Paris Saint-Germain’s excesses are just too great to be healthy

PARIS Saint-Germain look set to lose Kylian Mbappé this summer to Real Madrid, but the enormous wealth of the French champions means they will surely replace the young striker with another high profile signing. PSG’s financial advantages have brought them a multitude of top names and they currently have Neymar, Lionel Messi and Mbappé, but with their resources, PSG should be winning everything in France and challenging in Europe.

Their wage bill was € 500 million in 2020-21, around one third of the overall Ligue 1 total and more than € 350 million more than the nearest rival, Olympique Lyonnais, whose wages came to € 134 million. In 2020-21, PSG were beaten to the Ligue 1 title by Lille, whose player remuneration was around one sixth of the sum paid to the Parisians’ squad.

PSG’s finances make them the ultimate flat-track bully, but when they compete in the UEFA Champions League, they are found wanting almost every time. PSG’s problems stem from a lack of continuity around the management of the team and a culture of short-termism. Like Chelsea, their squad is a composition of various influences and they also have a penchant for attention-catching signings. Hence, the arrival of Messi and, for some peculiar reason, Sergio Ramos, both players past their prime, but undoubtedly enormously expensive.

The latest report from France’s DNCG (National Directorate of Control & Management), reveals French football was heavily impacted by the covid-19 pandemic in 2020-21. Only three clubs – Dijon, Reims and Saint-Étienne – made a profit and some of the losses were very eye-watering.

PSG’s loss, despite revenues of € 569 million (+2%), was € 225 million, the highest in France by some distance and the third highest in Europe after Barcelona (€ 550 million) and Inter Milan (€ 239 million). After PSG, whose losses climbed by € 100 million, the biggest loss in France was made by Lyon (-€ 109m), Marseille (-€ 76m) and Bordeaux (-€ 67m).

Like all French clubs, PSG’s matchday income was almost wiped out, but their bottom line figure was also influenced by a big reduction were in player trading which was down from a € 50 million profit to a near € 5 million loss. Profits on player sales are less important to PSG than rivals Monaco, Lyon and Lille, for obvious reasons, but there is clearly upside for the club if they choose to adopt a more commercial approach to transfers.

The club also incurred an increase in their already huge player costs. PSG’s wages were up by 21% to € 503 million in 2020-21, a wage-to-income of 88%.  According to L’Equipe, of the top 20 earners in French football, 18 are from PSG, with only Monaco’s Wissam Ben Yedder and Cesc Fabregas making up the list. The DNCG is keen to control the excesses of PSG, needless to say, and aims to stop any club having a wage bill of more than 70% of income. Another measure in progress is the restriction of debt, forbidding any club from having debt greater than share capital.

Broadcasting recovered in 2020-21 after the collapse of Ligue 1’s deal with Mediapro. Overall, TV accounts for 43% ( € 835 millon) of Ligue 1’s income and PSG generated over £ 200 million from this stream, a 54% rise on 2019-20. PSG have become very proficient commercially and their income totalled € 337 million. However, they are striving to push the envelope even further and hoped the acquisition of Messi would provide a significant boost.

Ligue 1’s total income was € 1.6 billion, but € 1.2 billion was paid out in wages and another € 119 million to agents and intermediaries. The league lost € 645 million, the total for Ligue 1 and 2 was a deficit of € 685 million.

PSG could be at the start of a new phase. The restrictions to be implemented will make it more difficult for the club to leverage its financial power and at some point, they will have to look at the way they build their teams. There’s also a good chance manager Mauricio Pochettino will move on and, with Mbappé and Ángel Di María certainly leaving, along with the possible departure of Neymar, times may be changing in Paris.

At the same time, France needs greater competition to improve the overall quality of Ligue 1. The country produces very good players on a regular basis, the national team are world champions and UEFA Nations League winners, but PSG are not always pushed enough. They’re still waiting for that first Champions League title, after all.

Forest’s wages hit 200% of income

WE’VE KNOWN for years that clubs in the EFL Championship have dangerously high wage-to-income ratios, but Nottingham Forest’s wage bill now consumes over 200% of their total revenues, the worst in the league. In their 2020-21 financials, Forest revealed that their wages totalled £ 37.2 million while their income amounted to £ 18.4 million. Such a figure, obviously influenced by the impact of the pandemic, should send alarm bells ringing among Forest’s loyal fans.

Forest’s ownership has already written off some £ 73 million in loans, otherwise the club’s net debt would be higher than the current level of £ 36.2 million, a figure that compares favourably to most of the Championship, notably fellow midlanders Stoke City and Birmingham City. They have also converted £ 52 million of debt to equity to ease the situation, including £ 12 million in the last financial year. 

Forest’s pre-tax loss for 2020-21 was £ 15.5 million, slightly less than the £ 15.9 million lost in 2019-20. They have only made a profit once since 2005 and have lost over £ 100 million in the past decade, including in excess of £ 60 million since Evangelos Marinakis took over. The operating loss for the season was more than £ 34 million. 

Forest’s overall revenues dropped by 27% on 2019-20. This was their lowest income since 2015-16 after four seasons when they generated £ 23 million per season. The current level equates to mid-table levels of earnings, but is way behind clubs like Norwich (£ 57 million) and Cardiff (£ 55 million). Over the past two seasons, covid-19 has cost the club some £ 16 million in lost revenues. 

The club has to cancel its shirt sponsorship with Football Index, who went into administration. Furthermore, the redevelopment of the 10,000-seater Peter Taylor stand has been put on hold, but Forest expect planning approval to be granted soon.

Matchday income totalled just £ 1.3 million in 2020-21 owing to empty stadiums for the vast majority of home fixtures. This was an 83% decline on 2019-20. Forest are not alone in virtually wiping out this revenue stream. This was partly compensated by a 12% rise in media income to £ 11 million. Commercial earnings went down by £ 2 million to £ 6.2 million.

Player trading have long been important to Forest and in 2020-21, profit from sales was £ 14.3 million, 27% more than the previous season. This was the second highest in the past 10 years, but way lower than clubs like Norwich City (£ 60 million) and Brentford (£ 44 million). The biggest sale was Matty Cash’s move to Aston Villa, which raised £ 14 million.

Forest spent modestly in a season that saw them finish a disappointing 17th. The signings of Harry Arter (Bournemouth) and Loïc Mbe Soh (Paris Saint-Germain) were all bought for undisclosed fees but Scott McKenna of Aberdeen cost around £ 3.5 million. Transfer income was approximately £ 15 million. Unfortunately, Arter fell out with the club and was sent on loan after just a few months and is currently at Notts County.

The club clearly has a very committed owner, but the wage-to-income ratio is still precarious and can only be unsustainable. Forest, in normal times, have a healthy support base – they have an impressively high percentage of season ticket holders and their average gate in 2021-22 is close to 27,000. This bodes well for the club’s 2021-22 accounts. Forest have made headlines this season in the FA Cup, beating Leicester City and Arsenal, and are not far off contending for promotion. Can they push on and return to the Premier League and transform their financial position?

Best stadium of 2021? Osasuna’s Estadio El Sadar

STADIUMDB has named a La Liga football venue as its stadium of the year for the first time, and it’s not one of the league’s blue riband clubs. The award, which was the outcome of a user poll, goes to none other than Club Atlético Osasuna, the team from Pamplona, a city renowned for its Running of the Bulls festival.

Despite the pandemic, geopolitical problems and rising concerns about climate change, stadium building continues around the world. There has been a rise in construction of sports venues in Turkey, Qatar and USA,  in fact these three countries account for 14 of the top 23 stadiums in the survey.

In addition to new builds, a number of clubs are embarking on redevelopment or expansion of their existing arenas, such as Liverpool, Manchester City, Wolverhampton Wanderers and Aston Villa. And in Spain, Real Madrid and Barcelona are at various stages of refurbishing  their iconic stadiums.

Osasuna’s Estadio El Sadar has a modest capacity – 24,000 – compared to the homes of the Spanish giants, but it has a very striking appearance. The cost of building exceeded the originally estimated € 16 million and eventually came in at around € 23.3 million, largely due to the inclusion of a roof that covered all corners of the ground. 

Architects OFS effectively won a beauty parade, their design, which made use of the club’s red colours, was called Muro Roja, the red wall, and appealed to the fans. The financing of the project was assisted by a loan from the Navarra Province.

The Estadio El Sadar is named after the river that runs alongside the stadium, it is located in the southern part of Pamplona and 2.5 kilometres from the city centre and 4 kilometres from the railway station. 

A notable aspect of the Osasuna stadium is that it was the cheapest among the contenders for the StadiumDB award. The average investment of the nominees was € 136 million, working out at € 4,000-plus per seat. The El Sadar’s cost, € 23.3 million, represented less than € 1,000 per seat.

Coming in behind the El Sadar was the Estadio Único Madre de Ciudades in Santiago del Estero, Argentina. The 30,000 capacity stadium is the home of Central Córdoba FC, who play in the top division in Argentina. The construction of such a site during the country’s deep financial crisis was heavily criticised, especially as the region in which it is located has one of the worst unemployment rates in Argentina. Nevertheless, the new stadium went ahead on the Dulce riverfront where Santiago meets neighbouring La Banda. The area has good new municipal rail connections and easy access to other major transport hubs.

Another South American stadium, Estadio Banco Guayaquil in the province of Pichincha, Ecuador, was placed third in the StadiumDB poll. This is the home of Ecuadorian champions Independiente del Valle and has a capacity of just 12,000. This was built with private money – the total cost was around US$ 12 million – raised by Banco Guayaquil, the third largest bank in Ecuador.

Fourth was Stadionul Steaua, the home of CSA Steaua, a club that has been grappling over its identity for some years. Based in the Ghencea district of the Romanian capital, the new stadium replaced the tired old ground from the communist era. The neighbourhood, which was once dominated by plastic and textile industries, has a poor infrastructure although this doesn’t stop fans from all over the city attending games. The Stadionul Steaua cost around € 95 million to build and has a capacity of 31,300.

The top five was completed by the Europa Park in Freiburg, Germany, which has had to overcome a number of hurdles to reach completion and to become fully operative. Owned by the city of Freiburg, it has a capacity of 34,700 and cost € 76 million. There were issues over the nearby airstrip and the ability of light aircraft to land, noise pollution complaints concerning the hosting of matches and other problems around conservation. These have largely been dealt with, so Freiburg now have an impressive new home.

One thing that seems to be clear in modern stadium development is the desire to create visibly stunning designs that not only please aesthetes but are also complementary to the environment. This is a trend that will surely continue as architects and clubs try to be more sympathetic to the broader environment. Furthermore, football grounds are increasingly local landmarks and tourist attractions. Nostalgists might rue the passing of wooden stands and crumbling terraces, but the state-of-the-art football grounds springing up across the globe really do represent the game of the future.