Could Neymar's record transfer to PSG be stopped by Financial Fair Play regulations?

The Neymar transfer saga rumbles on. After weeks of rumours that he might move to French club Paris Saint-Germain, the Brazilian forward has now confirmed the news and told his current club, FC Barcelona, that he wants to leave. The club’s response? PSG must pay a record €222m transfer fee in full if they want him.

Much attention has been paid to the fact that this would make Neymar the most expensive footballer ever – by quite some margin. But PSG’s ability to pay this money also comes with an additional predicament: Financial Fair Play (FFP) regulations. Indeed, La Liga, Spanish football’s governing body, has said it would not accept the payment from PSG to trigger Neymar’s release clause. The reason: “We have doubts that this money is in accordance with UEFA Financial Fair Play rules.”

These are regulations that were introduced by UEFA, European football’s governing body, that require clubs’ spending to match their earnings. They stipulate that clubs should avoid accumulating debts, by limiting the difference between their revenue and expense to a net loss that is currently set at €5m. So that’s a lot of money to make up when you consider the fact that Neymar is estimated to cost PSG close to €500m when you include his wages, bonuses, and other expenses, as well as the €222m release clause.

The FFP rules were introduced in 2011 in response to growing concerns regarding European club football’s overall financial health. Despite ever increasing revenues, many clubs were also exponentially accumulating debt. The losses among Europe’s top division clubs had in fact increased by 760% over the five-year period leading up to the introduction of FFP (2006-2011), with more than half of them reporting losses in 2011.

Ways around the rules?

Interestingly, PSG has been in breach of the FFP regulations before, in 2014. The club was sanctioned by UEFA for spending around €100m more than they earned. It was banned from increasing its salaries and had limits placed on its transfer spending in the next window. It was also given a €60m fine spread over three seasons and limited to naming a 21-man squad in its Champions League campaign instead of the usual 25.

It is worth noting that there are ways around the FFP regulations. First off, clubs are allowed to spend an additional €30m of their own money over a rolling three‑year period to cover any excess spending. Also, FFP accounting allows for transfer fees to be paid over the length of a player’s contract. This would give PSG time to sell some players to raise money over the next few years to cover the transfer fees, should such an agreement be reached with Barcelona.

Plus, PSG may be able to use some other creative solutions to plug any deficit in their accounts. For example, in 2014 the Qatari-owned club tried to avoid sanctions by signing a deal with the Qatar Tourism Authority which brought them within UEFA’s FFP earnings threshold. Following an investigation by UEFA, it was deemed to be overvalued (hence the sanctions), but who knows what sort of deals PSG might sign to increase its revenues.

These are in fact some of the reasons why FFP has been heavily criticised since its introduction. Indeed, there has been ample criticism regarding FFP and its potential effects. Some were concerned that the rules would freeze the existing hierarchy in the leagues and preserve the status of the wealthy elite clubs at the top of the table, while limiting the smaller clubs to their own meagre resources and reducing competition. The idea being that those clubs that took advantage of the lack of regulations before FFP would benefit from the change.

My research into the effect of FFP on the English Premier League (EPL) found little to no evidence to support this criticism. In fact, the study indicates that competition has increased, suggesting that FFP regulations might actually have a positive impact on leagues. Indeed, from the 2012-13 to 2015-16 seasons, there were four consecutive EPL titles won by four different teams – something never previously experienced in the EPL era.

As for Neymar’s transfer prospects, La Liga does not have the jurisdiction to block the move on FFP grounds. The deal – and PSG’s finances – can only be investigated by UEFA, in a potentially long and protracted process involving lots of lawyers. Based on previous sanctions, this may be something PSG is willing to risk.

Elisavet Argyro Manoli does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.