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Spain: Neymar PSG transfer threatened in Courts, EC

 |  August 3, 2017

The transfer of Brazilian soccer superstar Neymar da Silva Santos Junior from FC Barcelona to Paris Saint Germain (PSG), for a record shattering €222 million, is in trouble from an unexpected source. Spanish football body, La Liga, has asked that UEFA, the European football confederation, scrutinize the transaction under its Financial Fair Play rules and has threatened to challenge it in Swiss competition courts and with the European Commission.

At the core of the complaint are UEFA’s Financial Fair Play Regulations (FFP), instituted in 2009 to prevent the destabilization of European football by expenditures financed by new billionaire owners. As millions of dollars in owner-supplied funding swamped a handful of Clubs, some countries’ national leagues became increasingly dominated by a small number of teams. FFP requires, among other things, that clubs only spend an aggregate of €30 million (US$35.7 million) above their earnings for the past three seasons, of which only €25 million (US$29.7 million) may be covered by equity contributions.

It is not yet clear that an infringement has occurred, although it is difficult to see how that would not be the case. PSG’s earnings for the 2015-16 season were €520.9 million (US$618.6 million) according to Deloitte, while this transaction will likely cost a total North of €250 million (US$296.9 million, including agent fees), plus an estimated €40-50 million (US$47.5-59.4 million) per year to Neymar himself. PSG, is presumably already at the limit of the permissible deficit, according to an agreement reached in 2014.

On the basis of this, La Liga decided to reject payment of the buyout clause by the player’s attorneys in the morning of Thursday, August 3. Payment was later made at the FC Barcelona offices, sidestepping normal procedure, and the Club has removed Neymar’s profile from the current roster on its website. PSG has also announced the signing on its website and Twitter account.

La Liga President, Javier Tebas, has accused PSG, owned by Oryx Qatar Sports Investments, of “financial doping”, and speculated that Qatari government funds are involved in the transaction. Neither PSG nor its owners have issued a statement.

It is very unusual for a country’s league to object to a player transaction —as is the case now— especially considering that the acquiring club and player are in agreement, the selling club’s contractual requirements have been met and that the Spanish soccer federation (itself in leadership turmoil) has remained silent.

The reason in this case may be that clubs across the board in Spain are facing growing economic competition, despite their top teams remaining dominant at the continental level (they’ve won four out of the last five European Champions League finals, two of which were played between Spanish teams). The top three clubs in Spain, Real Madrid, FC Barcelona and Atlético Madrid, who have managed to buck the trend of hyperwealthy sponsor-owners, compete for talent and UEFA broadcasting rights budgets with the dominant teams in England, France, Germany and Italy, who are willing to pay eight and now nine figures to compete for European Champions League glory and cash.

Lower down the table, smaller clubs are challenged for players by other Clubs in European leagues and even rapidly growing upstarts such as Major League Soccer and the Chinese Super League.

It seems that this is a done deal. Any consequences will be faced by PSG down the line as the investigations that are sure to ensue play out. This is all sure to be closely watched by other Clubs whose owners have deep pockets such as Chelsea, Manchester City, Monaco and Milan AC.

Full Content: BBC News

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