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[Financial Analysis] Paris Saint-Germain: Business As Usual?

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A couple of weeks ago Deloitte released its annual report on the 20 biggest clubs, albeit from a financial perspective. In this case big means the size of the annual turnover as opposed to the size of the membership, or fanbase for that matter. In light of UEFA’s Financial Fair Play initiative that was designed to combat the escalating accumulation of debt across all European clubs, it does make sense to take a closer look at how some organizations work to meet the criteria set by the old continents governing football body.

Whenever rules and limits are introduced they almost always serve as an incentive to find loopholes in order to exploit their flaws. Hollywood accounting is one of the more infamous if not shady practices of America’s movie industry. Through a series of complicated licensing deals Hollywood blockbusters such as the Harry Potters series amongst other movies actually ended up losing money (even if the series grossed billions at the global box office).

But whereas Hollywood accounting is essentially designed to avoid sharing profits, paying tax etc., there’s a development in European football that is moving in the opposite direction – artificially increase revenue streams to operate with larger budgets, thus gaining an unfair advantage over the competition.

This year’s report offers a surprising newcomer in the upper echelons on the list. French club Paris Saint-Germain has made the leap into top 5 after being omitted for most of its existence. Two years ago the Ligue 1 outfit didn’t even qualify for the Top 20, let alone the Top 5. Hence, the rapid ascension of the club is quite fascinating to say the least.


Real Madrid remain the only club in football, and sports, whose turnover surpasses the half a billion Euro mark with revenues of €518,9 million. Los Blancos rivals FC Barcelona sit in second place with €482,6 million, treble winners Bayern Munich move up one spot to third place with €431,2 million, while Manchester United fall outside of the top 3 with €423,8 million, Ligue 1 outfit Paris Saint-Germain crack the top 5 with €398,8 million.

The Spanish capital club is also the sole organization inside the Top 5 that hasn’t won the domestic championship. Still, Los Merengues have been sitting atop of the Deloitte Football Money League since 2004-05, irrespective of titles.

Florentino Perez successfully rebranded Real Madrid into the sports first true fantasy football team. During his first term as president Perez articulated his Galactico vision and executed it flawlessly. What initially appeared to be delusions of grandeur was actually an ingenious way of combining shrewd marketing without undermining the competitiveness of his team. After all, the best footballers – thus most expensive ones – are usually also the most marketable ones too. That is unless the player goes by the name of Claude Makelele, who was shipped off after Perez decided he didn’t sell enough shirts and couldn’t pass the ball further than a few meters.

However, Perez Galactico policy has been virtually copied and used as a template by every club (with the necessary funds) since to varying degrees of success. Therefore finding Los Blancos at the top of the list in spite of silverware isn’t surprising.

The Spanish club has a long and storied tradition plus being fortunate enough to have been riding on a wave of success right around the time when internet really started booming. Since 2000 football fans have been sold the brand Real Madrid, not just the team. And as along as Los Blancos are able to attract superstar players, who in turn draw an array of premium sponsors, the Merengues remain a marketing juggernaut.

All clubs but Paris Saint-Germain have been mainstays in the Top 5, even treble winners Bayern Munich haven’t been able to capitalize on their exceptional campaign in the way the Ligue 1 outfit has done on the back of just a single French championship.


The leading clubs of the Top 5 leagues in the Deloitte Football Money League are La Liga’s Real Madrid, Bundesliga’s Bayern Munich, the English Premier League’s Manchester United, Ligue 1’s Paris Saint-Germain, and Serie A’s Juventus Turin.

Historically, the French championship has been the least successful and lowest ranked competition of Europe’s so called Top 5 leagues. The last Ligue 1 side to win the Champions League was Olympique Marseille in 1993. Furthermore, the last time a French outfit featured in a Champions League semi-final was in the 2009-10 campaign – Olympique Lyonnais.

Even the Lyonnais club were unable to parlay 7 consecutive championships, plus several appearances in the knockout stages of Europe’s marquee competition into a higher ranking than 11th in the Deloitte Football Money League (2005-06) with revenues of €127,7 million, or around €148 million in today’s currency. Lyon’s €146,1 million from the 2009-10 campaign (Deloitte Football Money League rank no. 14) remains the clubs high watermark in terms of revenue.

Against the backdrop of Olympique Lyonnais near-decade long domestic dominance, Paris Saint-Germain’s whopping 81% year-on-year increase in revenue following 1 league title plus 1 appearance in the Champions League is somewhat inexplicable, if not unbelievable outright. There’s zero evidence that the French league has become significantly more attractive since Olympique Lyonnais stranglehold over Ligue 1. The latest TV-broadcast deal for the French championship which runs from 2012 – 2016 is worth €607 million annually, down from the previous arrangement valued at €668 million per annum indicates as much.

For a broader comparison across the European championships, Real Madrid only gained 1% in the same timeframe, Bayern Munich’s treble season only boosted revenues by 17%, Manchester United’s title-run in the sports best advertised and marketed league only increased the turnover by 7%. Serie A’s Juventus Turin fared better than their counterparts at 39%, but still miles off Paris Saint-Germain massive 81%. It is worth mentioning that Serie A is still football’s second most popular league especially abroad, if existing TV-broadcast deals are anything to go by.

With Paris Saint-Germain there appears to be no such thing as steady growth. For a lack of a better explanation the Parisien club turbocharged into the Top 5 by running on an entirely different engine than the rest of Europe.


As mentioned earlier Perez Galactico policy provided the fundament for a Real Madrid’s successful business model. Madrid’s commercial income generates 41% of their turnover, or €211,6 million, the favorable TV-Rights account for 26% (€188,3 million), while Matchday income still contributes 23% (€119 million).

The make-up of Bayern Munich’s turnover is not too dissimilar to Real Madrid’s. Bayern Munich’s are slightly more lopsided in the commercial department 55% (€237,1 million), Broadcasting 25% (€107 million), and Matchday revenue at 20% (€87 million).

Premier League behemoth Manchester United’s commercial revenue is smaller than Bayern’s at 42% (€117,9 million) than Real Madrid and Bayern Munich, but its revenue from broadcasting just about falls in line with the previous values at 28% (€118,6 million). Nevertheless the EPL outfit generates more income from Matchdays 30% (€127,3 million) due to higher ticket prices and better attendances.

Again Paris Saint-Germain is moving at its own pace with commercial interests even surpassing Bayern’s at 64% (€254,7 million), broadcasting 23% (€90,9 million), and matchday revenue at just 13% (€53,2 million).

Speaking of extremes, Serie A side Juventus Turin rely heavily on broadcasting revenue at 61% (€166 million), while commercial interests account only for 25% (€68,4 million) of its annual turnover, whereas gate receipts from Matchdays are equally as underwhelming as Paris Saint-Germain’s at 14% (€38 million).

It all leads to the question what exactly makes Paris Saint-Germain so special that a club from a less popular championship, with virtually no European pedigree to boast, has far and away the biggest commercial revenue of any club across Europe?


Solely judging by the commercial revenue stream Paris Saint-Germain is already the Europe’s most lucrative enterprise with the collective amount of deals valued at €254,7 million, ahead of Bayern Munich (€237,1 million), Real Madrid (€211,6 million), Manchester United (€177,9 million), and FC Barcelona (€176,8 million).

Where is exactly lies the exclusivity of the brand PSG that enables the French capital club to not only crack the top 5 of the Deloitte Football Money League, but also leapfrog some of Europe’s most storied and successful organizations and generate the biggest commercial income of any club in the process?

Their commercial revenue stream is 7% ahead of Bayern’s, 20% of Madrid’s, an incomprehensive 43% of Manchester, and equally unbelievable 44% increase on Barcelona, who until a few years ago didn’t even have a shirt sponsor.

In that context, Paris deal with kit supplier Nike under the existing terms is reportedly worth €6,5 million annually, while the shirt sponsorship agreement generated €3,5 million per annum for a total of €10 million. Pennies for what is considered the equivalent of prime real estate in football.

For reference, the Deloitte Football Money League’s holy trinity of Real Madrid, FC Barcelona and Manchester United generate a significant amount through those avenues annually. Barcelona’s agreements with Nike, the Qatar Foundation/Qatar Airways guaranteed €63 million (€33 million/€30 million), Real Madrid’s deals with adidas and Emirates generated €57 million (€38 million/€19 million), Manchester United’s deals with Nike and AON were worth €55,5 million (€31,5 million/€24 million) during that time frame.

Therefore it is somewhat unfathomable how PSG only generate less than one fifth through shirt and kit deals than, say, Real Madrid, but have greater commercial revenues overall than any club period.

To provide an analogy, would anybody offer anyone who just became Europe’s top scorer (albeit in an inferior league) the same wages, sponsorship deals as Cristiano Ronaldo and Lionel Messi?

The answer is in all likelihood, no.

Conventional logic notwithstanding, this is exactly what happened when PSG confirmed a new 4-year deal with the Qatar Tourism Authority in 2013 that is worth €200 million in its last year. Which – conveniently enough – has been back-dated to 2012 by the time the agreement was signed, providing some much needed leeway to bypass otherwise dramatic budget constraints.


In terms of revenue generated through broadcasting PSG rank last among the leading clubs from the Top 5 leagues. Paris’ €90,9 million, aided by a two-legged quarter-finals matchup with Barcelona in 2011-12, was off 32% of the average of €134,2 million. Granted, even Manchester United and Bayern Munich find themselves behind Real Madrid (who profit from an individual agreement) and Juventus Turin (who greatly benefited from being the sole Italian side in the quarter-finals of the Champions League).

Nevertheless, the English Premier League signed new and vastly improved domestic and international agreements which generate as much as €2 billion annually, which only serves to increase United’s bottom line through that particular revenue stream. The Bundesliga also reached a new agreement over its TV-Broadcasting rights. Whereas TV-Broadcasting deals elsewhere gained in value, the rights to Ligue 1, home to Paris Saint-Germain, became cheaper. Lending further irritation at how PSG were able to land a sponsorship of this magnitude when even broadcasters aren’t treating the French championship as a premium product.


The Parisien club also find themselves at the lower end of the spectrum when their Matchday revenue is compared with their Deloitte peers. Among the leading clubs of the Top 5 leagues the Ligue 1 outfit is off 37% of the average of €84,9 million, or €31,7 million. Putting them just above Serie A’s Juventus Turin where the attendance across the Italian league has been ceasing for the better part of 10 years. Manchester United, Real Madrid and Bayern Munich command higher premiums and operate at a higher capacity than either PSG or Juventus Turin.

Finally, Paris Saint-Germain’s overambitious project isn’t even listed as one of the Top 20 Most Valuable Soccer Teams (2013) in the world. Yet the list does feature two Ligue 1 clubs, Olympique Lyonnais at no. 15 with an estimated value (equity + debt) of €280,4 million, and Olympique Marseille at no. 19 who are valued at €217 million.


Because PSG didn’t appear on Forbes Top 20 Most Valuable Soccer Teams list it’s difficult to assess the value of the French capital club in retrospect. If the list is anything to go by PSG’s omission would indicate that the France outfit was valued less than new signing Yohann Cabaye’s old team Newcastle United, who ranked last with an estimated value of €200 million.

Very interesting indeed.

Real Madrid’s turnover represents roughly one-fifth of its value at 22%, Barcelona’s ratio is slightly better at an even 25%, Bayern Munich’s stands at a fantastic 45%, while Manchester United disappoint at 18%.

But what about Paris Saint-Germain?

For the purpose of this exercise let’s assume Paris Saint-Germain evaluation was equal to that of Newcastle United (€200 million), their ratio would be an incredible 199%! Applying Bayern Munich’s values (45%) though, would put PSG’s evaluation at €886,2 million, more than double of the highest ranked French organization on the list. Conversely, calculating with Manchester United’s values (18%), would make the reigning Ligue 1 champions the third most valuable club in all of football at €2,2 billion. In reality, however, the French outfit is nowhere near those lofty evaluations.

It’s a safe assumption that PSG’s ratio is far better than Bayern Munich’s 45%, arguably the best organized club in football whose diverse portfolio counts telecommunications company Deutsche Telekom and financial services firm Allianz among its premium partners. Meanwhile PSG only needed to add one sponsor, the rather unknown entity of the Qatar Tourism Authority, to dwarf Bayern’s commercial revenue and everyone else’s for that matter.

Where does sponsorship end and financial doping start?

Financial Fair Play was designed to level the playing field as well as putting an end to the ever escalating accumulation of debt across the European championships, not to provide an incentive to rig the system so to speak. PSG’s inflated commercial revenues under the umbrella of corporate sponsorship undermine the intentions of the Financial Fair Play rules. Paris Saint-Germain’s marvelous ascension to the top Football’s Money Elite is only limited by the generosity of its patrons, not by the rules of the free market.