PSG under threat of violating FFP

Seems like UEFA has opened an enquiry as to the nature of PSG's 200 millions sponsorship deal with Qatar. They think it might be disproportionate...

the article is in german and google translate isnt the best, but seems like if found guilty that amount will no show up on PSG's books and they will be in the red ---> sanctions

http://www.transfermarkt.de/de/financial-fair-play-uefa-ermittelt-gegen-paris-st-germain/news/anzeigen_155179.html

I just read the tm.de article. They refer to SID as source, which is respectable: http://www.sid.de/sport-aktuell/

The 200 mio Euros sponsoring with QTA could be considered disproportionate as ManCity has a very similar contract with TCA Abu Dhabi which gives them "only" 15 mio Euros per season.

i don't see a problem with what teams like psg are doing.

isn't the point of FFP to prevent teams from resorting to huge debt and thus threatening the very existence of the club ?

if a team is getting a cash injection through sponsorship and not debt, how is that detrimental to the club ?

@Farfan, when the sponsorship comes directly from contacts of the owner as a way to circumvent the ruels there is a problem.

FFP is about the clubs spending what they earn, without resorting to cash injections from owners. Here is where the whole "Fair Play" concept works.

On topic, Qatar will just need to grease some hands to be found innocent of any wrongdoings.

So how do clubs with rich owners suddenly spend a lot if the FFP rules say you can only spend money you earn? Seems like a silly rule.

Another 500m sponsorship deal incoming from somewhere in Qatar

Wait

FFP is actually real? I still don't believe it but between Barca being transfer blocked (I know this wasn't FFP) and this, i'm starting to think they might actually have the guts to regulate these free spending clubs

Come on PSG ffs. You can't buy Pogba outright now so throw in Cavani + cash you legends.

Lord Spencer wrote:@Farfan, when the sponsorship comes directly from contacts of the owner as a way to circumvent the ruels there is a problem.

FFP is about the clubs spending what they earn, without resorting to cash injections from owners. Here is where the whole "Fair Play" concept works.

but this is different .

in the past, owners would just inject cash into the club in fhe form of debt with the expectation of recouping the sum of money from the club's revenue .

i was under the assumption that FFP's goal was to prevent clubs from getting into huge debt and left bakrupt by the sugar daddies.

what's next? qatar also owns bein sport . are they gonna launch an investigation into the amount of money they paid for PSG's TV rights in europe, north america, north africa and the middle east?

if the club is debt free, uefa should just butt out of their business.

farfan wrote:

i was under the assumption  that FFP's goal was to prevent clubs from getting into huge debt and left bakrupt by the sugar daddies.

well, your assumption is wrong

what's next?  qatar also owns bein sport . are they gonna launch an investigation into the amount of money they paid for PSG's TV rights in europe, north america, north africa and the middle east?

i'm gonna go with no, as uefa have no jurisdiction over league broadcast rights

Yeah right... if only.

I wonder why both clubs didn't get together earlier to come to an agreement on how massive each sponsorship deal was going to be so they can point to each other as "comparable deals". That's some serious oil money miscommunication right there.

Yohan Modric wrote:So how do clubs with rich owners suddenly spend a lot if the FFP rules say you can only spend money you earn? Seems like a silly rule.

I think you may have missed the point of FFP just slightly.

I'll wait for more information about a potential investigation before reacting.

farfan wrote:i don't see a problem with  what teams like psg are doing.

isn't the point of FFP to prevent teams from  resorting to huge debt and thus threatening   the very existence of the club ?

if a team is getting a cash  injection through sponsorship and not debt, how is that detrimental to the club ?

You haven't considered that PSG's spending is also forcing other poorer clubs to increase their spending in order to remain competitive. The point is to avoid a situation like you have in Spain, and to a lesser extent, Italy, where the top clubs are in huge debt and spending huge coin, but all of the smaller clubs are forced to up their spending just so they don't get relegated.

how could a club in that poverty league afford all those world class players? We shouldnt have even played them yesterday

El Chelsea Fuerte wrote:how could a club in that poverty league afford all those world class players? We shouldnt have even played them yesterday

and how come a team that only managed to record a £1.4m profit in over 11 years afford to spend over a billion euros in the transfer market ?


the audacity of some chelsea fans   

farfan wrote:

El Chelsea Fuerte wrote:how could a club in that poverty league afford all those world class players? We shouldnt have even played them yesterday

and how come a team that  only managed to record a  £1.4m profit in over 11 years afford to spend over a billion euros in the transfer market ?


the audacity of some chelsea fans   

were ffp compliant gtfo

chelsea got away with it in the pre-FFP era.

there was nothing " fair " in their past market activity when they recorded massive losses year in and year out and still managed to spend 9 figure budgets .


amount spent in the market between 2003 and 2005 : £ 293 million   

now let's take a look at their financial situation :
"
In the year ending June 2005, Chelsea posted record losses of £140 million (€165 million) and the club is not expected to record a trading profit before 2010"   

chelsea was basically a PSG on steroids back in the day.

so yeah , a chelsea fan lecturing on spending and sugar daddying is ironic to say the least.

L'Equipe: PSG set to be offered salary cap, transfer limit, UCL squad limit & a fine of €60m over 3 years in FFP sanctions.

PSG's current payroll highest in Europe (€240m) & PSG will be hit with further penalties if they exceed this in future.

UEFA want to impose transfer limit of €60m for PSG. If club spend entire sum on one player, payroll cannot increase.

PSG to be limited to 21-man UCL squad instead of regular 25-man group (8 of whom would have to be trained domestically).

PSG to be fined €60m over next 3 years (€20m yearly). Need to lower deficit to no more than €30m by end of next season.

Final agreement must be reached with PSG, who can appeal. If they do, they risk a more severe punishment.

In short, PSG must now sell to buy. Wage bill must be cut, €60m limit on future moves, UCL squad size limit of 21 & a fine to pay.

Edinson Cavani, Marco Verratti, Javier Pastore & Ezequiel Lavezzi could all leave PSG to enable club to bring in new players.

All via @Jon_LeGossip

urbaNRoots wrote:

L'Equipe: PSG set to be offered salary cap, transfer limit, UCL squad limit & a fine of €60m over 3 years in FFP sanctions.

PSG's current payroll highest in Europe (€240m) & PSG will be hit with further penalties if they exceed this in future.

UEFA want to impose transfer limit of €60m for PSG. If club spend entire sum on one player, payroll cannot increase.

PSG to be limited to 21-man UCL squad instead of regular 25-man group (8 of whom would have to be trained domestically).

PSG to be fined €60m over next 3 years (€20m yearly). Need to lower deficit to no more than €30m by end of next season.

Final agreement must be reached with PSG, who can appeal. If they do, they risk a more severe punishment.

In short, PSG must now sell to buy. Wage bill must be cut, €60m limit on future moves, UCL squad size limit of 21 & a fine to pay.

Edinson Cavani, Marco Verratti, Javier Pastore & Ezequiel Lavezzi could all leave PSG to enable club to bring in new players.

All via @Jon_LeGossip

Oh wow, that would actually be a much bigger punishment than I had expected. That would be proper action from UEFA and actually quite well thought out. I'll look to hear something official, though.

http://www.lequipe.fr/Football/Actualites/Quatre-sanctions-pour-paris/462690

PSG agreed to the sanctions.  It's like this:
-  Annual player salaries cannot go above 240 million per season, which would be the highest in Europe.  I don't know how close to that they are now.  
-  60 million fine over 3 years.
-  For this summer mercato, they can only spend 60 million.  Anything more, they will need to sell players.
-  If they get their books to where they only have a deficit of 30 million in the next season, all the sanctions go away.
- They can only register 21 players for CL as opposed to 25 next season.

What this means is that nobody is going to be sold or allowed to go.  Cavani, Pastore, etc. are all staying.  Only one i can see happening is Pastore and Jallet being sold to allow for the wage of Pogba or Alves if they want to sign one of those guys.  With Menez coming off the books too... that would be about 8 million in wages.  I get the feeling that they will go for Pogba and sign Aurier, who is much cheaper than Alves.  We'll see.

they should sell thiago silva to barcelona once and for all :')...
one can dream.

I'll tell you what's going to happen now though...  instead of investing, PSG will go to banks like Societe Generale or others and get massive loans like the La Liga clubs do.  Since that's not a problem for FFP (I don't understand why), they'll just use that structure.  

I expect a 300 million line of credit set up come January lol.

As far as why they didn't just do this earlier... they wanted to see how far they could stretch the investment envleope before using debt.

Noooo, sportsczy, no you can't use loans to get round FFP, where did you get that idea from?

FFP is about not making too big financial losses and if you use debt to cover your losses, they're still losses.

you can get 300 million in debt and pay 4% annual interest on it.  That's 12 million a year in interest payments.  So your bottom line gets hit with 12 million per year as opposed to 300 million all at once and then covering the loss with capital investment...  Debt is a balance sheet number and the interest on debt is what hits the income statement.  All FFP is worried about is that club don't show big annual losses, which is all income statement driven, and that clubs don't get sugar daddy investment above the market value of the club.  Well, they can't argue against an international bank making a loan to a club because that loan is not guaranteed by the sugar daddy... the club is the sole guarantor on the loan and, thus, the bank views the club as being worth at least as much as the loan.  That's how La Liga clubs get around FFP (as well as others).  That's all PSG is going to do:  Point to the precedent of elite clubs like Real Madrid and Barca who have debt that represent about 50% of their revenue; and that's going to skyrocket with the new stadium projects.  They'll just leverage up their revenue, which is over 300 mill even with taking a 50% haircut on the sponsorship deal with QTA (which is what UEFA did), and point at all these clubs as precedent.  They'll use the financial markets and the unquestioned credibility of such markets to create the needed liquidity and validate their valuation.

I also heard that they will eventually take a minority share of PSG shares public on the french stock exchange when they need even more money than what a private entity can get from banks.  No worries about the stock price because it will all be bought up by hedge funds anyhow... that are backed by Qatar investment.  That will put the market value of PSG at an even higher number if required and will give them access to a whole new world of financing opportunities.

If the game is played a certain way, you just go ahead and play it.  You try the straight line method at first knowing that the game is there if you need it.

But the FFP looks at the income statement. Whatever cash reserves you have does not affect the income statement, like you said, that's balance sheet stuff. PSG's income statement would still fail the FFP rules even if their balance sheet was loaded with cash.

As for Barca and Real Madrid, they have a lot of debt, but I guess they are able to service it (because their turnover is so high). So UEFA don't mind that, because their income statements seem to be fine.