Can Neymar provide a financial return on PSG’s investment?

(CNN)Neymar insists his record-breaking $261 million move from Barcelona to Paris Saint-Germain “isn’t about the money,” but the subject won’t go away.

The Brazilian forward’s five-year contact is reportedly worth approximately $45 million a year before tax, making him the highest-paid player in the history of his sport.
Combined with his record transfer fee, it would mean PSG’s total outlay, including wages and agent fees, is likely to exceed half a billion dollars over the five-year contract.
    So how can the French club afford it and satisfy the UEFA’s mandatory Financial Fair Play regulations? And can Neymar provide a financial return on the club’s investment?
    “When you consider Neymar as a brand, maybe it won’t seem so expensive. I’m sure we’ll make more money than we’ve paid,” Qatari billionaire Nasser Al-Khelaifi, PSG club president, said at the press conference Friday when Neymar was unveiled.
    “Before Neymar signed the club was worth 1 billion ($1.17 billion). Now it is worth 1.5 billion ($1.76 billion). The best player in the world is here. With him our project will grow even stronger and the league will become more interesting to everyone.”

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    Manchester United boss Jose Mourinho, who signed Paul Pogba for more than $100 million last summer, believes the deal represents good value.
    “For 200m, I don’t think [Neymar] is expensive,” Mourinho told reporters earlier this week.
    “Neymar is one of the best players in the world, commercially he is very strong and for sure PSG thought about it.”

    Financial Fair Play

    Under the terms of Financial Fair Play, introduced by UEFA seven years ago to slow the game’s spending, players wages can’t constitute more than 70% of a club’s income and losses can’t exceed 30 million ($35 million) over a three-year period.
    PSG brought in an estimated $618m in 2016/17 — of which over $350m was from commercial sources — according to KPMG’s Football Benchmark.
    The Neymar fee alone comes to over 42% of the club’s entire income last season — leaving aside his wages of more than half-a-million dollars per week.
    Arsenal manager Arsene Wenger has criticized the deal, calling it “beyond calculation and beyond rationality” and telling reporters on Thursday that new ownership structures have “completely changed the whole landscape of football in the last 15 years.”
    But Al-Khelaifi believes there will be “no problem” meeting UEFA’s regulations.
    “We’ve been very transparent from day one about Financial Fair Play,” said Al-Khelaifi, countering La Liga’s initial stance that the deal had contravened laws. “There’s no problem with that; we have a team working day and night.”
    “For anyone worrying about FFP, I say: go and have a coffee.”

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    ‘The billion-dollar question’

    How PSG can afford the deal is the “billion-dollar question,” says sports lawyer Daniel Geey.
    “It could come within stadium and ticket revenues, mainly broadcasting monies, winning competitions and the commercial revenues — the boot deals and the brands that want to be associated with the player and the club,” Geey told CNN, Thursday.
    The club is unlikely to recoup its transfer outlay through extra season tickets and shirt sales alone.
    PSG’s average attendance in Ligue 1 last season was 45,317, just 2,612 shy of the Parc des Prince stadium’s capacity.
    Neymar’s allure might well fill the remaining seats but — based on season ticket prices ranging from around $450 to $2,750 — match day income won’t come close to covering the costs.
    Neymar shirts may fly off the shelves but, on top of an agreed annual fee, clubs typically only receive a small percentage of manufacturer’s profit margin per shirt sale, Independent.co.uk reported.
    Besides his contribution in the pursuit of trophies, Neymar’s worth is more likely to derive from his immense marketability.
    According to the Forbes Rich List, the 25-year-old was the only footballer to earn more from his off-field endorsements than his playing contract during his time at Barcelona.
    Neymar sponsors include Nike, Gillette, Panasonic and Beats by Dre, netting him $22 million last season alone.
    If PSG can increase revenues through long-awaited Champions League success, secure more lucrative television deals and a percentage of the player’s image rights, the deal might not be as unfeasible as it first appears.

    Read more: http://www.cnn.com/2017/08/04/sport/neymar-financial-fair-play-psg-barcelona-how-have-they-afforded-it/index.html