Neymar, Mbappe and PSG not making a joke out of Financial Fair Play: FFP is the joke
When Paris Saint-Germain signed Neymar from Barcelona in August for €220 million, they did not just break the world transfer record for one individual player, they came close to spending more in one fell swoop than any team in history had in a single transfer window.
Only Real Madrid’s Galactico buying campaign of 2009, in which they captured Ballon d’Or winners Cristiano Ronaldo and Kaka, eclipsed PSG’s paradigm-shifting move. Simply by signing relatively unheralded full-back Yuri Berchiche from Real Sociedad for the relatively modest fee of €16m, they made their summer of 2017 a record-breaking one.
Nevertheless, concerns have been raised about the Parisians’ ability to comply with Financial Fair Play (FFP), which is designed to stop clubs spending more than they can afford. In reality, however, it acts as a buffer to make it incredibly difficult for any upstarts to break into Europe’s elite – a barrier that PSG appear to have bludgeoned their way through.
“Nasser is right to do what he did, but are we right to allow him to do it?” Lyon president Jean-Michel Aulas questioned, having previously voiced his concern over a potential lack of competitiveness in France.
While outside agencies have criticised the lavish price paid for Neymar – Bayern Munich CEO Uli Hoeness notably called it “a sign of weakness” while L'Equipe reports Real Madrid and Barcelona want their accounts closely scrutinised – that did not stop the Parisian outfit seeking to circumnavigate their way around FFP legislation in order to land another major prize: Monaco teenager Kylian Mbappe, who is slated to cost the capital side something in the region of €180m.
How they can afford to make two giant signings is relatively simple.
PSG will take advantage of an accounting practise known as amortisation to account for Neymar. As he has signed a five-year contract, they can break down his €222m transfer fee into five equal sums of €44.4m for each season he is at the club – a far more manageable amount. That will be the figure that appears next to his name in the club’s cost accounts (plus wages, of course).
This is not a dirty accountancy trick, this is simply standard practice by businesses of every type the world over.
In the meantime, PSG believe that Neymar represents such a commercial draw that he will be worth every cent. In the 24 hours after his signing was made official, it was reported that the Ligue 1 giants shifted 15,000 official Neymar strips in Paris alone.
There can be little doubt that over the course of the next five years, the Brazilian will be the biggest commercial asset in the game. Barcelona held that belief, too, and that is why they were so displeased to see him leave – even for the incredible sum of €222m. Quite simply, he was worth more than that to them when he marketability and on-field talent were combined.
So, unless something catastrophic occurs, it’s entirely plausible that Neymar will more than pay back his transfer fee to PSG, despite the eye-watering sum it entails.
A little more complex, however, is how they intend to follow up with the Mbappe deal.
Aware that they could not afford to foot the bill for two such monumental transfers in one window, PSG have elected to move for the 18-year-old on loan.
A compulsory purchase option at the end of his year at the Parc des Princes would mean that his cost would have to be accounted for in this year’s books. The deal was delayed as a result to allow a way around it. Reports of a throwing in an outlandish clause, such as the loan contract being broken in the event PSG were relegated, were discussed.
Ultimately, with little more than five hours left in the transfer window, a way was found the obstacle.
It is in this type of scenario that lawyers and accounts prove their worth to clubs, finding loopholes in FFP legislation that can be exploited.
But FFP itself is fallible. The superclubs have immense budgets and, as such, can effectively use FFP as an insurance policy to ensure that their hegemony cannot be challenged.
For Europe’s biggest sides, it is a virtuous cycle. Succeed in Europe, earn the biggest prize money and greatest television contracts, sign the best players and therefore attract the most fans and commercial revenue before it all begins again.
For middle-ranking sides, even those that are ambitious, it is almost impossible to break into such a category. PSG and Atletico Madrid are, arguably, the only sides that have achieved this over the last decade and it appears that only the French club have had the additional financial clout to make themselves a worldwide force to make their success sustainable over the long term.
Meanwhile, former heavyweights such as Porto and Lyon have fallen away due to their inability to maintain incredible levels of investment.
Premier League clubs are the exception, as the monumental television deal in England skews a great financial advantage to those club. For instance, Sunderland earned more for finishing last in that division last season (£93.4m) than Champions League winners Real Madrid earned for becoming European champions (£82.5m).
Little wonder, then, the clubs on continental Europe are working tirelessly to make such a flawed system work in their favour.
Madrid, Barcelona, Bayern Munich and even PSG, of course, all have certain marketing advantages over the likes of England’s more provincial top sides, but it is easy to see how, in this environment, how an elite can be perpetuated.
PSG are not making a joke of FFP. FFP is the joke to begin with.