Welcome to Athletic Interest.
Today we are going to break down the new deal that Kylian Mbappé has just signed with PSG.
This deal is controversial for two reasons:
1) The money is crazy! 💰
2) It pissed off Real Madrid 😡
We will get to the mad Madridistas a bit later, let’s start with the money.
According to Sky Sports, Mbappé will earn more than $1 million a week. Depending on which report you believe, he will also receive a signing bonus of somewhere between $100-200 million. If PSG hand over $200 million, they will technically have paid more to re-sign Mbappé than his current market value on Transfermarkt.
Furthermore, the French Maestro will enjoy a greater share of his image rights (money paid to the club for using players in advertising) and he has reportedly negotiated a number of bonus clauses, with PSG promising to pay extra based on number of goals, Ballon d'Ors and Champions League trophies.
While money will have played a big role in convincing Mbappé to stay, there were reports that PSG had sweetened the deal by handing Mbappé the power to give his opinion on future signings, team managers, and even the sporting director. These reports have been rejected by the player and the club, but it wouldn’t be incorrect to say that PSG are building the team around Mbappé and the Frenchman will hold a position of incredible influence over the next three years.
So, does this new deal make Mbappé the richest footballer?
Forbes Highest Paid Footballers 2022:
🥇 Lionel Messi - $130 million.
🥈 Cristiano Ronaldo - $115 million.
🥉 Neymar - $95 million.
With Mbappé earning a base salary of around $60 million and having agreed on favourable bonus clauses we can estimate that his yearly wages will at least match, if not surpass, that of Ronaldo and Messi. According to another breakdown by Forbes, Mbappé earns around $15 million from endorsements. When you combine these figures with his minimum $100 million signing fee, the Frenchman is set to become the highest-paid athlete by the end of the year.
This deal isn’t just surprising because of the money. Many were expecting Mbappé to sign with Real Madrid, none more so than Madrid themselves. According to some reports, Mbappé had actually signed a preliminary agreement with Madrid before deciding to stay with PSG.
This snub angered Madrid bosses, who are said to have set aside a considerable amount of money to sign Mbappé. In fact, Madrid reportedly offered the French international $25 million a year after taxes and $138 million as a signing fee. This money is now sitting in the club’s bank account waiting to be spent (expect some big moves from Madrid this transfer window!)
With Madrid tabling a comparatively similar offer, Mbappé has technically considered PSG - and by association the French League - to be a more attractive location to continue his development.
This idea is backed by the player’s comments after the contract was announced:
"I am convinced that here I can continue to grow at a club that provides everything necessary to perform at the highest level. I am also delighted to continue to play in France, the country where I was born, where I have grown up, and where I have made my name."
If we take the position that this move was not completely down to money, then it could symbolise something very important indeed…
Has La-Liga lost its power?
There was a time - at the height of the Galacticos and Messi’s time at Barca - that La-Liga was seen as the biggest league on the planet. Spanish clubs dominated the champions league, had the highest earnings, and beat every other club in terms of value.
More recently, things have taken a turn. PSG rose up and snatched Neymar from Barcelona, Ronaldo left Madrid, Barcelona went into crippling debt, and Messi left Barca for PSG.
Add the fact that Mbappé has rejected Madrid in favour of PSG, and you can understand why it might seem like La-Liga is falling behind.
It isn’t just the fans that are noticing. Moments after the news went public about Mbappé's PSG renewal, La-Liga announced plans to sue PSG in front of the French Courts and the EU.
"On Kylian Mbappe's possible announcement to stay at PSG, La Liga wishes to state that this type of agreement attacks the economic stability of European football,” explained La-Liga in a statement.
Essentially, La-Liga claims that PSG are ruining European football because they are allowed to make huge losses - and inflate their income with shady deals from Qatari companies - while still spending millions on players each year.
By contrast, Real Madrid has to conform to strict La-Liga cost caps, with salaries limited to around 70% of the club’s income.
La-Liga argues that it is unfair that Madrid worked hard to save money and reduce costs in order to pay for Mbappé, while PSG simply pumped themselves full of debt and extra money from Qatari sponsors to cover the wages.
We should point out that the claims over shady sponsorship deals are unproven.
The president of the French League has hit back at La-Liga, calling the allegations ‘manifestly false.’
Ligue 1 president Vincent Labrune even pointed out that it is ironic for La-Liga to complain about French clubs spending big when Spanish top division clubs have spent almost a third more on players than the French league in the last 10 years.
We still don’t know if this lawsuit will ever reach the courts. La-Liga does have a habit of announcing lawsuits and then never following through.
At the end of the day, the real issue here is that La-Liga has far stronger financial regulations than the other big leagues. This is starting to see the large Spanish clubs fall behind their English and French rivals in the transfer market.
This raises a wider debate about the future of financial regulation in European football. Should UEFA take a stronger stance against big-spending clubs, or does de-regulation actually help new clubs break into the elite?
Sports Business Bites 🍎
A quick summary of some other important developments:
🔵 The takeover of Chelsea F.C. has finally been completed. A consortium led by American investor Todd Boehly has paid $3.1 billion to purchase the team and committed a further $2.2 billion to be invested into the team and stadium over the next decade. While Boehly will be the face of the project, the majority of the money has been provided by investment firm Clearlake Capital. There are reports that the consortium plan’s to invest heavily in the upcoming transfer market, with boss Thomas Tuchel being handed at least $250 million to spend on players.
🏎 Red Bull Racing boss Christian Horner has suggested that several F1 teams will have to miss the final races of the season if the cost cap regulations are not loosened. Under the current cap, F1 teams are not allowed to spend more than $140 million on racing (this includes parts, fuel, logistics, etc.) With inflation hitting the cost of transport, fuel, and raw materials, teams are now struggling to keep expenses within the limit and could face race bans.
👕 British apparel brand Castore has just agreed on a deal to replace Nike as the kit sponsor of Spanish La-Liga side Sevilla. The partnership will last four years and is reportedly worth €3 million per season. Castore has been on a mission to challenge the likes of Nike, Adidas, and Puma and is using kit sponsorship as a platform. The brand has already concluded deals with Rangers, Newcastle, Bayer Leverkusen, and even the Mclaren Formula 1 team.
🥤Pepsi will no longer sponsor the Super Bowl Half-Time Show. The drinks brand has decided to shift its focus towards online advertising, but will still maintain a partnership with the Super Bowl. The half-time show sponsorship rights are reportedly worth around $40-50 million…expect a crypto brand to take over.