Parisian Jokers Mock Financial Meltdown Facing French Socialists

(Bloomberg) -- “Historic monument for sale,” read the prank listing on Le Bon Coin, the French equivalent of Craigslist, shortly before President Emmanuel Macron’s victory in parliamentary elections on June 18. An accompanying photo showed the elegant Paris headquarters of the Socialist Party, with a caption adding: “Needs renovation.”

The hoax ad was quickly taken down. But the Socialists’ financial predicament is all too real.

French political parties get about half their revenue from public subsidies based on their electoral performance -- an arrangement that rewards big winners while compounding the misery for losers.

After taking their electoral drubbing on Sunday, the Socialists will lose about two-thirds of their subsidy, while Macron’s newly created party Republic on the Move is set for a windfall of more than 20 million euros a year for the duration of this parliament.

“They’re going to be very rich,” says Abel François, an economics professor at the University of Lille who studies political financing. “They’ll be able to live well for five years.”

Public Subsidies

The center-right Republicans could lose 20 percent of their subsidies after they dropped from 198 to 113 National Assembly seats, while aid to the far-right National Front could edge upward after it rose from two to eight seats in the 577-member body. Macron’s party won 308 seats.

The subsidies are based on a formula that takes into account the popular vote for each party during the first round of parliamentary voting, the number of lower-house seats won in the second round, and the number of Senate seats held by each party. Senate elections will be held this fall, and exact figures for the new subsidies won’t be known until after that.

It’s already clear, though, that the Socialists are facing financial calamity after they plunged from 292 to only 29 National Assembly seats. That wiped out some 17 million of the nearly 25 million euro annual subsidy they’ve received until now.

Private Donors

The Socialists don’t have a ready source of money to compensate for the subsidies they’ll lose. Private donations to the party in 2015, the most recent year for which figures are available, totaled about 1 million euros out of a budget of about 50 million euros, according to a report by the government’s commission on campaign accounts and political financing.

The Republicans got about 8 million euros from private donations and had a budget of 36 million euros.

The Socialists have relied heavily on dues paid by elected officials and party members, but their ranks could shrink dramatically after the electoral debacle.

Macron’s party, by contrast, has a significant base of private donors, although details won’t be known until later this year when official campaign finance reports are published. Last December, representatives of Macron’s campaign said he had raised about 3.5 million euros from 11,000 donors at that time. In an interview in March, Macron said the number of donors had reached about 30,000, without saying how much he’d raised. French law limits individual donations to 7,500 euros.

‘New Era’

Even before the vote, former Socialist leader Jean-Christophe Cambadelis had floated the idea of selling the early 20th-century mansion on the Left Bank that’s been the party headquarters since 1986. Moving to new digs could be part of an effort to reinvent the party and “signal the start of a new era,” Cambadélis said in a May 22 interview on France Inter radio. He subsequently resigned as the party’s first secretary after failing to hold on to his seat.

The Socialists’ building was purchased for 8 million euros. Now it could fetch more than 40 million euros, says Sebastien de Lafond, president of MeilleursAgents.com, a Paris-based agency that tracks real estate prices.

Whatever the party does with its Parisian real estate, the party will have to slash operating costs, and possibly sell off assets, François said.

“They can’t continue living as they have been,” he added.

To contact the reporter on this story: Carol Matlack in Paris at cmatlack@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Ben Sills, Mark Deen