Before big games at Paris Saint-Germain’s home ground, the crowd of diehard ultras, well-heeled French elites and international celebrities are treated to a pyrotechnic show as a booming voice reminds them: “Ici, c’est Paris”.
Over the past year the French champions have also hosted executives from US investment group Arctos Partners, which has been thrashing out an agreement to buy up to 12.5 per cent of the football club from its Qatari owners.
This month’s deal valued the club at more than €4bn despite the club losing hundreds of millions of euros since the start of the pandemic, playing in a rented stadium with fewer than 50,000 seats and competing in a league that lacks the global appeal of some of its European rivals.
Since Doha-backed Qatar Sports Investments took control 12 years ago in a $70mn deal, PSG has been transformed into a football force that has drawn star players such as David Beckham, Lionel Messi and Kylian Mbappé, dominated French football and challenged for top honours in Europe.
The arrival of Arctos, led by financier Ian Charles and David “Doc” O’Connor, a former executive at Madison Square Garden and Creative Artists Agency, is intended to signal another new chapter.
The message is that PSG is ready to embrace a new culture and financial sustainability following clashes with football’s European governing body and, perhaps most importantly according to people close to the club, that it is no longer a solely Qatari project.
“We are so proud of our heritage in Paris and France — Paris is our home,” PSG president and QSI chair Nasser Al-Khelaïfi told the Financial Times. “But we also connect with and inspire fans all around the world . . . believe me this is just the beginning.”
Derisively nicknamed Qatar Saint-Germain by rival fans who complain that its financial firepower has changed the French league for the worse, PSG has won the title in nine of the past 11 seasons.
But despite QSI investing about €1.5bn in the club, PSG has fallen short in the Uefa Champions League, Europe’s most prestigious club competition. On Thursday the team scraped into the knockout phase of this season’s competition with a 1-1 draw against Germany’s Borussia Dortmund. Winning the tournament “is not at all an obsession”, according to Al-Khelaïfi.
The club wants to prioritise players in the Île-de-France region surrounding Paris, a hotbed for the development of young talent, after letting go of ageing high-earners Messi and Neymar in a summer overhaul that will increase the importance of its new €350mn training campus.
“We are building a team that is really playing as a team,” Al-Khelaïfi said. “We want our players to enjoy playing, our staff to enjoy coaching, and for our fans to enjoy it when you watch.”
Arctos will exert no influence over sporting decisions but people with knowledge of QSI and PSG say it will help the club target fans and sponsors in the US, which is set to host the Club World Cup in 2025 and the Fifa World Cup the following year, and where demand for elite football was highlighted by Messi’s summer move to Inter Miami.
“There is a big, big opportunity in the US market,” said PSG’s general secretary Victoriano Melero. “Having Arctos — with all the companies where they’ve got stakes but also with the expertise they’ve got — for us it will be very, very useful to have them next to us.”
Founded in 2019, Arctos is at the vanguard of the rush of private capital into sport, having snapped up indirect holdings in Premier League football club Liverpool FC and the Boston Red Sox baseball franchise, as well as stakes in the Tampa Bay Lightning hockey team and the Golden State Warriors basketball team.
QSI, which has also invested in Portuguese football club Braga and the fast-growing game of padel, may explore other sports opportunities with Arctos, according to the people. The US investment group will also back plans to invest in PSG’s real estate and women’s football, two other sources of potential revenue growth.
Boosting revenues from merchandising and sponsorship overseas is vital as PSG chases an annual sales target of €1bn, according to Melero. The club is on course to report roughly €800mn in sales for 2022-23, according to chief revenue officer Marc Armstrong, which would be among the highest-ever sums in European football.
However, the club racked up net losses of more than €700mn in the three seasons up to and including 2021-22, according to accounts on the website of Ligue de Football Professionnel, the sport’s governing body in France.
In the penultimate season before the departures of Neymar and Messi, PSG’s annual payroll soared to €729mn, dwarfing the sub-€100mn levels of most of its French rivals. Since 2011 it has outspent all but three clubs — Chelsea, Manchester City and Manchester United — in the transfer market, with gross expenditure of roughly €1.9bn on players.
Melero told the FT that PSG should be able to reach profitability in the next two to three years.
“We’ve had 10 years of unfettered spending and now it’s payback time,” said Simon Chadwick, professor of sport and geopolitical economy at Skema Business School in Lille. “US private equity money will bring much stronger commercial discipline not just to PSG but QSI as well.”
PSG has had run-ins with European football’s governing body Uefa, which last year said the club had not complied with its “break-even requirement” and imposed a penalty of €10mn that could rise to €65mn subject to future compliance.
QSI wants to turn the training centre into a destination not just for players but the outside world, with plans under discussion to add private and public sports facilities, shops, restaurants and housing.
The club’s owners hope to buy PSG’s home stadium Parc des Princes from the Paris City Council but may have to relocate if the club’s owners are unable to break an impasse with the city’s mayor Anne Hidalgo.
Increasing capacity is seen as a must to compete with Europe’s top clubs. FC Barcelona are redeveloping the Camp Nou to create a 105,000-seat stadium, Real Madrid are finalising renovations at the Santiago Bernabéu and Tottenham Hotspur set the standard in England with a modern arena that is the envy of rivals.
Another drag on revenues is Ligue 1’s lacklustre broadcast revenues. While the Premier League last week struck a domestic rights deal worth £6.7bn over four seasons, analysts doubt that the equivalent French sale will achieve its target of roughly €800mn a season.
“All we can do is maximise the revenues we control directly: sponsorship, merchandising, ticketing, hospitality,” Armstrong said. “We want the bigger stadium to grow them even more.”
PSG benefits from being the only major football club in Paris. Fabien Allègre, chief brand officer, said the club wanted to extend its reach beyond football fans in the capital, in an approach that pitches “Paris” as a brand that will even appeal to gamers in China who know nothing about football but love the city and the club’s esports team.
“You cannot pretend to be the club of a new generation if you’re still doing stuff as before,” he said.
Far from its flagship store on the Champs-Élysées, PSG has opened a shop on London’s Oxford Street, adding to sites in Doha, New York, Los Angeles, Tokyo, Seoul, Miami and Las Vegas.
Deloitte estimates PSG’s commercial activities contributed €383mn to its football operations’ €654mn in revenue in 2021-22.
But the club has drawn scrutiny because of a perceived reliance on Qatari state-owned partners, including the national airline and tourism promoter.
Armstrong said only a handful of the PSG’s roughly 40 sponsors were Qatari and that the Qatar Airways shirt sponsorship was “absolutely fair value”.
Ahead of the Fifa World Cup in 2026, which the US is co-hosting with Canada and Mexico, Armstrong said “there’s a good chance you’ll see us touring the US in one or both of the next summers because I think that’ll become an even more strategically important market for us”.
The 2024 Olympic Games in Paris present another opportunity. PSG is looking to make use of “pop-up stores” in the city and has worked with Nike on some “Paris-focused” product ranges.
Armstrong said: “Rugby World Cup, Olympics next year, the financial centre has become even more important post-Brexit; it just feels like it’s really Paris’s time at the moment. And we’d like to think that Paris Saint-Germain is part of that.”