A sports enterprise professor at the University of Salford in Manchester, England, believes the European football industry is not overly concerned over the current inflation in player transfer fees, which has risen sharply recently with Neymar's world-record $263 million move from Barcelona to Paris Saint-Germain. (Photo courtesy of Twitter/PSG)
European Football Market to Remain Inflated After Neymar's Record Transfer: Expert
BY :AMAL GANESHA
AUGUST 08, 2017
Jakarta. Simon Chadwick, a sports enterprise professor at the University of Salford in Manchester, England, believes the European football industry is not overly concerned over the current inflation in player transfer fees, which has risen sharply recently with Neymar's world-record $263 million move from Barcelona to Paris Saint-Germain.
Neymar's transfer on Aug. 3 is double what Manchester United paid for Paul Pogba last year when he moved from Juventus. The 25-year-old Brazilian striker will reportedly receive 550,000 euros ($648,000) per week at PSG until 2022.
Neymar's record transfer fee has been deemed irrational by Arsenal manager Arsène Wenger, who has been vocal regarding UEFA's Financial Fair Play regulation, which is meant to strike a competitive balance between clubs' revenue and spending.
"The pressure is now on PSG to build its revenue stream, especially around activities related to Neymar. My sense is that the club will struggle to do this, which suggests that PSG will need to look at other, more creative ways of addressing the financial challenges created by Neymar's signing," Chadwick told the Jakarta Globe on Monday (07/08).
PSG belongs to Qatar Sports Investments, a company linked to the nation's ruling family. This fact supports claims that Neymar's acquisition would have been impossible if there were no state funds involved.
According to the BBC, the $263 million transfer fee is equal to the gross domestic product of Tuvalu, Montserrat, Kiribati, the Marshall Islands, Nauru and Palau. It is also more than Fiji's $72.4 million national debt.
Qatar, the highest-ranking country in GDP per capita, has been heavily investing in the promotion of the 2022 FIFA World Cup, which it is hosting. The country recently faced geopolitical resistance from other Gulf neighbors over alleged support for a certain radical group.
Some believe Neymar's transfer could be part of Qatar's geopolitical strategy.
"Neymar's signing is an issue beyond Financial Fair Play; essentially, geopolitics has trumped continental regulatory controls. The transfer was motivated as much by political matters in the Middle East as it was by the business and commerce of football," Chadwick said.
"Nevertheless, the consequences are likely to be profound: it will inflate transfer fees and wages, and it will have a trickle-down effect that will ultimately impact on smaller clubs playing in the lower tiers of leagues around the world," he added.
With the freshly injected money into the industry causing inflation, common sense dictates that there will need to be a tradeoff with new revenue, though Chadwick argues that only few parties will benefit.
"Alongside Neymar's transfer, there are important changes taking place in the broadcasting market. Together, these two developments have injected significant liquidity into the player transfer market," Chadwick said.
"As such, I don't foresee the market deflating anytime soon. That said, this is likely to benefit the elite few rather than the majority, leading to industrial concentration. A relatively small number of clubs will grow and prosper, whereas the majority will struggle to keep up and will be unable to sustain significant long-term expenditure on players," he said.
Barcelona is reportedly targeting Liverpool's Philippe Coutinho to replace Neymar.