European Clubs Seek Payment Guarantees from Saudi Buyers

In a summer marked by unprecedented spending in the world of football, European clubs are stepping up their efforts to secure guarantees for the payment of exorbitant transfer fees agreed upon with Saudi Arabian counterparts. The surge in transfers involving Saudi clubs has reshaped the football transfer market, prompting concerns about financial stability and ensuring that hefty sums are paid in full.

Saudi clubs’ expenditures on players in Europe’s top divisions typically fell within 2-3% of sales annually; however, this summer saw expenditures surge dramatically with marquee signings such as Neymar, Ruben Neves, Fabinho, Aleksandar Mitrovic and Riyad Mahrez commanding huge sums; consequently their transfer fees spending has skyrocketed from 2-3% of total annual sales (EUR63 million in 2020) to an astounding 11-1 of total transfer fees paid – amounting to EUR878 Million spent by Saudi clubs this summer!

The emergence of Saudi clubs as major players in the global transfer market has raised legitimate concerns among European clubs about the security of these transactions, particularly regarding payment. These concerns have reportedly been discussed behind closed doors at the European Club Association (ECA) general assembly held in Berlin from Wednesday to Thursday.

European clubs want reassurances that they will have leverage and recourse should Saudi counterparts breach their financial commitments. Article 83 of UEFA’s financial licensing and sustainability regulations stipulates that clubs must have no overdue payables before being given permission to compete, though this rule only applies within Europe; its effect diminishes significantly for deals conducted outside.

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With such vast sums involved, such as Al-Hilal’s EUR93 million transfer of Neymar from Al-Hilal to Paris Saint-Germain for Mitrovic and Al-Ittihad’s EUR47 million sale of Fabinho from Al-Ittihad to Liverpool respectively, selling clubs are understandably keen to protect their financial interests in any sale transaction that involves them – with FIFA even speculated upon as an entity to provide certainty and enforce payments agreements should need be.

ECA general assembly also saw several significant announcements, with one striking development garnering widespread praise: to address concerns regarding solidarity payments, clubs that fall short of qualifying for group stages of European competitions will now receive 7% of projected annual television rights revenue rather than the previous 4%; this increase amounts to approximately EUR4.4 billion gross and will take effect as early as the 2024-25 season; an additional 3% has also been set aside as compensation payments to clubs who do not compete at any European competitions.

The Union of European Clubs, an advocacy group dedicated to serving small and mid-sized clubs, welcomed this announcement as a key step toward rectifying financial disparities within European football.

As European clubs navigate the burgeoning international transfer and financial regulations landscape, ensuring integrity in transactions remains of top priority. All eyes will be watching as discussions and negotiations take place that could shape the future of football’s global transfer market.

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