Financial Fair Play and PSG


It has been reported in the last few days that Paris Saint-Germain (PSG) is close to agreeing a Eur100 million per season, four year sponsorship deal with a Qatari financial institution. Many questions have been asked about whether this is a blatant attempt at Financial Fair Play (FFP) circumvention. Others have applauded the ability of PSG to raise such a substantial sum. In order to dispel some myths about FFP spending, below is a quick guide to the FFP implications of the deal.


  • PSG do not need approval from UEFA to enter into any sponsorship agreement.
  • In order for PSG to break-even under the FFP requirements, they will submit financial information in time for the 2013-14 season. That information will include detailing such sponsorship deals.
  • UEFA will have the power to look into those deals at the time of the relevant FFP submissions.
  • Only if the deal is classified as a related party transaction (RPT) will UEFA be able to assess the fair value of the transaction. If it is not an RPT, UEFA cannot investigate further.
  • If it is a RPT, UEFA can assess the fair value for the transaction and amend the figure for FFP calculations accordingly.

The next question is what is a RPT, what does it mean and will it catch the PSG deal?

Related Party Transactions

In Annex X(E) of the FFP rules reference is made to “related party transactions and fair value of related party transactions”. The specific provisions of this rule are to ensure that owners of clubs are not able to artificially inflate a club’s revenues in order to bolster the chances of passing the FFP rules by providing the club with a massive sponsorship deal from one of the owner’s other companies. In many instances it could be particularly difficult to measure concepts of fair value for an asset or a discharged liability but UEFA is keen to ensure that few loopholes are available.

Annex X(E.7) states:

A related party transaction may, or may not, have taken place at fair value…An arrangement or a transaction is deemed to be ‘not transacted on an arm’s length basis’ if it has been entered into on terms more favourable to either party to the arrangement than would have been obtained if there had been no related party relationship.”

Manchester City comparison

It is helpful to use Manchester City as an example of how UEFA, come the 2013-14 season, will review the Etihad deal and assess, like they may do with PSG, whether the sponsorship deal is a RPT under the FFP rules. In relation to Man City’s reputed £400 million Etihad naming rights deal, the issue from UEFA’s perspective is three-fold.

  1. First, UEFA will need to establish whether the sponsorship deal is a RPT. The Abu Dhabi government own Etihad Airways whose ruler Sheikh Khalifa is the half-brother of Manchester City owner Sheikh Mansour. In order for the deal to be caught under the UEFA RPT provisions, it would probably need to be demonstrated that Sheikh Khalifa had some type of influence or control over Manchester City (see Annex X(E) paragraphs 3-4). If the agreement is not a RPT, UEFA will not look at the value of the deal in any more detail.
  2. Second, if the Etihad deal is deemed to be a RPT, UEFA will be faced with an interesting issue of how to divide the deal’s revenues between the shirt sponsorship, the stadium naming rights deal and the Etihad Campus development. A type of benchmarking exercise will need to be carried out to assess what UEFA considers to be “fair value”. If UEFA considers the deal has been at a fair value that will be the end of the matter. Therefore UEFA will need to assess the counter-factual position should question marks be raised over a particular transaction. The devil is obviously in the detail but issues over how revenue can be correctly valued may become a particularly thorny issue. In order to investigate a shirt sponsorship deal to assess fair value it would be necessary for UEFA to use comparators to identify whether a particular deal is extraordinary in any particular way.
  3. In using a rather blunt example, should an entity with a relationship to Premier League club X who has Champions League aspirations enter into a £70 million per season in shirt sponsorship deal with Club X, UEFA may study the top shirt deals in the Premier League and throughout Europe to see the current market rates. Remember also that ‘market value’ will be different to UEFA’s ‘fair value’ test.
  4. Lastly, if UEFA concludes a deal has not been at a fair value, the revenue for the benefit of calculating a club’s FFP licence application would be reduced to the level UEFA believe is appropriate.

My understanding is that any investigation into any potential RPT will only take place when all the information is requested from City, PSG and other clubs in time for UEFA to consider specific 2013-14 license applications (i.e. when the FFP rules actually kick-in and not before).


By using the Man City example, it can be demonstrated how UEFA will weigh up the potential PSG deal with the Qatari institution. As stated above, only when UEFA and the French national football association have looked closely at whether the deal may qualify as a RPT will an assessment of the practical RPT test become clearer. Before then, I am afraid, it remains something of a guessing game.

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