A distressed transfer market and a TV-deal up in the air: Coming off the back of a €700 million operating loss, how well-suited are French clubs to deal with the pandemic?

30 November 2020

Photo: PA Images AS Monaco were able to cover their losses in the 2018/19 season almost entirely through player sales of which they netted an impressive €155 million profit.

Just a single Ligue 1 club recorded an operating profit in the 2018/19 season with most dependant on big transfers to be sustainable.

The average wages-to-revenue ratio was close to 80 per cent and is likely to have risen as the crisis continues to slash income.

Despite Covid-19, clubs got their wallets out this summer, expecting revenue to rise due to the record Mediapro TV-deal, but that agreement is now up in the air - posing a massive problem.

Offthepitch.com has analysed the finances of France's top flight clubs prior to the pandemic's advent.

Emil Gjerding Nielson and Joseph Mailil, analyst nielson@offthepitch.com

With a new record €814 million a year TV-deal lined up the 2020/21 season were supposed to have been a catalyst for French football to close at least some of the gap with the rest of Europe's top five leagues. 

So, when the broadcaster behind the agreement, Mediapro, in October failed to pay the second €172 million instalment of the contract, concerns were raised. 

And, coupled with a pandemic which has brought down transfer spending down across Europe, the situation in France appears problematic to say the least. 

The Premier League last season was the most important importer of French clubs, but that equilibrium is now a big problem

"Ligue 1 clubs spent money this summer anticipating the increased revenue, offering sign-on bonuses, long-term contracts and big salaries which they never would have otherwise," says owner of Ligue 2 club Clermont Foot 63, Ahmet Schaefer, who also runs advisory Core Sports Capital. 

Offthepitch.com has taken a look at the situation in France to determine how well-suited top flight clubs are to deal with such financial turmoil. The analysis, based on clubs' 2018/19 annual accounts, has one major conclusion: French football is heavily dependent on the willingness of international competitors to spend money on its players. 

An equilibrium in peril

In the 2018/19 season, Ligue 1 clubs had a combined operating loss of €699.3 million, with AS Monaco responsible for almost a fourth of that figure with a loss of €165.2 million. 

The club, owned by Russian billionaire Dmitry Yevgenyevich Rybolovlev, however, were able to cover their losses almost entirely through player sales of which they netted an impressive €155 million profit. All in all, the club finished the season with a profit after tax of €3,000.

AS Monaco's situation is symptomatic of the general tendency in Ligue 1. In a season resulting in a collective almost three quarters of a billion euros in operating losses, clubs recorded a combined profit on player sales of €635 million. 

"Some of the big clubs in Ligue 1, which already have double digit losses and are so dependent on English clubs purchasing their players for €30-50 million, will have a massive problem in the near future," Schaefer says. 


In the end, clubs had a more modest combined loss of just €126.4 million, heavily skewed by the fact that Marseille recorded a loss of €91.4 million, Lille OSC a loss of €66.6 million, and Bordeaux a loss of €25.7 million. 

Put together, clubs had an average operating margin of negative 43.1, revealing a general struggle for clubs to generate income from their core, stable income flows. 

Europe's top five leagues combined spent €2 billion less this summer on player transfers than they did the season before, so for French clubs it's clear that not only Mediapro's contract poses a problem.

"In a globalised 21st century football market it's not only about one Mediapro contract and 20-40 clubs in France. It's about what is happening outside," Schaefer says.

"The Premier League last season was the most important importer for French clubs, but that equilibrium is now a big problem because the league has its own challenges, with Brexit as well. Certain clubs may simply collapse."

Unsustainable wages

The massive operating losses are due to different reasons, but a major factor is clubs' wage bills. The average wages-to-revenue ratio in the season stood at 78.6 per cent, way above the 60 per cent recommendation by UEFA.

AS Monaco again brought the average up with a ratio of 131.8 per cent. However, only four clubs had a ratio that was below UEFA's guidelines: Strasbourg, Amiens, PSG and Lyon. 

In total, 13 clubs had a ratio that exceeded 70 per cent. 


The wages-to-revenue ratio for clubs in the top five leagues is as a result of the pandemic expected to climb from 59.6 per cent in the 2018/19 season to 70.1 per cent in the 2020/21 season. 

But worse is yet to come. The European Club Association's (ECA) CEO, Charlie Marshall, earlier in November told offthepitch.com he expects it to eventually reach the high seventies.

What now?

The Professional Football League (LFP) has already taken central steps to help its clubs. In May it took out a €224.5 million loan with French investment bank Société Générale, 80 per cent of it underwritten by the French government, after the league was halted and PSG declared the winner. 

And, following Mediapro's missed payment, the LFP took out another loan to advance the usual payments to clubs. 

"We are extremely worried about the situation with the Mediapro contract which was supposed to provide oxygen to clubs. But if you take away the oxygen the patient will die," Schaefer says.

A club that have already revealed the impact of the pandemic are Lyon, whose turnover fell by €40.2 million last season, resulting in a €36.5 million pre-tax loss. And in the first quarter of this year, the club estimated the negative impact of the pandemic to have been €12 million.

Despite reports that the LFP is looking to hand over Mediapro's four-year rights deal to French pay-TV broadcast giant Canal+, uncertainty still remains for French football. But Schaefer is clear in what he wants.

"The rights need to be stripped off Mediapro, be renegotiated and re-commercialised as soon as possible."