Soccer arms race is getting bigger as Neymar, one of the world’s best soccer players, is reportedly about to leave FC Barcelona and teammate Lionel Messi, for Paris Saint-Germain. The question being asked is how PSG could afford to pay the required $250 million buyout clause the forward has with Barcelona?
Short answer: oil.
The French soccer team, which we estimated generated $92 million in operating income (earnings before interest, taxes, depreciation and amortization) during the 2015-16 season, was bought by Qatar Sports Investments, a branch of the emirate’s sovereign wealth fund, six years ago. Like English soccer power Manchester City, PSG is emblematic of how Gulf rivals are fueling spending in soccer. PSG is the fourth-highest spending soccer team since 2010.
PSG ranks only tenth in sponsorships with a $23 million a year kit deal with Nike and $28 million a year shirt deal with Emirates. And Ligue 1 is a distant fifth when compared with the other top soccer leagues in broadcasting revenue.
Per-Season Broadcasting Rights (Millions)
League Domestic International Total Term
Premier $2,340 $2,210 $4,550 2017/19
Bundesliga $1,299 $269 $1,568 2018/21
Serie A $1,056 $208 $1,264 2016/18
La Liga $989 $271 $1,260 2017/19
Ligue 1 $813 $90 $903 *2017/20
* International rights 2018/24
So how has PSG built a team that has come in first four times and second once in Ligue 1 during the past five seasons? As the New York Times reported in 2012: “With an additional investment of an estimated $340 million — a number unheard-of in French soccer — the team has recruited more than 15 players from the top ranks of international soccer, including the Swedish striker Zlatan Ibrahimovic, whose $21 million salary set a record in France.”
Barcelona, which is owned by 180,000 club members, is banking on a $650 million stadium that is scheduled to open a few years from now to keep pace in the financial arms race. But that might be too late to keep Neymar.