Now may be the time for PSG to repay the backers
Posted on December 7, 2019
WHAT will motivate Paris Saint-Germain when they get tired of winning domestic trophies at a canter? And despite their huge wage bill, growing revenue base and ability to snare any player they choose, how can PSG become more competitive where it really matters – in European competition? Given the amount of cash their owners have spent on player transfers and remuneration, should the French champions not be faring better?
PSG’s most recent financial report illustrated how the club has grown over the past eight years into a brand that generates money across multiple revenue streams. Their income of €634 million ranks them among the top half dozen in Europe but they are still some way behind the likes of Barcelona (€ 990m) and Real Madrid (€ 757m).
The French league is of a lower standard than La Liga and the Spanish giants have a track record and culture of legacy that goes back decades, but PSG’s accelerated progress has placed them in a strong position. It helps, of course, when you have substantial middle eastern muscle behind you, but PSG have been building more than just an all-star team of highly-paid hired hands. Nevertheless, it cannot be denied that Madrid and Barcelona have been “football cities” far longer than Paris, which despite its place in the evolution of football, has rarely shone on the global football stage.
PSG is a huge beast of the plains living in a zoo – or the big kid left behind in the junior grades when all his pals have moved up to the high school. They are far too mighty for their own good, effortlessly winning Ligue 1 seven times in eight years. The average margin of their title wins since 2012-13 has been 14 points, peaking in 2016 with a 31-point advantage. Last season it was 16. After 15 games this season, they have a five-point lead over Marseille. In each of the last four campaigns, PSG have scored over 100 league goals and in four seasons, they have conceded less than a goal a game. In 2019-20, their scoring rate has gone down to 2.13 per game and they’ve already lost three times. Hardly a major decline, but signs that momentum might have slowed.
PSG are not Europe’s only serial winners, Juventus have been dominant to the same extent in Italy and Bayern Munich have a similar level of success in Germany. All three clubs have similar ambitions – to conquer Europe and to be in contention every year. You sense there’s a degree of anxiety about PSG’s quest for the highest honours and that the club’s owners will not rest, and that can be translated into hiring and firing coaches and being competitive in the transfer market, until the Champions League is won.
Financial Fair Play means the owners cannot merely throw money recklessly into the project, so PSG have to build on their financial momentum. The club describes itself as “an economic player in the heart of the city” and over the past five seasons, they have spent more than € 800 million in transfer fees while recouping almost € 400 million in player sales. Included in the € 800 million were the purchases of Neymar and Kylian Mbappé. Cynics might suggest PSG do not need to spend so much to comfortably win domestic honours year-by-year.
The amount of cash being “invested” in the name of PSG gives them such a huge, some might say obscene, advantage in France. Consider their current wage bill is € 580 million, which represents more than 28% of the overall budget of the 20 Ligue 1 teams. At the same time, the gap has closed in France, or rather, clubs have attempted to up their wages in order to present some sort of credible opposition. In 2015-16, PSG’s wage bill was € 490 million, which represented 30% of the total for the division. Since then, Lyon’s budget has grown by 82%, Lille’s has gone up by 57% and Saint-Etienne is paying 47% more.
A giant at home, certainly, but can PSG move up a gear and become genuine Champions League challengers? Their form this season, in a group that includes Real Madrid, suggests they are committed to getting further than the past three seasons when they have reached the last 16. They have a reputation for freezing when a big game comes around and their dramatic capitulation at the hands of Barcelona in 2016-17 highlighted a certain lack of savvy. It ultimately cost Unai Emery his job the following season, even though he has the best win rate of any of the recent PSG coaches, with his 76.32% outperforming Thomas Tuchel, the current boss (73.21%) and Laurent Blanc (72.83%). Tuchel could be on his way in the summer, if not before, as Bayern Munich have shown an interest in him. PSG’s clout is such that they will be able to lure another big name to Paris.
It will be interesting to see if PSG’s strategy involves a new stadium at some point. The Parc des Princes is an iconic ground, but PSG are not in the same bracket as Real, Barca, United and Bayern. Their average gate is 47,500 (around 99% stadium utilisation rate) while the aforementioned clubs all enjoy much bigger crowds, with Barca, United and Bayern all drawing more than 70,000.
As well as generating greater matchday income, PSG hope to sell naming rights for their stadium and training ground. Consultancy Duff & Phelps calculated that this could earn around € 12 million, but other experts see PSG getting up to € 20 million. Given the French market’s limitations, PSG may also have to further leverage their global audience to better effect. The club claims it has over 100 fan clubs around the world, including 25 in Africa and 17 in Asia. The African presence has been boosted by a recently signed deal with Rwanda which could yield around € 10 million annually for the club.
PSG’s business model is quite diverse and includes eSports, judo and handball as well as a successful women’s football franchise. Yet the question is how much more money can PSG squeeze out of their domestic market given their relatively modest-sized stadium. Paris offers very little football competition, but it is a city of many distractions. Moreover, there has been talk of Qatar Sports Investments reducing its funding of the club owing to frustrations over the lack of Champions League success. They’ve also shown an interest in Leeds United. These two factors may make the 2019-20 season even more important for PSG as they bid to be mentioned in the same breath as Real Madrid and Barcelona. With the Neymar era undoubtedly drawing to a close soon, pariow much time have they got before their backers decide their ambitions might be better fulfilled elsewhere?