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The French Football Farce

The Bundesliga’s resumption and the steady drumbeat of football returning to Spain, England and Italy has left France, in its decision to cancel the remainder of its footballing calendar, increasingly isolated among Europe’s ‘big five’ leagues. The contrast, in part, speaks to each country’s unique handling of the coronavirus pandemic, but also betrays what now appears to be a hasty decision-making process on the part of the French government and its corresponding footballing bodies. Decision-making that could have unforeseen implications on league competitiveness, as well as its financial standing in Europe.

The Ligue de Football Professionnel’s (LFP) decision to abbreviate the 2019/20 campaign came in the wake of an announcement on 28th April by French Prime Minister, Édouard Philippe, forbidding sporting events from taking place, even behind closed doors, until August. This led Canal + to immediately terminate its broadcast deal – leaving a portion of its final instalment, totalling €234m, unpaid. In order to mitigate the damage, the LFP took out a €223.4m government loan, which is to be redistributed to ailing clubs throughout the summer and paid back over a period of four years.

Impact of Truncated Ligue 1 2019/20 season on Club TV Revenues

Club% missed out onTotal Due (Euros)Total Received (Euros)Total Lost Owing to League Termination (Euros)*
Paris Saint-Germain59%59.9m24.3m35.6m
Olympique de Marseille59%52.4m21.6m30.8m
Olympique Lyonnais48%42.4m22.0m20.4m
Stade Rennais FC53%37.3m17.4m19.9m
OGC Nice49%35.2m18.0m17.2m
LOSC Lille50%34.3m17.1m17.2m
AS Monaco42%34.4m19.9m14.5m
Stade de Reims44%28.0m15.6m12.4m
AS Saint-Etienne34%31.6m20.1m11.5m
Girondins de Bordeaux39%29.0m17.8m11.2m
Montpellier Herault SC40%27.4m16.5m10.9m
RC Strasbourg Alsace34%23.4m15.4m8.0m
Angers SCO33%23.7m15.9m7.8m
FC Nantes32%24.1m16.5m7.6m
Toulouse FC28%22.2m16.0m6.3m
FC Metz24%19.9m15.1m4.9m
Stade Brestois 2924%19.5m14.9m4.7m
Dijon FCO23%20.0m15.4m4.7m
Amiens SC24%19.9m15.1m4.7m
Nimes Olympique10%6.6m15.0m1.6m
Total601.2m349.4m251.8m

*This data does not take into account the subsequent deals that the LFP made with Canal + and BeIN Sports that will see both broadcasters make a partial payment of a bill that was due on 17th April which neither paid on time. Canal + did not pay a €110m bill including tax due per their contract, including €43m due for matches already played.

BeIN Sports, the other major broadcaster of Ligue 1 and Ligue 2, also did not make their April payments, €42m due, including €15m due for matches already having taken place.

Canal + have since agreed to pay €37m out of that €110m bill, a sum that will be split proportionally in accordance with the above data. It is unclear whether or not BeIN Sports will pay any of the April bill at this stage.

In a recent statement, the LFP emphasised there was ‘no financial risk’ in obtaining the loan, citing the commencement of a €5.3bn broadcast rights deal as the saviour, the bulk of which will be paid by Spanish company, Mediapro. The deal represents a 60% increase in broadcast revenue; a detail which seems to have played a significant role in dispelling concerns over a shortened season.

The LFP’s statement was spurred on by a set of documents leaked to French outlet, Mediapart, defining the terms of the government loan, as well as the expectation that Ligue 1 and 2 clubs stood to lose in the region of €541m as a consequence of the truncated campaign.

In the short-term, when set against the incoming TV money, the numbers look surmountable and are unlikely to threaten the fundamental health of the league. Clubs such as Bordeaux, Marseille and Lille, who reported significant losses and corresponding debt in their most recent financial reports, may be required to perform more complicated feats of fiscal acrobatics, but are ultimately more valuable to creditors alive than dead. Making a refinancing, or adjustment of loan terms seem more probable than bankruptcy.

However, with Europe’s other big four are poised to complete their 2019/20 seasons in full and UEFA remaining steadfast in its commitment to playing out the remainder of the 2019/20 Champions’ League and Europa League tournaments in August, this recent information has left France more isolated and begs as to whether the government, the Fédération Francaise de Football (FFF) and the LFP were overeager in April.

This is highlighted by fact that in late April, when the decision was made, Le Parisien reported that the Minister for Sport, Roxana Maracineanu, in the interests of ensuring greater parity, spoke to her counterparts in Italy, England, Germany and Spain in the hopes of convincing them to follow France’s lead. Now, nearly a month later, and as European soccer cascades back onto the pitch, Maracineanu’s attempts have categorically failed; with France now set to experience the competitive imbalance that the Minister was reported to have been seeking to avoid. Maracineanu, a protagonist in this tale, has now been proved to have erroneously or otherwise misled the French government as it sought to produce a policy stance on French football in April, having incorrectly repeated publicly and privately that UEFA had set a hard deadline of August 3rd for all 2019/20 league football to be completed. A claim that has been refuted by UEFA President Aleksandr Ceferin in letter correspondence with Lyon President Aulas.

The most vocal critic of the league’s premature end has been Jean-Michel Aulas. The Lyon president coming under heavy criticism from his peers, who maintain his concerns stem out of self-interest, with the club having been formally classified in 7th place following the decision to terminate the season after 28 games played. A position that leaves them provisionally without European football for the first time in the 21st century, depending on Coupe de la Ligue and Champions’ League outcomes, with OL still in both competitions.

The lack of money flowing into the club from European competition could force Lyon to drastically cut wages, as well as augment their transfer sales. In the process, the implications have doubled as the perfect foil to some of Aulas’s more lucid commentary, much of which alludes to potential losses (of which he calculates roughly €900m league-wide) and a possible competitive disadvantage in Europe.

Saint-Étienne co-president, Bernard Caïazzo, has been a regular sparring partner with Aulas; using his position as president of Première Ligue, one of France’s two professional club unions, to promote a message of unity. The espousal of a collective approach has helped Caïazzo to obfuscate the benefits of a shortened season on his own club, Saint-Étienne. Three points clear of the relegation play-off place when the season ended, ASSE managed to avoid a potential dogfight at the bottom of the table, as well what would have been an extremely complicated financial situation if they were ultimately to have been relegated.

According to the leaked documents and reporting from Mediapart, Saint-Étienne were one of four Ligue 1 clubs with a negative net cash balance. This comes on the heels of the DNCG report from back in June 2019, in which the club posted a modest €500k profit for the 2018/19 season. The small profit was made possible by €42m in TV broadcast earning – augmented by the club’s European appearance – the total accounted for nearly 60% of the club’s operating income. This paints a foreboding picture for the club with the league’s eighth largest wage bill – the latest financial disclosure putting it at over €53m – and few sellable player assets. High earners such as Yann M’Vila, Mathieu Debuchy, Wahbi Khazri and Stéphane Ruffier will be nearly impossible to sell in a contracting transfer market. All of this points to a club that would have been left in an extremely compromised position had they been relegated.  

Unlike ASSE, Rennes found themselves near the top of the table when the season was called – one-point clear of Lille for the final Champions’ League place. Although Rennes may not be in the same daunting financial straits as ASSE, there are distinct benefits to avoiding the remaining ten matches. The most obvious is the influx of European money which is set to roll in as a result of next season’s European adventure. If Rennes can find their way into the group stages (as of yet undetermined) they would see a broadcast revenue boost of over €20m. This is particularly notable, as Rennes was one of four sides to disclose a profit loss in the latest DNCG report; a modest sum of just over €1m but enough to put them on the financial governing body’s radar.

What is more, Rennes lay claim to the league’s sixth highest wage bill – last disclosed at €63.6m – and according to the Swiss Ramble, a wage to turnover ratio of 80%. The impact of the new broadcast deal would have helped to bolster Rennes earnings heading into next season and, even without European football, would have dispelled any concerns of posting another year of negative earnings. Instead, like every team across Europe, Rennes are staring at an indefinite period of gate losses (Rennes accrued €9m in ticket sales last season), merchandising losses, and now unlike their European peers, the loss of this year’s TV revenue. Going off of last season’s TV earnings, Rennes will pocket roughly an additional €17m from the new deal, which is at risk of becoming negligible once the unforeseen costs of the 2019/20 and 2020/21 seasons are covered. If Rennes intend to improve their squad, there are likely to do through financing achieved by Champions’ League qualification.     

These case studies help to shed light on the sovereign thinking that has guided the LFP’s members in their decisions surrounding the pandemic. Outside of Lyon and Ligue 1’s two relegation sides, Toulouse and Amiens, few clubs have reason to balk at the season ending prematurely. Those clubs that have qualified for Europe will be pleased with the additional income, while the concerns of mid-to-low table sides can be allayed by next season’s robust infusion of broadcast revenue.

As France becomes siloed from the rest of Europe’s top five leagues it seems increasingly likely that its decision to cut the season short in April will have negative implications both financially and competitively going forward. While manageable, the situation the LFP is grappling with is becoming increasingly unique.

French teams will benefit from swelled broadcast revenue, but will have to use at least a portion of those new earnings to plug gaps in unpaid TV and advertising money from 2019/20. When signed, the new broadcast deal was expected to move Ligue 1 closer in line with its European counterparts, but because of the truncated season its impact will now be tempered. Ultimately a season cut short will leave French clubs to grapple with challenges that many of their European peers will not. What could have been a break the glass ceiling moment for French football, moving onto the 2nd most lucrative domestic rights TV deal in the game’s landscape, pre-COVID, has turned into a masterclass in settling for a longer period in Europe’s powerhouses’ shadows.

In a recent statement, the LFP emphasised there was ‘no financial risk’ in obtaining the loan, citing the commencement of a €5.3bn broadcast rights deal as the saviour, the bulk of which will be paid by Spanish company, Mediapro. The deal represents a 60% increase in broadcast revenue; a detail which seems to have played a significant role in dispelling concerns over a shortened season.

The LFP’s statement was spurred on by a set of documents leaked to French outlet, Mediapart, defining the terms of the government loan, as well as the expectation that Ligue 1 and 2 clubs stood to lose in the region of €541m as a consequence of the truncated campaign.

In the short-term, when set against the incoming TV money, the numbers look surmountable and are unlikely to threaten the fundamental health of the league. Clubs such as Bordeaux, Marseille and Lille, who reported significant losses and corresponding debt in their most recent financial reports, may be required to perform more complicated feats of fiscal acrobatics, but are ultimately more valuable to creditors alive than dead. Making a refinancing, or adjustment of loan terms seem more probable than bankruptcy.

However, with Europe’s other big four are poised to complete their 2019/20 seasons in full and UEFA remaining steadfast in its commitment to playing out the remainder of the 2019/20 Champions’ League and Europa League tournaments in August, this recent information has left France more isolated and begs as to whether the government, the Fédération Francaise de Football (FFF) and the LFP were overeager in April.

This is highlighted by fact that in late April, when the decision was made, Le Parisien reported that the Minister for Sport, Roxana Maracineanu, in the interests of ensuring greater parity, spoke to her counterparts in Italy, England, Germany and Spain in the hopes of convincing them to follow France’s lead. Now, nearly a month later, and as European soccer cascades back onto the pitch, Maracineanu’s attempts have categorically failed; with France now set to experience the competitive imbalance that the Minister was reported to have been seeking to avoid. Maracineanu, a protagonist in this tale, has now been proved to have erroneously or otherwise misled the French government as it sought to produce a policy stance on French football in April, having incorrectly repeated publicly and privately that UEFA had set a hard deadline of August 3rd for all 2019/20 league football to be completed. A claim that has been refuted by UEFA President Aleksandr Ceferin in letter correspondence with Lyon President Aulas.

The most vocal critic of the league’s premature end has been Jean-Michel Aulas. The Lyon president coming under heavy criticism from his peers, who maintain his concerns stem out of self-interest, with the club having been formally classified in 7th place following the decision to terminate the season after 28 games played. A position that leaves them provisionally without European football for the first time in the 21st century, depending on Coupe de la Ligue and Champions’ League outcomes, with OL still in both competitions.

The lack of money flowing into the club from European competition could force Lyon to drastically cut wages, as well as augment their transfer sales. In the process, the implications have doubled as the perfect foil to some of Aulas’s more lucid commentary, much of which alludes to potential losses (of which he calculates roughly €900m league-wide) and a possible competitive disadvantage in Europe.

Saint-Étienne co-president, Bernard Caïazzo, has been a regular sparring partner with Aulas; using his position as president of Première Ligue, one of France’s two professional club unions, to promote a message of unity. The espousal of a collective approach has helped Caïazzo to obfuscate the benefits of a shortened season on his own club, Saint-Étienne. Three points clear of the relegation play-off place when the season ended, ASSE managed to avoid a potential dogfight at the bottom of the table, as well what would have been an extremely complicated financial situation if they were ultimately to have been relegated.

According to the leaked documents and reporting from Mediapart, Saint-Étienne were one of four Ligue 1 clubs with a negative net cash balance. This comes on the heels of the DNCG report from back in June 2019, in which the club posted a modest €500k profit for the 2018/19 season. The small profit was made possible by €42m in TV broadcast earning – augmented by the club’s European appearance – the total accounted for nearly 60% of the club’s operating income. This paints a foreboding picture for the club with the league’s eighth largest wage bill – the latest financial disclosure putting it at over €53m – and few sellable player assets. High earners such as Yann M’Vila, Mathieu Debuchy, Wahbi Khazri and Stéphane Ruffier will be nearly impossible to sell in a contracting transfer market. All of this points to a club that would have been left in an extremely compromised position had they been relegated.

St Étienne - DNCG Account Inspection - P&L - 2018/19 (Selected Items Only)

ItemIncome (+/- Euros)
Broadcasting Rights+ 42,186,000
Sponsors - Advertising+ 18,961,000
Gate Receipts+ 6,275,000
TOTAL OPERATING INCOME+ 74,374,000
Total Payroll- 53,626,000
Amortisation of Transfer Compensation- 9,066,000
Players' Agents/Intermediaries Fees- 2,369,000
TOTAL OPERATING EXPENSES- 88,896,000
Operating Result- 14,522,000
Profit (Loss) from Transfers+ 17,134,000
Net Profit (Loss)+ 536,000

Unlike ASSE, Rennes found themselves near the top of the table when the season was called – one-point clear of Lille for the final Champions’ League place. Although Rennes may not be in the same daunting financial straits as ASSE, there are distinct benefits to avoiding the remaining ten matches. The most obvious is the influx of European money which is set to roll in as a result of next season’s European adventure. If Rennes can find their way into the group stages (as of yet undetermined) they would see a broadcast revenue boost of over €20m. This is particularly notable, as Rennes was one of four sides to disclose a profit loss in the latest DNCG report; a modest sum of just over €1m but enough to put them on the financial governing body’s radar.

What is more, Rennes lay claim to the league’s sixth highest wage bill – last disclosed at €63.6m – and according to the Swiss Ramble, a wage to turnover ratio of 80%. The impact of the new broadcast deal would have helped to bolster Rennes earnings heading into next season and, even without European football, would have dispelled any concerns of posting another year of negative earnings. Instead, like every team across Europe, Rennes are staring at an indefinite period of gate losses (Rennes accrued €9m in ticket sales last season), merchandising losses, and now unlike their European peers, the loss of this year’s TV revenue. Going off of last season’s TV earnings, Rennes will pocket roughly an additional €17m from the new deal, which is at risk of becoming negligible once the unforeseen costs of the 2019/20 and 2020/21 seasons are covered. If Rennes intend to improve their squad, there are likely to do through financing achieved by Champions’ League qualification.     

These case studies help to shed light on the sovereign thinking that has guided the LFP’s members in their decisions surrounding the pandemic. Outside of Lyon and Ligue 1’s two relegation sides, Toulouse and Amiens, few clubs have reason to balk at the season ending prematurely. Those clubs that have qualified for Europe will be pleased with the additional income, while the concerns of mid-to-low table sides can be allayed by next season’s robust infusion of broadcast revenue.

As France becomes siloed from the rest of Europe’s top five leagues it seems increasingly likely that its decision to cut the season short in April will have negative implications both financially and competitively going forward. While manageable, the situation the LFP is grappling with is becoming increasingly unique.

French teams will benefit from swelled broadcast revenue, but will have to use at least a portion of those new earnings to plug gaps in unpaid TV and advertising money from 2019/20. When signed, the new broadcast deal was expected to move Ligue 1 closer in line with its European counterparts, but because of the truncated season its impact will now be tempered. Ultimately a season cut short will leave French clubs to grapple with challenges that many of their European peers will not. What could have been a break the glass ceiling moment for French football, moving onto the 2nd most lucrative domestic rights TV deal in the game’s landscape, pre-COVID, has turned into a masterclass in settling for a longer period in Europe’s powerhouses’ shadows.

K.T.

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