At the weekend, PSG became the first french team to field an all foreign line-up in a league game (in England this first happened with Chelsea in 1999). Their opponents Lyon fielded 7 french players and were hammered 4-0. This triggered inevitable debates about whether the scenario was a good thing, with 63% of respondents in one survey finding it 'shocking. However it looks like something they are going to have to get used to.

Off the field it has been an interesting week for the club.  A senior delegation from PSG has met with UEFA officials in Switzerland to discuss the controversial Qatar Tourist Authority (QTA) deal. The PSG team, including the owner, the COO and his deputy, argued that the QTA cash should be regarded as legitimate revenue for the FFP Break Even test. 

As I have outlined previously, the QTA deal appears to be artificially inflated and designed specifically to help the club Break Even. The owners of PSG are a company called QSI. QSI is owned by the Qatari government via a Sovereign Wealth Fund.  QTA is a department of the Qatar government. The QTA deal is worth 105m euros in 2011/12 and 200m euros in 2012/13. The deal was  agreed  mid-way through the 2012/13 season and was backdated to a season prior to it being signed!  

PSG's hopes of passing the Break Even test rests entirely on the inflated QTA deal. This, in turn, hinges on whether the deal is classed as a Related Party Transaction (RPT). If it is determined to be an  RPT, then UEFA's CFCB panel will be required to assign a 'fair value' to the deal. If it isn't considered a RPT, then UEFA will not be able to amend the deal; PSG would sail through the FFP test.     

PSG's owners, accountants and auditors are clearly arguing that the deal is not an RPT - they maintain that QSI and the QTA are completely separate entities and in no way 'Related'.  However that isn't the end of the matter.  

Related Party Transactions (RPTs) 

An RPT occurs where an owner, or someone closely connected to the club owner, carries out a transaction with the club. RPT rules are important for FFP as they ensure the owner doesn't artificially inflate a transaction above 'fair value' in the aim of boosting the club's income. However, deciding when someone is a  'Related Party' or not is not always easy and can be subject to interpretation.

When the new Premier League spending constraints rules were introduced (they apply from the current 2013//14 season) a rather straight-forward approach to RPTs was introduced. An RPT is simply 'anything classified as an RPT in the club accounts' - if it isn't deemed to be an RPT by the club accountants and auditors, it isn't captured by the RPT rules.  Although this might first appear to be a rather 'trusting' approach, in reality has the benefits of being both simple and secure. The UK  accountancy and auditing standards are considered to be among the best in the world and the definition and handling of an RPT is contained within the Financial Reporting Standards which forms the accountancy 'rule-book', 

UEFA, however, has chosen a different approach to RPTs. UEFA has a span of 54 countries, big and small, some in the EU and some not.  Although EU countries would be required to comply with International Accounting Standards(IAS), non EU countries could use different standards.  UEFA therefore wrote detailed RPT rules into the FFP.  These rules (as was pointed out to me recently) appear to be almost identical to the IAS requirements.  The rationale for standardisation seems, at least in part, driven by a concern that not all countries could be relied upon to have the same exacting standards. Interestingly, the ECA Vice President Umberto Gandini gave an interview where he indicated his belief that Russian auditing standards might not up to the job and were potentially very lenient. 

Compliance with the FFP rules will judged by the independent CFCB panel (technically not part of UEFA). Crucially, the CFCB are able to decide that an item that was not originally classified as an RPT by the club and its auditors, is actually an RPT and requires an adjustment.  

One might think 'rules are rules' and if both parties are working to the same rulebook the outcome will always the same. However, the definitions and meaning of concepts such as 'Influence' are always going to be open to interpretation.   

For example, UEFA's FFP rules explain that a Related Party would exist where: 

3 a The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others); 

b)  One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);  

Given what we know about the relationship between PSG, their owners and QTA, it seems perfectly possible that (despite what PSG's accountants say) the CFCB would determine that there is some kind of related 'association' between the different bodies. 

Of course this could all get contentious (and litigious). Interestingly, the CFCB was established as an independent body for this very purpose - UEFA itself is much less exposed to legal action if the rules and punishments are determined by separate and and independent body. 

The benefits of forming such an independent body has precedents in the Premier League. In the famous the Tevez case, an independent panel set up by the FA decided that West Ham would be fined for failing to disclose a third party ownership contract - no points were deducted. An appeal was lodged and this second panel essentially determined that although they would have imposed a more severe punishment, due process had been followed by the first independent panel and the decision wasn't so 'perverse' that it had to be overruled.  The FA were protected from any legal action by the use of the independent panel. 

The point here is that the CFCB are able to make their own interpretation of what makes an RPT, and that might be different to one the club's auditors have come up with (as long as they don't decide something 'perverse). This week's meeting seems may turn out to be just first part of the long and winding RPT journey.