Messi's transfer rekindles debate on FFP rules

PARIS • Paris Saint-Germain's signing of Lionel Messi has re-ignited a debate over the effectiveness of Uefa's Financial Fair Play (FFP) rules, which were designed to curb excessive spending but have been relaxed in the last year due to the coronavirus pandemic.

The rules were introduced in 2009 to prevent clubs spending beyond their means and distorting the market, requiring teams to break even, and keep wages and transfer fees in line with income.

PSG and Manchester City were among clubs to fall foul of the rules, although both teams avoided excessive punishment after winning appeals through the Court of Arbitration for Sport.

A softening of rules to help clubs cope with the financial shock of the pandemic, however, means neither PSG nor City - who last week broke the Premier League transfer record to buy Jack Grealish for £100 million (S$187 million) - have had to worry about new investigations into their spending.

"We know the rules of Financial Fair Play and we will always follow the regulations," said PSG chairman Nasser Al-Khelaifi. "Before we do anything, we check with our commercial, financial and legal people. We have the capacity to sign him. If we sign Leo, it's because we can, otherwise, we would not have done it."

PSG's revenue for 2019-20 was €541 million (S$864 million), according to a report from KPMG, while their wage bill stood at €405 million.

Their spending on salaries has soared in the last year, however, after signing Georginio Wijnaldum, Sergio Ramos and Gianluigi Donnarumma on free transfers, allowing them to offer bumper wages in lieu of transfer fees.

PSG have also splashed out €60 million on full-back Achraf Hakimi and the signing of Messi - who will pocket a reported €25 million signing-on fee and annual salary of €35 million - has inflated their wage bill even further.

The club's revenue, meanwhile, has fallen due to the pandemic and the collapse of Ligue 1's television rights deal with Spain's Mediapro.

Another key rule change from Uefa was allowing owners to spend their own money to alleviate losses, which played into the hands of Qatari-owned PSG and Abu Dhabi-funded City but provided little relief to fan-owned Barcelona.

The Catalans were also at the mercy of La Liga's financial fair play rules, which set each club a maximum budget each season according to their expected income.

Barca's budget for 2020-21 fell to €347 million due to the pandemic and is set to fall to between €160 million and €200 million next campaign, making it impossible for them to give Messi a new deal.

PSG, by contrast, benefited from the French football federation postponing requirements for its clubs to spend only 70 per cent of revenue on wages. They thus have no obligation to break even for now.

The break-even rule could be removed altogether, according to Andrea Traverso, Uefa's director of financial stability and research, who in April described it as "purposeless" in the post-pandemic era.

He suggested new rules should focus on the present and future rather than punishing clubs for past excesses.

Uefa has declined to comment on what the future of FFP would look like or on whether the relaxing of the break-even rule cleared the way for PSG to sign Messi.

But according to Bloomberg, the body is drawing up new plans and will seek to prevent clubs with super-rich owners, like PSG, from gaining an unfair advantage by introducing new caps on player salaries.

BLOOMBERG, REUTERS