Beckham's PSG move about more than money

David Beckham has earned a lot of publicity both for his free-agency and, more recently, for his nascent move to French gazillionaire-club Paris Saint-Germain.  The fact is that even at age 37, he is easily the single-most recognizable footballer in the world and still earns his coin on the pitch with deadeye dead ball delivery and smart, if limited, movement.

Beckham’s move also earned notoriety because he became the first football figure to donate the entirety of his wages to a local children’s charity.  As usual with a public – and polarizing – figure, this has earned him both acclaim and skepticism.

It is true that Beckham has more money than, well, nearly everyone.  He’s an exceedingly wealthy man.  However donating his salary to a change agency is the first such move I can remember and he should be congratulated for his willingness to help those less fortunate than himself.  It’s a wonderful gesture.

The decision perhaps wasn’t a hard one to make.  The Beckhams will have donated a portion of money to not-for-profits and France’s controversial high-earner’s tax means that he likely would have only taken home 25% of his gross wage.  By donating that money straight to that charity, it would seem the beneficiary organization would receive a greater portion of those monies than Beckham would himself.

(c) Balanced Sports (author's own collection)

Whether it says that David Beckham doesn’t play football for the money is still up for debate.  The fact is that his salary earnings are far outstripped by his incredible endorsement potential (in this chart, Beckham is the fifth-highest endorsement earner of any athlete, behind Tiger Woods, Roger Federer, Phil Mickelson and Kobe Bryant).  That he is still in the limelight and playing in a chic location suggests an undiminished ability to generate off-field income far more lucrative than the relative pittance he’s able to command for delivering balls to Zlatan.

David Beckham has also always been conscious of legacy.  He helped solidify soccer’s popularity in the US and recently announced he wouldn’t sign for a Premier League club because it would pit him against Manchester United.  He might be the athlete most aware of the way he is or will be perceived historically and offering weekly cheques with four or five zeroes in them is a publicity boon – for him, and his Qatari employers, whose public perception has suffered since controversially winning the rights to stage the 2022 World Cup.

It’s a genius move.  It’s also really worthwhile both financially and philosophically.  It’s likely there are more reasons at play than simply altruism, but when the results are so beneficent it just doesn’t matter – (most) everyone wins.

Financial Fair Play: why it had to happen

No-one said that Financial Fair Play (FFP) was perfect. Even Michel Platini, the UEFA President behind the long-touted new standards, accepts his brainchild has some serious flaws. But in these days of the paradoxical austerity boom, European football clubs are going to have to take responsibility for their collective bottom lines.  FFP had to happen.

A slight shift towards prudence by some clubs – for example Newcastle United or AC Milan – has been balanced by remarkable spending by others. Nothing prompts wasteful extravagance like owning a football club. According to UEFA, almost seventy percent of all European top-flight clubs are losing money. Platini's regulations resolve to save clubs from themselves.

At its simplest, FFP penalises clubs who spend more than they earn. Opponents to the plan suggest this will keep the big clubs powerful and the small ones insignificant; they may have a point. However, it will also minimise the wealthy benefactor model made so famous by Chelsea, Manchester City and now Paris Saint-Germain.

Clubs are already beginning to implement the necessary changes. Whether UEFA enforces their laws is still to be seen.

While even Platini should accept the FFP legislation is imperfect, the overall ramifications of the legistlation should somewhat control spiralling wage-bills. The percentage of overall revenue spent on player wages by top-tier European clubs is simply bad business practice.

Within the past two years, American sport has seen lockouts in the NFL and NBA. A similar impasse has been reached between NHL owners and players. In all three cases, the warring parties struggle(d) to agree on a collective bargaining agreement (CBA) which splits revenue fairly between players and owners.

The graphic below charts the revenue split between players and owners in each of the four major US sports and compares it to top-flight European football clubs. The contrast is stark. Baseballers receive about 57% of their pie – as do hockey players under the current CBA – while NFL and NBA players' shares decreased to around 50% with their last CBA. (Given the habit owners have of “winning” these negotiations, the figures below come from the owners' last offer rather than the current iteration of the CBA which will certainly change).

Sources: The National Football Post, New book dives into business of baseball, Breaking down changes in new CBA, Twitter and the Belfast Telegraph.

And this chart doesn't even take into account transfer fees that are paid on top of wages! Even accounting for cross-continental differences, the average 13-20% extra that top division European footballers earn makes them the obvious outlier. What makes this startling is that the player/owner revenue sharing scheme now in operation in Europe isn't codified but voluntary – owners don't pay this lofty percentage out of legal compulsion.

No matter how different the sports, American owners like the Glazers, Stan Kroenke and Fenway Sports Group operate teams on both sides of the Atlantic. This means that there is a basis for comparison, if not for drawing fully-fleshed-out conclusions.  It's obvious that running a business and not accumulating debt - let alone making a profit - when you pay 70% of your income to employees is hard to do.

Because of the continental ramifications of employing a salary cap, an system index-linked to revenue was the most feasible way that UEFA could harness undisciplined spending.  FFP is not perfect, has loopholes aplenty and it won't necessarily address the lack of competitive balance across Europe's top four leagues. Hopefully, these refinements will come.

Zlatan Ibrahimovic, PSG, AC Milan and the carousel

Life is cyclical. Well, at least until it isn't.

However, in football, this is more strangely true than in many other realms.

Take for example Joe Kinnear, who reared his head at Newcastle United in 2008 after nearly a decade submerged by heart trouble, poor results and relegation. The man who signed his pay cheques? Mike Ashley, who was known as a shrewd businessman when he arrived Tyneside; the same man who lost millions – and, for about two years, his mind – before rebuilding the Magpies into a wonderful, cost-effective side.

His reputation may not be restored, but it is certainly rehabilitated.

The carousel nature of football finance has been fixed for years. Some clubs emerge to challenge the established plutocracy, often as those old money sorts trend towards a kind of faux-austerity. However, often the nouveau riche accomplish only a mild sensation before owners who arrive in Ferraris depart the scene in Greyhound buses. Nothing's easier than losing money in sports ownership.

If development isn't sustainable, even the most generous benefactor has a limited capacity for giving away their money. Eventually, if baseplates and failsafes aren't created, the carousel quickly rights itself and all returns to normal: old money persists and questions pursue those who got rich quick.

This week's transaction between AC Milan and Paris Saint-Germain is of this nature. It was a handshake made of Rossoneri fiscal expediency and of PSG's owners, Qatar Investment Authority, buying that ugatti Veyron they always wanted. By shoving what amounts to fob change at both Thiago Silva and Zlatan Ibrahimovic in that most notorious “double swoop”, QIA have rounded off their transfer expenditure at a satisfyingly even €200 million.

As Champions League winners Chelsea and EPL Champions Manchester City have succeeded, so too will PSG. At some stage, however, they will fall – Blackburn Rovers couldn't maintain their mid-nineties success while the most high-profile team of them all, the Galacticos, were only a moderate success. If expectations aren't met, impatient men blow up their creations and begin the cycle again.

Clubs like Liverpool, AC Milan, Barcelona and Manchester United have built up so much equity over decades that their ascent again has become a foregone conclusion. For entities such as PSG, who were created in 1970, that's not necessarily the case; a cycle isn't a short one but could mean years in the wilderness.

A ready example of how to spend their money already exists. Sheikh Mansour has achieved short-term results without sacrificing altogether future, a sign that he hopes to accumulate that same equity. Whether that has been the aim at Chelsea, QPR or PSG is still very much in question.

The old money temporarily cycles down as the new money rises. As always.

Trading Fashion Cities: Leonardo swaps Inter Milan for PSG

In French, Brazilian coach Leonardo would be called Un chat à la mode. And a lucky one. Talk about landing on one's feet! The former AC Milan and Inter Milan coach signed on Thursday to coach French Ligue 1 outfit Paris Saint-Germain.

Leonardo, whose brilliant playing career made him a rossoneri icon is, at best, a hesitant coach. He was persuaded to take the AC Milan managerial reins after Carlo Ancelotti's 2009 sacking and was replaced at the end of that season as his relationship with club owner Silvio Berlusconi became progressively more unworkable. After six months out of the game he resurfaced as Inter Milan's boss replacing the remarkably unpopular Rafael Benitez. Inter, fourteen points behind league-leading red-half rivals AC, promptly went on a tremendous run to the point where April's Fashion City Derby became the season's deciding game.

Under new coach Massimiliano Allegri, AC Milan were triumphant and Inter Milan settled uncomfortably into second place in Serie A. The nerazzuri's title streak died at five. Leonardo, whose coaching philosophy could be best described as rolling the ball out and saying "Go play", empowered that turnaround either by shrewd assessments of his players' moods or by sheer good fortune. However it was accomplished, large questions remain as to his coaching prowess and even his suitability to such an everyday, hand-on role. Rumours persist that he has no great love for the role of manager and even in the mid term would prefer a boardroom position.

Perhaps this is the rare occasion where nice guys actually do finish first. Leonardo presents exceedingly well: dapper, articulate and friendly. The move to PSG presents the opportunity to hone his skills, revisit past glories or maybe just an escape from the relentless baking heat of the Italian media kitchen. Perhaps he felt club expectations were too high in the wake of opponents strengthening. Having said that, however, PSG's new Qatari owners should be very aware of what they will be getting: style with little proven substance.

For someone who has shown no great affinity for the work, reportedly has designs on higher and less stressful offices and isn't a relentless self-promoter, Leonardo has the happy ability of falling on his feet; his skills on the training track overshadowed by his incredible talent for dealing with almost despotic club owners Berlusconi and Moratti. PSG, one of France's most storied clubs - and where he played for two years from 1996 - can only speculate as to what they are getting beyond an urbane, handsome spokesman.

Whether Leonardo's attacking football - which promotes player enjoyment - last season was a reaction to Benitez's staid gameplan or the first manifestations of an easygoing coaching style is amusingly unanswerable. Whether it was genius or luck, his mindset and tactical nous still need proving.

Moratti's satisfaction with his former sideline boss is unknown. Whether this is a blow to his plans for the side really comes down to his opinions as to Leonardo's ability, a situation where has more information with which to judge than we in the public. What is, however, apparent, is the search for a replacement, which given the dearth of quality candidates could become one of summer's football tiresome constants.