In the summer of 2017, Brazilian soccer star Neymar Jr. completed a transfer from F.C. Barcelona to Paris Saint Germain. His buyout clause was set at $263 million, a sum that no team could afford while complying with the FFP rules.
Nevertheless, PSG was in the clear because they did not pay the fee to Barcelona. Instead, Qatar National Bank, the financial institution behind PSG, paid Neymar the sum and he paid his own buyout clause.
Rules were not broken, but PSG was able to achieve what the FFP rules attempt to outlaw: Inequality between teams due to giant financial muscle, an issue that continues to rear its head across soccer.
Fast forward to 2021: English team Newcastle United was purchased by the Saudi Arabia Public Investment Fund. With more money at its disposal than the rest of the teams in the league combined, Newcastle was able to land young coach Eddie Howe and marquee signings.
While Newcastle hasn’t seen the success of top European clubs, it seems like a matter of time before money buys the quality that is missing. And that, alone, is illustrating the ineffectiveness of the FFP rules.
Of course, it is natural for a team with more money to add high-end talent, but Fiorentino Perez, President of Real Madrid, believes that the FFP ought to make the teams generate the money, rather than having it injected into the club.
“European clubs need independent, transparent rules, without conflicts of interest, against the growing threat of actors outside the EU who use European football to other ends,” Perez said at a Real Madrid match. “It’s fundamental that all football clubs survive on what they generate.”
He added that teams are not necessarily sustained by their own income, as is the case with Manchester City or PSG, teams owned by state backed institutions. These institutions can inject cash into the team, allowing it to acquire more talent.
Depending on the country, teams may be managed by owners or by members. In Spain and Germany, most teams are managed by members, who are the people paying fees in exchange for decision power. Teams managed by owners are reigned as the shareholders see fit.
Therefore, private ownership in sports signifies different rules in comparison to teams managed by members.
That is what Perez and many of the football world criticize. Most importantly, that is why sporting successes such as Real Madrid, Barcelona or Bayern Munich are admired by most. They generate their own money. Cash is rarely injected, and when it is, it becomes a debt owed to an investor, rather than owed to itself.
That is the current case of FC Barcelona. The pandemic and bad management left the club nearing bankruptcy, and current President Joan Laporta decided to sell several assets and rights to inject cash into the team and restructure the squad. However, Barcelona has had to change the name of the stadium and sell part of their television rights for 50 years. They even had to let go of global great Lionel Messi, as they had not enough money to renew his contract. Now they have the money, but they own less and less of the club. After approximately 3 years of a subpar squad, the team finally has talent to compete with.
In comparison, if a team such as PSG had the issues Barcelona had, the owner can use money to buy a better squad. This was the case in 2017 with Neymar. The same summer they agreed a deal for Kylian Mbappe, worth $213 million, which was to be paid a year later.
PSG President Nasser Al-Khelaifi defended the way he manages PSG, as he believes the investment aspect of the sport holds high importance.
“We bought PSG for $70 million. Now it is worth many, many multiples of that — and we’ve had huge offers to buy the club,” Al-Khelaifi said in a press conference. “So, from where we came from, that shows this is an investment project. We have added value to European football by spending at PSG.”
This summer, Real Madrid was set to sign Mbappe on a free transfer from PSG, as the Frenchman was running out of contract. In a wild turn of events, Mbappe accepted an offer from PSG worth $26 million per year, which included a signing bonus of $140 million. PSG managed to keep Mbappe with a lucrative deal despite reporting losses of over half a billion dollars in recent seasons.
La Liga President Javier Tebas criticized PSG and UEFA, not only because of the constant spending but also because Al-Khelaifi occupies several significant charges.
“We believe there is a conflict of interest with the president of PSG,” Tebas said during a press conference, ”because he is the president of beIN Sports, a company that buys UEFA rights, president of ECA, which is an organization within UEFA for clubs, and a member of the UEFA executive committee. It is a lot of hats for one person.”
What Tebas suggests goes beyond FFP rules but from the same origin. UEFA’s decisions have benefitted certain clubs and Al-Khelaifi holds several seats that put him in a position of power which has allowed his team to operate in certain gray areas, while making it harder for those who disagree with the ones in charge.
PSG and Manchester City, the two biggest state-owned clubs, have not yet won the Champions League, which is the main goal of every elite European club. Nevertheless, every season they manage to flip the transfer market in their favor and reach squad depth levels that are rarely matched by their opposition.
The FFP rules do not fulfill their purpose, and thus sporting success is becoming equivalent to financial power. Teams that manage resources adequately will have an advantage over others, and it should be that way, but that advantage may well be insignificant if certain teams have unlimited resources.