(Bloomberg View) -- Just as European soccer authorities were beginning to get a warm, fuzzy feeling about their success at defeating the game's dependence on wealthy owners who spent irresponsibly to bolster their reputations, a single player's transfer brought home the stark reality: Soccer is no closer to financial sustainability. It is as wedded as ever to the easy money.
On Friday, the French club Paris St. Germain acquired Brazilian star Neymar by paying the Spanish superclub Barcelona his seemingly impossible transfer fee of 222 million euros ($263 million). Coupled with Neymar's salary, 600,000 euros a week after tax, that's by far the biggest transfer deal ever and an enormous burden for a club to take on. According to Deloitte's latest "Football Money League" report, PSG is the world's sixth biggest club by revenue, which reached 520.9 million euros last season. Blowing more than half of that on one player doesn't look like a great move business-wise, especially as the Union of European Football Associations has a rule against big financial losses. According to the UEFA's "financial fair play" policy, adopted in 2010, a club can spend 30 million euros more than it earns in a season if that loss is covered by a direct contribution from owners.
UEFA boasted in its benchmark report this year that "Financial Fair Play regulations have turned around football finances, creating a more stable and sustainable financial position for European top-division clubs." The teams' aggregate operating profits in the last two years hit 1.5 billion euros, compared with 700 million euros in losses in the two years before the rules were introduced. This, however, is a blatant case of window-dressing through creative accounting that would have been met with outrage and ridicule in the corporate sector.
PSG would need to sell off half its team, or all its most valuable players, to break even on Neymar. But it won't have to do that: More likely, we'll just see the club's revenue rocket to cover the potential loss.
PSG is owned by Oryx Qatar Sports Investment, a vehicle for the Qatari government. In 2014, it declared as one of its revenue sources a 200 million euro sponsorship contract with the Qatar Tourism Authority. The UEFA didn't turn a blind eye: It discounted the contract to 100 million euros, fined the club and limited its transfer activity. But in 2016, PSG announced a new QTA contract worth 175 million euros.
It's also not impossible for a club to pretend that contributions from the owner are from unrelated parties. According to UEFA, Zenit St. Petersburg, the Russian club owned by the government-controlled natural gas company Gazprom, is ninth among European clubs in terms of operating profit. According to Deloitte, however, almost three quarters of its revenue -- an abnormally high share -- is "commercial," coming from sponsorship deals often tied to Gazprom-related companies that, on paper, are only loosely affiliated with the gas giant. PSG, too, has a higher share of "commercial" revenue than most top clubs -- and UEFA counts it as the second best in Europe in terms of operating profit.
Despite UEFA's best efforts, clubs that are essentially owned by nations -- and by billionaires with diverse business interests -- have largely managed to book the owners' payments as commercial contracts. That's a big reason why "financial fair play" has been so successful at fixing the economics of top soccer clubs.
There are a multitude of reasons why Qatar might want to strengthen PSG with Neymar, considered one of the world's three best players along with Lionel Messi and Cristiano Ronaldo. French clubs underperform in Europe's prestigious international tournaments such as the Champions' League. Winning in them can give a nation as passionate about soccer as France an enormous lift. French President Emmanuel Macron supports a different club, Marseilles, but Qatar, which is trying to fight out of isolation by its Persian Gulf neighbors, would get a lot of goodwill in France if PSG did well with the Brazilian playmaker. This kind of popular diplomacy is one of the best chances for the emirate to build trust in the West, which it needs like never before.
The motives of Qatar have little to do with soccer as a business, which UEFA would like to promote. By the same token, Gazprom's push to turn Zenit into one of the world's wealthiest clubs has also boosted the city of St. Petersburg, where Gazprom pays much of its taxes.
The world's most popular game has always been used by nations to stir up patriotism and assert superiority. But that kind of pageantry should be limited to national teams and tournaments such as the World Cup. Manager Arsen Wenger of Arsenal, a leading U.K. club that makes as much from match-day sales as from commercial deals, is right when he complains that "once a country owns a club, everything is possible." Clubs should be private, and they should strive to make fans and TV viewers their biggest revenue sources: That's how the sport thrives, and that's how fair competition develops.
UEFA needs to take a long, hard look at the Neymar deal and at its financial rules. They may well be too lenient toward state-controlled and other vanity-motivated owners.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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