PSV is back. Back to start

Marcel Brands, general manager of PSV, has a strong opinion about the financial strategy of a football club. “The capital must be on the field,” he says in April 2018 Football International, then in his role as technical director. With players such as Hirving Lozano, Steven Bergwijn and Gastón Pereiro, PSV became champion just before after a convincing 3-0 victory over Ajax. “It is fantastic that Ajax has so much money in the bank, but I think it is more important to become champion,” Brands sneered at the much richer rival from Amsterdam.

Now, just under five years later, Marcel Brands has sold a large part of PSV’s capital halfway through the season. On Sunday, the number three in the Eredivisie will play against leader Feyenoord in De Kuip. Without Cody Gakpo, who went to Liverpool for 50 million euros. Noni Madueke is also not there, he now plays at Chelsea – his transfer fee is estimated at 38 million. As replacements, PSV, a team “under construction” according to trainer Ruud van Nistelrooij, hired the Portuguese center striker Fábio Silva (20) and the Belgian striker Thorgan Hazard (29). Defender Patrick van Aanholt (32), substitute at Galatasaray, also came to Eindhoven for a few months.

It is the transfer policy of a club that chooses to cash in, even if the result is that the chance of the title – and therefore participation in the Champions League – is significantly reduced. Exactly the strategy that Brands condemned earlier. But the club management, including the general manager, believes that PSV no longer has a choice. Too often investments have turned out wrong, sportingly and financially.

How did PSV, a club supported by large multinationals from the region such as ASML, VDL and Philips, end up in this approached position? And what are the prospects?

Brands’ advice – put the capital on the field – is almost immediately taken to heart in Amsterdam. While moving to Everton in 2018 to become a director, Ajax is using the financial buffers it has built up to invest aggressively. Player salaries – the best predictor of sporting results – go up to 60.5 million euros in one fell swoop, more than doubling. In comparison: PSV worked that season with a salary budget of around 20 million euros.

John de Jong, who takes over the role of Brands, succeeds in retaining popular players such as Hirving Lozano, Luuk de Jong and Steven Bergwijn. “Sometimes the best transfer is a player who stays,” says general manager Toon Gerbrands after PSV qualified for the group stage of the Champions League at the expense of Bate Borisov. PSV generates a minimum of about 35 million euros. The ‘system PSV’, as Gerbrands calls it, functions excellently.

Nevertheless, directors and supervisory directors are already starting to worry at that point. No one can then suspect that Ajax’s investments will lead directly to the national title and the semi-finals of the Champions League. But in Eindhoven they also know that PSV can occasionally compete with a club that puts twice as much money into the selection. So the question is: how can PSV, which has a structurally lower turnover than Ajax (60 to 90 million at that time), narrow the gap?

PSV, which has influential businessmen on its supervisory board with Jumbo director Ton van Veen and billionaire Robert van der Wallen, is successfully appealing to the local business community. The club will play with ‘Brainport Eindhoven’ on its chest, as a joint billboard for Philips, ASML, Jumbo, VDL and the High Tech Campus. The sponsorship agreement generates extra millions for PSV. In addition, the club will take out another 30 million euros in loans from these ‘partners’ under favorable conditions – repayment is only required after ten years.

Sail closer to the wind

The support from the business community gives PSV room for part two of the plan. PSV cannot invest as aggressively as Ajax, but it wants to sail a bit more financially. In this way, the club must qualify for the Champions League once every two to three years, so that players become worth more, transfer income rises and Ajax does not get too far away.

So PSV more often gets players from the higher segment. Attacker Armindo Bruma and defender Timo Baumgartl together will earn around 25 million euros in 2019 – with a few exceptions after a trend break with investments in the previous ten years. The rewards are also going up. In five years’ time, the salary budget will double to around 40 million euros, as will the depreciation on transfer fees – from 15 to 30 million.

Only: the strategy doesn’t work. Four years in a row, PSV does not reach the group stage of the Champions League, sometimes by a hair, as a result of which the club misses out on tens of millions in income. ‘Expensive’ players like Bruma and Baumgartl disappoint – and cannot be resold for handsome amounts. Officially ‘budgeted’ PSV participation in the Europa League. But the reality is that PSV has to earn about 40 million euros annually on the transfer market to avoid losses, something that usually succeeds due to the lucrative sale of mainly self-trained players such as Steven Bergwijn.

If PSV goes into the red for 23 million euros in the 2020-2021 corona season and is then eliminated again in the preliminary round of the Champions League, the supervisory board has seen enough. She demands from the management a “non-binding plan” for the recovery of equity, which has fallen to a meager 17 million euros due to the loss. In football language, that assignment means: selling players and lowering the salary budget. So take care.

‘We want to get over Ajax’

But anyone who overlooks the sentence in the annual report will not get the impression that PSV is going to cut back. On the contrary. “We expect to strengthen our competitive position nationally and internationally through this choice,” said Gerbrands in March last year, at the presentation of a new partner fund: five parties will once again provide a loan of thirty million euros. Not much later he leaves early to make way for Marcel Brands.

“We do not want to make the gap with Ajax smaller, no. We want to get over it,” says technical director De Jong in July. He means sportingly, not financially, but the remark irritates the commissioners. Why does he raise such high expectations, they wonder, while he knows that PSV has to sell.

It will turn out to be the prelude to the breach of trust between the supervisory board and De Jong at the end of August. Some of the supervisory directors, Ton van Veen in the lead, have been dissatisfied for some time with what De Jong is achieving with the extra budgets on the transfer market. Now they think he does too little to arouse interest in PSV’s most valuable players. If Leeds United makes an offer of 30 million euros for Gakpo in the last week of the transfer period, PSV will reject it. De Jong thinks the attacker can be sold for more later, although he realizes that delay is a risk. Moreover, Gakpo is crucial for title chances. He stays and gets a big salary increase. For the supervisory board, the failed transfer is proof that the austerity operation at De Jong is not in good hands.

This winter, Brands did what the Supervisory Board had already wanted to see in the summer. In addition to Gakpo and Madueke, he has also rented out bench seats Philipp Max and Yorbe Vertessen. It’s why Brands had something to explain this week to the rank and file and some media selected by the club – NRC was not welcome. “It is clear that the gap between revenues and costs has become too large,” he said in VI.

The financial reserves have been (somewhat) replenished, but the selection has been stripped down considerably. PSV has another valuable player in Ibrahim Sangaré, in addition to star Xavi Simons. But Simons has a clause in his contract that stipulates that he can return to his previous club, Paris Saint-Germain, for just over 10 million euros next summer. PSV wants to convince him to stay. But if he succeeds, the club will have to reward him well for it.