Why PSG is reportedly 'on course' for Financial Fair Play sanctions
Paris Saint-Germain could be set to incur the wrath of UEFA after an independent review of the French club’s finances found irregularities that might put it in violation of Financial Fair Play, according to a report from the Financial Times on Wednesday.
The investigation, which was launched in September after PSG more than doubled soccer’s transfer record to sign Neymar from Barcelona, could result in penalties as harsh as a Champions League ban.
The Parisian club has drawn the scrutiny and ire of the entire football world for its seemingly limitless spending. It has been accused of “financial doping.” Weeks after paying $275 million for Neymar, it agreed a $223 million deal – the second-most expensive ever – for Kylian Mbappe. But it exploited a Financial Fair Play loophole by signing Mbappe on loan, with an obligation to make the full purchase this upcoming summer.
But that isn’t the real problem here. The subject of the investigation into PSG isn’t how it’s spending its money; it’s where that money is coming from.
PSG is owned by Qatar Sports Investments, which is bankrolled by the Qatari state. In other words, PSG is owned by a national government. The emir of Qatar effectively runs the club – and has even reportedly chosen its next manager.
The issue is that Qatar’s filthy rich national government also owns a lot of other things, including companies PSG could strike sponsorship deals with. So, naturally, that’s exactly what PSG and the companies have done. PSG’s sponsors and partners include the Qatar National Bank and BeIN Sports.
Except this isn’t one party doing business with another. It’s effectively one party doing business with itself. That party can therefore tailor the terms of the sponsorship deal to its liking, because the money is all coming from the same – or a similar – source.
In other words, technically, the Qatari government can increase the value of the sponsorship deal to increase PSG’s revenue without the finances of the situation actually changing. Which is a problem for UEFA, because FFP rules are based on revenue. They state that a club can’t spend more than €30 million ($37.2 million) beyond its revenues over a three-year period. So if the Qatari state can hike up sponsorship payments – and therefore PSG’s revenue – as it pleases, then PSG’s spending truly is limitless.
But UEFA has mechanisms to close the loophole. According to the Financial Times, it appointed a sports consultancy firm to assess the “fair value” of PSG’s sponsorship deals, to ensure the fall roughly in line with what the market would predict. And per the FT, citing two sources, the independent review found the deals to be “significantly overstated.”
That doesn’t necessarily mean PSG is in violation of Financial Fair Play. And the Parisians (er, Qataris) still have time to generate more revenue before the year is out. They still have time before UEFA conducts its own final review of the situation after the 2017-18 season is complete. But PSG was harmed financially by its Champions League round of 16 exit. It is reportedly “on course” for trouble.
And if it is, what will the sanctions be? They depend on exactly what UEFA has found or will find. But the possibilities are a fine, limits on how many players the club can register as part of its Champions League squad, or a ban from the Champions League altogether.
And PSG, as a repeat offender – it was fined $74 million in 2014 for a problematic sponsorship deal with the Qatar Tourism Authority – would presumably be in for one of the tougher penalties.
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Henry Bushnell covers global soccer, and occasionally other ball games, for Yahoo Sports. Have a tip? Question? Comment? Email him at henrydbushnell@gmail.com or follow him on Twitter @HenryBushnell.
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