The money side of Neymar’s €222m record breaking transfer

Increasingly in football, the line between playing for passion and playing for money is getting thinner. Players are being priced at rather outrageous sums as clubs show that they are willing to break the bank for the signature of any player(s) that catches their attention. Last year’s eye-popping 89 million pound fee for Pogba sounded outrageous to many until Neymar came along.

Brazilian playmaker Neymar da Silva Santos world record transfer worth €222m from Spanish side, Barcelona to French Ligu1 Side Paris Saint-Germain (PSG), has sparked debate that the 25-year old was overpriced.

The deal makes Neymar the most expensive player in the history of football. The 25-year-old smashes the previous record set when Paul Pogba returned to Manchester United from Juventus for £89m in August 2016.

The Brazilian is set to earn €45m (£40.7m) a year – €865,000 (£782,000) a week – before tax from the initial five-year deal, a total outlay of £400m.

When FC Barcelona inserted the €222m buyout clause into the contract of its then new signing Neymar, four years ago, club officials believed no rival could afford such an astronomical fee.

Against all odds, PSG activated the buyout clause, forcing the Spanish club to allow the Brazilian to open talks on the most expensive transfer in football history.

Neymar’s deal has gone through and is likely to shake up football. Sport’s authorities are under pressure to scrutinise the activities in the transfer market, which challenges the efficacy of rules designed to ensure clubs do not spend beyond their means.

The acquisition could signal a shift in the power balance among Europe’s elite clubs. Barcelona, one of the continent’s traditional superpowers, faces the loss of one its star players against its will. The Spanish club’s illustrious history could not match the raw financial clout of PSG, owned by Qatar Sports Investments, a state-funded group.

Industry experts said the move also showed how a team sport has moved towards a superstar-centric financial model. “If you think how football was 30 years ago, then the overwhelming majority of a team’s money came from the local fan base,” said Stefan Szymanski, author of Money and Football: A Soccernomics Guide.

“The difference today is the global reach of teams, through all forms of media, so that the revenue generating potential comes from global celebrities like Neymar, [Lionel] Messi and [Cristiano] Ronaldo.

“It is not impossible to imagine, bizarrely, that this transfer may even pay off one day.”

Across Europe, the value of football transfers has steadily increased for several years, mainly because of the growth in broadcasting revenues.

PSG’s financial strength, however, comes from the commercial deals created by its owner, Qatar Sports Investments, a state-funded group. The club has been spending large amounts on players in an attempt to transform the club into one of Europe’s superpowers.

Even if the French side can fund the transfer, football authorities are set to scrutinise the deal. UEFA has said PSG’s spending will need to satisfy “financial fair play” rules, which place curbs on how much teams can spend as a proportion of income.

Recently, Javier Tebas, president of the Spanish football league, was reported in the newspaper Mundo Deportivo saying that, if the transfer took place, “We will make a complaint about PSG because they infringe UEFA’s financial fair play rules and also the European Union’s competition rules.”

According to the consultancy Deloitte, Barcelona is the second-wealthiest club in European football, with revenues of €620.2m in 2016. Paris Saint-Germain is the sixth-richest club on the continent, with revenues of €520.2m last year.

The so-called financial fair play (FFP) rules were revised in 2015, so clubs must show that they do not have losses of more than €30m over a three-year period, though this exempts spending on items such as stadium infrastructure and youth development. Javier Tebas, the president of La Liga, has said he believes the deal would breach FFP.

However, under the rules, PSG would not book the transfer fee up front, but would account for the deal over the length of the contract, a five-year deal, worth €30m a year after tax to the player.

As a result, UEFA has said the French side has several years to raise the revenues required to fund the Neymar acquisition, and it means PSG could sell several players for a significant amount to meet the financial fair play rule.

Daniel Geey, partner at Sheridans, a law firm that represents a number of football clubs, said he would also expect PSG to raise revenues by creating new commercial deals, particularly through endorsements based around Neymar.

“These deals don’t happen too often and this is obviously a monumental figure,” said Mr Geey. “There are only a few clubs in the world that can afford it from a cost and revenue perspective, but Paris Saint-Germain is one.”

The club’s hierarchy will also hope Neymar can lead it into the latter stages of the Champions League, Europe’s premier club tournament, which would provide increased prize money and broadcasting income. PSG has yet to appear in the semi-finals of the competition.

Neymar’s performance in that tournament may provide the best reason for the transfer. “In order to be successful you have to win,” said Mr Szymanski. “That motivation has typically trumped any commercial dimension in football.”

Neymar, the man at the middle of the record-breaking transfer, said he has joined “one of the most ambitious clubs in Europe”.

 

Anthony Nlebem