It’s bank-break­ing work, but worth it

Los Angeles Times - - SOCCER - KEVIN BAX­TER ON SOC­CER kevin.bax­ter@la­ Twit­ter: @kbax­ter11

Here are a few things worth $613 mil­lion:

The com­bined 2017 pay­rolls of the Mil­wau­kee Brew­ers, Tampa Bay Rays, Ari­zona Di­a­mond­backs, San Diego Padres, Cincinnati Reds, Oak­land Ath­let­ics and Chicago White Sox.

A fleet of a dozen Boe­ing 737 jets.

Four Rem­brandts and a paint­ing each by Da Vinci and Raphael.

One 25-year-old soc­cer player from Brazil.

When French club Paris Saint-Ger­main agreed last week to pay a $263-mil­lion trans­fer fee for Barcelona’s Ney­mar da Silva San­tos Jr. — known to soc­cer fans as Ney­mar and now to bankers as “sir” — it seemed to strain the bounds of eco­nom­ics, logic and com­mon sense. Yet that price, more than dou­ble the pre­vi­ous record for a trans­fer, was sim­ply a down pay­ment to get Ney­mar out of the fi­nal four years of a deal with his Span­ish team.

PSG had to spend an ad­di­tional $350 mil­lion in salary and bonuses, ac­cord­ing to Forbes, to sign Ney­mar to a five-year con­tract that will make him the high­est-paid player ever in a team sport. Add it up, and PSG spent well over half a bil­lion dol­lars on a striker who never led his pre­vi­ous team in scor­ing.

It’s a deal so gar­gan­tuan it sent shock waves through soc­cer, and fi­nan­cial, cir­cles. Yet it’s also one that not only could prove prof­itable for PSG, but soon may be im­i­tated by other clubs, says Ste­fan Szy­man­ski, a Univer­sity of Michi­gan pro­fes­sor who has writ­ten seven books on the eco­nom­ics of soc­cer and in­ter­na­tional sport.

“For global soc­cer, there is the means to mon­e­tize this,” Szy­man­ski said. “It’s re­ally how many eye­balls are you drag­ging? How many clicks are you drag­ging to your site through hav­ing this in­di­vid­ual?

“And Ney­mar is ob­vi­ously worth it.”

The early re­turns cer­tainly sug­gest that’s true. On Fri­day, as Ney­mar was be­ing for­mally in­tro­duced as PSG’s new­est signee, fans waited hours to spend $118 apiece on replica Nike jer­seys bear­ing his name. The club said it sold more than 10,000 shirts, and the de­mand was so great that shop­pers vis­it­ing stores at the team’s Parc des Princes sta­dium or along the Champs-El­y­sees were lim­ited to one jersey apiece Satur­day, when Ney­mar made his PSG de­but.

But the real money to pay for the Brazil­ian’s con­tract could come from far out­side Paris. The global reach of the English Premier League and top Euro­pean teams such as Barcelona, Real Madrid and Bay­ern Mu­nich has turned China, In­dia and much of Asia into a vast and rapidly grow­ing source of rev­enue — one that clubs have be­gun to tap through reg­u­lar pre­sea­son tours.

The U.S. mar­ket has been no less lu­cra­tive, with broad­cast rights and mer­chan­dise sales pro­duc­ing hun­dreds of mil­lions in an­nual rev­enue. NBC’s six-year deal with the EPL is worth $1 bil­lion, for ex­am­ple, and the re­cently con­cluded In­ter­na­tional Cham­pi­ons Cup, an eight-team series of ex­hi­bi­tions in­volv­ing top Euro­pean clubs, sold more than 680,000 tick­ets, with one seller get­ting more than $5,500 on StubHub for a ticket to last month’s Real Madrid-Barcelona game in Mi­ami.

That’s money Euro­pean teams didn’t have ac­cess to un­til re­cently. And with Face­book al­low­ing teams to track their fan bases — the high­est con­cen­tra­tion of Arse­nal’s 42 mil­lion fans is in Ethiopia, while the num­ber of Bay­ern Mu­nich sup­port­ers in the U.S. has more than dou­bled, to 27 mil­lion, in the last three years — it has be­come eas­ier to tar­get mar­ket­ing at re­cep­tive au­di­ences.

“Once you start to get into so­cial me­dia and global mar­kets, where we’re talk­ing about mon­e­tiz­ing clicks, In­ter­net views, what­ever, we may be mov­ing into a dif­fer­ent world,” Szy­man­ski said. “If Ney­mar makes Paris Saint-Ger­main the most fol­lowed club in the world on Face­book or on Twit­ter, that turns this into a com­mer­cially sen­si­ble ex­pen­di­ture.”

With Ney­mar com­ing to Paris with more than 130 mil­lion fol­low­ers on so­cial me­dia and a sta­ble of spon­sors that in­cludes Gil­lette, Red Bull, Nike and Pana­sonic, that may not be a reach. Nasser Ghanim Al-Khe­laifi, the team’s CEO, said Fri­day that Ney­mar’s sign­ing in­creased the value of the team by a third, to $1.75 bil­lion, overnight.

And he promised mer­chan­dise sales, new spon­sor­ships and in­creased ticket prices would keep the team’s losses from ex­ceed­ing the limit al­lowed un­der fi­nan­cial fair play guide­lines.

But there are also soc­cer rea­sons for Ney­mar’s move. In Barcelona, he was the third wheel on a team steered by Lionel Messi and Luis Suarez. At PSG, the team will be built around him — es­pe­cially con­sid­er­ing that Ney­mar, at 25, soon will re­place 30-some­things Cris­tiano Ron­aldo, Messi, Suarez and Zla­tan Ibrahi­movic as the world’s dom­i­nant player.

That al­lowed Ney­mar to say with a straight face Fri­day that the move to France had noth­ing to do with money.

“I was never mo­ti­vated by money,” he told a packed news con­fer­ence at the Parc des Princes. “What I think about is hap­pi­ness. If I was fol­low­ing the money, I would maybe be in some other coun­try.”

He’ll cash the checks just the same. But the goal, clearly, is to bring the team the one prize it’s miss­ing: a Cham­pi­ons League tro­phy. The Qatari in­vest­ment com­pany that bought the team in 2011 has in­vested bil­lions in the club, win­ning four con­sec­u­tive Ligue 1 ti­tles and three do­mes­tic cups.

But PSG has never got­ten past the quar­ter­fi­nals of Europe’s big­gest club com­pe­ti­tion, and Al-Khe­laifi, an in­fa­mously in­pa­tient CEO, has spent more than $1 bil­lion on trans­fer fees alone in an ef­fort to win a con­test that pays its win­ner less than $106 mil­lion.

PSG’s oil-rich own­er­ship group loses that much in the sofa cush­ions each year. Yet the Ney­mar deal, Al-Khe­laifi in­sists, is one that will be prof­itable — and if it is, it will be one other teams soon will try to copy.

“When we look at Ney­mar as a brand with PSG, I don’t think it is ex­pen­sive,” he said. “Am I sure we are going to make more money than we paid? Def­i­nitely.”

Christophe Petit tes­son Euro­pean Pressphoto Agency

PARIS SAINT-GER­MAIN landed Ney­mar with a $263-mil­lion trans­fer fee and $350-mil­lion con­tract.

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