefore,£12 million will go towards each set of annual accounts until 2026, alongside the new quartet’s wages, which amount to roughly £35 million per year.The £8 million transfer fee earned for selling Mitchel Bakker to Germany’s Bayer Leverkusen last week will offset some of that, as might the revenue generated from possible exits of Alphonse Areola, Pablo Sarabia, Sergio Rico, Mauro Icardi, Leandro Paredes and Layvin Kurzawa.
Thirdly, PSG’s income, just like every other Ligue 1 club’s income, has seen a sharp nosedive due to the collapse of the French league’s long-term TV deal, but Champions League prize money, along with PSG commanding an ever-increasing UEFA coefficient owing to reaching the finals and semis in the past two seasons, helps to compensate. Other than that, securing sponsorship Accor Live Limitless along with a Nike Jordan brand tie – up has helped to reduce the blow visible in balance sheet owing to the controversial sponsorship deal with Qatar Tourism Authority.