Ligue 1’s financial mistral

FRENCH football has already revealed that it is in chaos, the collapse of its € 3.25 billion TV deal with Chinese-Spanish broadcaster MediaPro has been well documented, but the financial state of the member clubs in Ligue 1 and 2 is worrying. Some less optimistic market watchers have suggested there are a number of clubs that could collapse, and big names like Bordeaux have already shown they are not immune from tip-toeing towards the abyss. 

Bordeaux have changed hands, but some analysts believe French football has become so unattractive that almost every Ligue 1 club is currently for sale. Others, such as Marseille’s president, Jacque-Henri Eyraud, consider the league is no longer sustainable in its current format and needs reducing from 20 teams.

More to come

Indeed, Jean-Marc Mickeler, the head of the regulator, Direction Nationale du Controle de Gestion (DNCG) has warned: “The worst is yet to come. In two seasons, French clubs have lost € 700 million in revenues…many clubs are at the end of their ability to plug the holes, so we cannot exclude there will be bankruptcy filings…there are no longer any financial institutions or funds that will agree to finance French football.”

The league has only just released the club financial statements for the aborted 2019-20 season, a decision that seemed rather knee-jerk to some and one the league may now regret. Ligue 1 ended with half a dozen rounds of matches still to play, with Paris Saint-Germain awarded the title. The club statements made horrifying reading in some cases, but Mickeler is probably correct – 2020-21, after all, was in effect a season played behind closed doors. To make the mood gloomier, France’s national team, Les Bleus, fell short in the Euros, surprisingly losing on penalties to Switzerland in the last 16.

Ligue 1’s continual problem is that it has been a one-horse race since Paris Saint-Germain became Qatari-owned, although Lille’s stunning 2021 title success indicates that surprises can still happen in the most imbalanced of leagues. Slighted by their failure to win yet another championship, PSG will now spend heavily to put Lille and any other contender in their place. The reinforcements have already started to arrive in the form of Euro 2020 star Gianluigi Donnarumma (AC Milan), Inter Milan’s Achraf Hakimi, Georginio Wijnaldum of Liverpool and Sergio Ramos from Real Madrid. There will surely be more to come before the 2021-22 season gets underway.

PSG’s revenues in 2019-20 totalled € 560 million, which represented around a third of Ligue 1’s entire income. Nobody comes remotely near that figure, Lyon are closest but their earnings total just € 181 million. Clearly, PSG should win the league every season with an advantage of that size. But even the mighty are vulnerable during a pandemic. PSG’s revenues fell by 15% in 2019-20, with media income down by 25% despite a Champions League run that ended in the final, and matchday was some 25% lower.

France’s top three clubs by revenue also includes Marseille, and between them, they account for 54% of Ligue 1’s total. Overall, the league saw income down by 15% to around €1.6 billion. 

Ligue 1 needs to worry about its lack of profitability, which eluded nine of the league’s 20 clubs in 2019-20. Operating losses affected all but Saint-Etienne and combined came to over € 900 million. Pre-tax losses came to more than € 250 million, the highest being PSG’s € 125 million, followed by Marseille’s € 97.8 million. Bordeaux and Lyon’s losses amount to more than € 35 million apiece.

But worryingly, Ligue 1’s wage bill still continued to rise. The total for the league was €1.4 billion, compared to € 1.37 billion in 2018-19 – a 3.6% increase. Predictably, PSG’s wage bill dwarfed the rest of the league and, at € 414 million, represented well over a quarter of the total. 

Lower income and higher wages resulted in a substantial increase in the wage-to-income ratio among Ligue 1 clubs, a rise of almost 16 percentage points. Six clubs paid out more than they earn, including Rennes, Nice and Bordeaux, while the average for 2019-20 was 89.5%. 

Sale fever

Ligue 1’s problems have triggered the prospect of a “fire sale”, with scores of big clubs now circling France in search of bargains. Naturally, Lille’s title-winning team will be picked over like vultures at a carcase just as Monaco’s 2017 champions were dismantled, while others, such as Houssem Aouar, Pape Sarr, Boulaye Dia, Boubacar Kamara, Jeremy Doku and Eduardo Camavinga, will also be on the radar of Premier League clubs. France has long been a target market for clubs from the other major leagues and French clubs have benefitted financially from selling talent. 

The Euro 2020 squad of 26 included 20 players employed by clubs from England, Germany, Spain and Italy. Players like Kylian Mbappé, Kingsley Coman, Antoine Griezmann and Raphaël Varane are among Europe’s most coveted players, but with the exception of Mbappé, they play abroad.

In such a troubled and uncertain environment, can a club like PSG hang on to its star players who are ambitious and yearn for the big prizes such as the Balon d’Or and UEFA Champions League? Even Mbappé’s future has been under discussion, as it is at the end of every campaign he stays in Paris. How long will he be satisfied to play in a competition that may see its status further erode? If the likes of Mbappé leave and other young stars opt for England, Spain or Germany, then PSG will be more appealing to veteran names on a retirement tour.

If this current crisis prevails, the league must be hoping the tie-up with Amazon proves successful and helps the clubs navigate their way through to the other side. There is another hurdle, needless to say. Canal+, who were originally sub-licensed from MediaPro’s partner, beIN, are unhappy about Amazon’s involvement and have said they will not broadcast Ligue 1 football. A solution has to be found soon, coupled with better financial management and greater transparency, to restore some stability, because France’s domestic game is in danger of losing ground and its ability to attract big names. 

@GameofthePeople

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