PSG estimated at $ 1 billion: "The club has become an international brand"

Christophe Lepetit, head of economic studies at the Center for Law and Economics of Sport in Limoges (CDES), deciphers the spectacular progress of the Parisian club - 992% in ten years! - and now estimated at over a billion dollars. In a ranking established by Forbes, PSG comes 2nd behind the Golden State Warriors. Only two football clubs appear in the top 10 trusted by the NBA: PSG and Manchester City.

What exactly does “promotion” of a club or a sports franchise mean?

CHRISTOPHE LEPETIT . We often confuse "valuation" with "income". An extremely well-valued club is not necessarily the richest. In this case, we rely on an accounting method that tries to give a value to an entity. A club is considered to be worth the sum of its assets. For a football club, we take into account its material assets: its stadium, its training center and all real estate, as well as the cumulative amount of players' contracts. For PSG, players' contracts are the first item on the balance sheet. We also take into account the intangible assets: the registered trademark, the logo, the colors. The global brand in the broad sense.

How to explain such a progression of the PSG?

The 900% increase is explained by the fact that the club started from very low. We went from a club that was no longer worth much, with problems of supporters and few players in the portfolio, to an international sports brand, valued at more than a billion dollars. However, starting from a billion, it will be difficult to maintain such growth scores. However, a billion dollars is significant. Even if North American franchises, NFL and NBA, are much more valued, as are, to a lesser extent, clubs like Real or Barça.

The overall promotion of the Club: the real strategy developed by the @PSG_inside teams led by Jean-Claude Blanc. https://t.co/Cu0WTDJXON

How did PSG achieve such results?

In the seven years since the QSI's arrival, the strategy has first been to grow the club sportily. By endowing him with very good players, by making him win titles. We have increased the “players” asset. Then, gradually, it was passed from a good national club to one of the main clubs in Europe and in the world. Through world tours and various partnerships, we have increased the value of the brand, its intangible assets.

How can the PSG entity evolve in the coming years?

At the start, PSG needed funding from its shareholder. Qatar's financial strength helped to prime the pump. Today, we realize that very gradually but very soon, PSG will no longer be dependent on its Qatari sponsors. Thanks to the income from its sports and extra-sports activities, as well as by its promotion, it will become a real international brand. Ultimately, Paris can be valued up to its European competitors, or even beyond, if it manages, for example, to obtain ownership of the Parc des Princes or even to conquer a European title.

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Who should we attribute this success to?

The Qatari shareholder had identified the potential when he arrived. He did not invest in Paris by chance. Behind the sports strategy, what the teams led by Jean-Claude Blanc (executive director) do is in the direction of promotion and a progressive less dependence on Qatari sponsors and shareholders.

At this level of valuation, can't the Qatari shareholder be tempted to sell?

Potentially, Qataris have a club that is worth much more than the amount spent to buy it. But I don't think they are in a sales strategy. They are still in their soft power strategies (Editor's note: change of image of Qatar and diversification of their activities) . These strategies take time. I don't see them leaving in the very short term, unless the Qatari state decides to put these strategies to sleep. For an entrepreneur, it would be tempting to sell, given a valuation close to its peak. Not for a state that doesn't necessarily need money.