It is our great pleasure to include an interview with Frédéric Longuépée, deputy managing director of Paris Saint-Germain (PSG), in this issue. The interview is of great interest to the sports marketing community because of the changes that are happening at the club.
Following its takeover by Qatar Sports Investment, PSG has seen a major injection of cash into its playing budget and has attracted some of the world’s top footballers.
This type of rapid investment creates many challenges, not least a need to demonstrate to UEFA that the club is operating within the federation’s Financial Fair Play (FFP) rules, which basically state that a club must operate within a budget generated by its activities. No longer can clubs simply be bankrolled by billionaires and record sustained and heavy losses.
For PSG in particular, this poses a problem, because the club operates in the French Ligue 1, which has traditionally lagged behind equivalent leagues in England, Germany, Italy and Spain in terms of TV revenues, gate receipts and commercial income.
Mr Longuépée explains the approach taken by PSG to grow its commercial income and also to deliver the objectives of its major backers in Qatar. In a nutshell, the club is aiming to become one of the world’s leading sporting brands within a decade and the word ‘brand’, rather than ‘club’, is key.
At the outset was a redesign of the club crest to emphasise the city of Paris more clearly. There is a feeling within the club that the city is a massive asset in terms of developing its brand and to position itself to reflect and benefit from the attributes of its home city. In terms of fan engagement, there is a much greater emphasis on customer experience, whether at the stadium, online or indeed in the club shop. The strategy is first and foremost about building the brand; revenues, it is argued, will follow on the back of this.
PSG has deliberately opted not to follow the path of, for example, Manchester United and sell multiple national deals around the world. Instead its aim is to associate itself with a limited number of major global brands which can each activate their rights internationally. The strategy is not without risk. The FFP rules kick in over the next two years and although PSG has already seen a big increase in revenue, as a club it is still not self-financing. This does throw up a very interesting question for the governing body,UEFA. The PSG plan is long-term, but it requires major investment now. Will the club be penalised for taking this approach instead of looking for what some might describe as ‘quicker, easier money’?
UEFA will also want to keep a close eye on the value of sponsorships that come from Qatar. Overpayment, to circumvent FFP rules, could lead to UEFA sanctions. PSG is clearly working hard to develop its global image and justify the multi-million dollar deals. Its argument is that the stronger its brand, the greater its value to sponsors, and the club is producing research to back up its claims to deliver return on investment to the Qatar Tourism Authority in particular.
It’s fair to say that the football and sponsorship industries have to date been very sceptical of the deal, with many saying that it is simply a backdoor channel for Qatari investment. In this interview, Mr Longuépée makes a robust defence of PSG’s case by emphasising the investment and strategy to develop the club’s brand, as opposed to its playing squad.
How UEFA will react remains to be seen, but what is clear is that PSG has developed a sophisticated brand and commercial strategy, based on sound marketing principles and market research. Other sports clubs and franchises would be well advised to read the interview and consider whether they could learn from this approach. I look forward to talking to Mr Longuépée in a few years time to see how PSG has fared.