Despite having lost more than €600m since 2019, Paris Saint-Germain are set to escape any serious punishment from European football’s governing body following this season.
PSG, owned by Qatar Sports Investments (QSI) and chaired by Nasser Al-Khelaifi, the chairman of QSI, the beIN Media Group and the European Clubs Association, have been heavy spenders in the market in recent years.
A front three of Kylian Mbappe, Lionel Messi and Neymar Jnr doesn’t come cheap, with PSG have spent big to grow their brand on and off the pitch, success outside of their domestic league with regards to the former still eluding them when it comes to the Champions League.
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Last year UEFA announced that new sustainability regulations would be introduced to replace the previous financial fair play (FFP) system. The new requirements, known as the football earnings rule, came into effect from June 1, with the new rules seeing acceptable losses double from €30m to €60m over three years. But there was also supposed to be a stricter crackdown on clubs that break the new rules.
Back in August, UEFA announced that, following investigation, prize money from European competitions totalling €26m was to be withheld from the eight clubs sanctioned under FFP rules, with a further €146m in fines to be imposed if the sanctioned clubs failed to meet financial targets before over the next three years, something that was agreed through settlement deals with the clubs in question.
PSG were among the eight clubs to have been hit with a financial penalty, although the rather paltry amount of €10m would not have led to too many sleepless nights for club bosses in the French capital.
Last week, French newspaper L’Equipe reported that no immediate sanctions would be placed upon PSG, and nor would any sanctions likely arise before 2025/26, allowing the overspending clubs to get their houses in order.
Earlier this month, in an exclusive interview with the ECHO, Liverpool principal owner and Fenway Sports Group chief John W. Henry, spoke about the Reds’ ownership’s desire to see greater curbs on spending.
Liverpool, despite having recorded record revenues of £594m for the 2021/22 financial year, have for more than a decade of FSG ownership attempted to conduct their business in what they perceive as a sustainable manner, where the ability for the club to generate revenue through investment in infrastructure and commercial deals, as well as through profit from player trading, has underpinned the success on and off the pitch.
However, with transfer and wage spending having risen exponentially in the Premier League and across Europe, having such a stance towards the running of the football club has presented challenges when it comes to engaging in the transfer market, with the club’s policy having been a source of frustration for some Reds fans.
Henry told the ECHO: “You are right that there are ever-increasing financial challenges in the Premier League.
“The league itself is extraordinarily successful and is the greatest football competition in the world, but we’ve thought for some time there should be limits on spending so that the league doesn’t go the way of European leagues where one or two clubs annually have little competition.
“Excitement depends on competition and is the most important component of the Premier League.
“We’ve seen many football clubs go down unsustainable paths.”
The ability for PSG to press ahead with little in the way of sanctions for their significant losses in recent years underlines the point that Henry was making, with there having been a clear lack of implementation when it comes to the rules and regulations around spend.
On Monday it was claimed by The Athletic that Jude Bellingham, a long-term target of Liverpool and a player seen as someone who could help lead a new era at Anfield, was now ‘increasingly unlikely’ to join the Reds this summer from German side Borussia Dortmund.
England international Bellingham, 19, is expected to move on from the Bundesliga this summer and will not be short of potential suitors. However, with a transfer fee likely to be around £130m and significant wages to also be considered there are very few clubs who could become involved in the race.
With Liverpool now reportedly not leading the chase, falling behind Manchester City and Real Madrid in the race, potentially losing out to two major European rivals for fear of being dragged into a bidding war would be a cause of great frustration for both club and fans.
There has been little sense that Manchester City will pull back on any spending this coming summer despite having been landed with over 100 charges by the Premier League relating to alleged breaches of the Premier League’s profit and sustainability rules over a nine-year period. City’s appeal was upheld by the Court of Arbitration for Sport in 2020 having initially been hit with a Champions League ban by UEFA for alleged FFP breaches. They were still fined €10m following their appeal.
Real Madrid made a €13m profit for the 2021/22 financial year against revenues of €721.5m (£631.4m). That is a figure around £35m higher than Liverpool’s revenue for the same period. Real anticipate revenues of €769.6m in 2022/23, a figure that while an increase on 2021/22 is still less than pre-pandemic levels for the Spanish giants that reached €822m (£719.5m) in 2019/20.
During the pandemic Real made cutbacks on wages and sought to recapitalise the business. They adopted a measure of pulling back on transfer spend, something in contrast to rivals Barcelona who attempted the opposite to get themselves back on an even keel. Last year, Real concluded a deal with US investment fund Sixth Street to aid the redevelopment of the Santiago Bernabeu. The club is sitting on cash reserves of more than £370m.
Real Madrid’s financial muscle will likely be flexed this coming summer, and that will make plans for Liverpool to land Bellingham far more challenging.
But despite having revenues that place them third in European football, Liverpool could be beaten to the punch in their race for Bellingham, despite flying well below the FFP radar.
The PSG settlement also sets something of a precedent for UEFA, with the potential for clubs to seek a similar means of resolution.
The spending is set to continue, and at a huge rate. For clubs that have found a way to become less concerned about potentially heavy losses through raising funds on the balance sheet elsewhere, it likely won’t be too much of a tough pill to swallow. For some clubs that have some reliance on institutional investment, continued losses may put off that particular industry in the future, a vital lifeblood for some big teams, if tougher sanctions on spending are not introduced.
For FSG they will have to find a way to navigate through the financial landscape this summer in order to rebuild, challenge and continue to grow on and off the pitch.
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