European Super League – the drama continues
The announcement of the European Super League (https://thesuperleague.com/index.html) on 18th April, 2021 took the world by storm. Huge uproar, sense of betrayal, tremendous surprise were the phrases that were relevant in the last few days. Now, as the Super League has been put on “pause” on 20th April, 2021 (just after two days of the announcement), it’s time to look behind the apparent adrenalin and try to understand the context of the same. This post focuses on the real reasons behind the formation of the Super League and the dynamics associated with it.
Remember the name of Charlie Stillitano and the year 2015
Charlie Stillitano is a famous person in the United States as he has been the person to secure multi-million dollar deals on football in that part of the world. He was involved in the Major League Soccer tournament from inception in US as a general manager of a team. However, his claim to fame was when he brought in mega stars and clubs into US to play games that yielded contracts of millions of dollars. Currently, he is the chairman of Relevent Sports Group, which pioneered in building a succesfull footbal tournament featuring top football clubs in Europe – basically turning the pre-season tours into something exciting & competitive.
In Dec 2015, he came out with a proposal to the Real Madrid club executives of building an exclusive European tournament featuring top clubs of Europe.
Charlie calculated that each of the top clubs could achieve annual revenues of €500m+
By context, real madrid received around €80m from uefa when they became the 2016 champions league winner
The key point to note was that all this triggered discussions between the top clubs without UEFA knowing details around the same. The discontent of the top clubs with UEFA was always there, but now that was backed up by pretty attractive numbers coming from a professional, who has proven it’s worth in the United States.
A series of actions rolled out secretly
The above value proposition invoked a lot of actions from the clubs – all secretly:
A task force was then created in Jan’2016 involving Real, Bayern Munich, Juventus, FC Barcelona, Manchester United, Arsenal FC and AC Milan & worked upon to develop an option for leaving the national leagues and their football associations behind entirely
An email was sent by Michael Gerlinger of Bayern Munich on 3rd Feb 2016 to the international law firm Cleary Gottlieb to examine whether FC Bayern Munich could withdraw from the German league, the Bundesliga, and whether the team would have to allow its players to play for the national team in the future. Search for the answers to the below queries started to happen:
Could the Super League clubs be held liable for any loss of revenue at UEFA?
Would the clubs still be required to allow their players to play for national teams after leaving UEFA?
Could the associations or leagues penalize players for participating in the Super League?
Could players have their contracts annulled if their club switched to a private Super League?
On 1st March 2016, the British tabloid The Sun exposed on a secret meeting held in London with the headlines of “Top secret European Super League summit revealed: Man U, Arsenal, Chelsea, Liverpool and Man City chiefs in talks to LEAVE Champions League”
A meeting of the Big 7 involving Real Madrid, Bayern Munich, Juventus, FC Barcelona, Manchester United, Arsenal FC and AC Milan happened in Zurich on 31st March 2016 under secrecy
In the meanwhile, the European Club Association (ECA, who represented the interests of 220 clubs in Europe) was kept in the dark for most of the activities carried out behind the scenes during this period.
In one of the meetings Raúl Sanllehí of Arsenal explained that UEFA was thinking about introducing a third competition above the Champions League, adding that it would act “as a revenue driver.” Rummenigge of Bayern Munich added that “the big clubs have some ideas on the format.” However, not a word was said about a possible withdrawal from the national leagues, and there was no indication that some of the top clubs had already worked out concrete concepts for a private league.
All the above came into light when an article was published in Der Spiegel in November 2018
“Clash” with UEFA
Amidst the constant friction with UEFA on the revenue sharing with the top clubs of Europe, in May’ 2016, with one of the meetings with UEFA, for the first time the Big-7 clubs came up with a direct conflict and tried to setup certain terms and conditions to be met by UEFA if the latter wants these top revenue-generating clubs to stay in UEFA Champions League (UCL):
The UCL league would only include 24 teams in the future;
Clubs that had been extremely successful in the past should be rewarded with additional spots in the tournament;
Some European competition matches should be held on weekends and more matches must be scheduled for time slots convenient for broadcast in more TV markets worldwide;
The clubs had to be given the power to organize and control the competition together with UEFA
Out of the above points, the last point was very significant as the top clubs now wants direct control (to start with partial control) on the running of the UCL. The response of UEFA on the meeting points was quite strong and tried their best to push back against the dominance of the top clubs. This included a certain sarcastic line of “We would be grateful if you could inform us about the group of clubs that you represent”.
In August 2016, Karl-Heinz Rummenigge, the then chairman of the European Club Association (ECA)In Aug 2016, Rummenigge said that “the big clubs received big offers to create a super league and that UEFA then called for a meeting with representatives of some of these big clubs a couple of weeks ago with a proposal to keep European club football united.”
The message was clear: Unless the big clubs got more money and power from UEFA, they would start their own league.
Reforms of the UEFA Champions League
Starting in 2017, UEFA had promised to work on a serious reform of European football, which would then be implemented with the new rights period, starting in 2021, which got delayed to 2024
The solution found with UEFA will be beneficial primarily to the top clubs due to the new regulations.
The tradition clause alone, which allots greater revenues to those clubs that have found success in the last 10 years in the Champions League and Europa League, will generate over 30 million euros for FC Bayern starting with the 2018/19 Champions League season – money that is guaranteed even before the club had even played its first game.
The reform will increase the monetary prize owed to the winner of each Champions League match, which also only benefits the top teams.
The top clubs got something else as well. Their representatives will occupy four of the director slots in a joint company with UEFA. Over the course of the next three years, they will be able to examine all of UEFA’s balance sheets, sponsorship deals and broadcast-rights agreements along with the administrative, organizational and operational costs of UEFA competitions.
Contention point of revenue distribution – capitalism vs socialism
Today, UEFA distributes a majority of their revenues to the European footballing pyramid:
Based on the latest number shared by UEFA for the 2019/2020 season, the below numbers have been mentioned:
Gross commercial revenue from the 2019/20 UEFA Champions League, the 2019/20 UEFA Europa League and the 2019 UEFA Super Cup is estimated at around €3.25bn.
The total amount available for distribution to participating clubs in 2019/20 is €2.55bn, of which €2.04bn will be distributed to clubs competing in the UEFA Champions League and the UEFA Super Cup, and €510m will be distributed to clubs participating in the UEFA Europa League.
6% of the revenue (ie €295m) is spent on management / administration overheads
Rest is given back to the footballing pyramid
7% (€227.5m) for solidarity payments
6.5% reserved for European football and remain with UEFA
Rest to the various clubs playing in Europe
Around 93.5% of the total revenue generated by UEFA goes back to the football pyramid of Europe. However, the big clubs complained on how little they get as compared to their investments
The financial condition of the big clubs as on beginning of 2021
One of the main reasons behind the idea of floating of an independent European Super League is the financial conditions of the top clubs. While the Covid year of 2020 is majorly blamed for the current situation, the story from many focuses on mis-management of the clubs in prior years as well – poor choice of players bought with huge transfer fees, etc.
The basic view of the European Super League (ESL) are hinged on the following narrative so far:
Clubs across the world are reeling under tremendous financial pressure
While Covid is to be blamed partially for this, ESL’s view is UEFA’s revenue sharing model does not favour the big clubs, even when they claim that maximum revenue comes out because the big clubs are playing the UEFA Champions League. ESL say’s that with ESL, money to the big clubs will increase multi-fold and if big clubs earn more money, that money will percolate down the pyramid of European football
One of the things that is not in the ‘official’ statements of ESL representative, but shared by many of the supporters of ESL is of corruption that is present within UEFA / FIFA which potentially ‘robs’ off actual money to be flowing across the football value chain in Europe
The below pictures from two different views shows the situation with the big clubs
What are the financial incentives behind the Super League?
One of the major reasons behind the concept of an European Super League is the money involved and the share of the same given to the “founding member” clubs:
These solidarity payments will be substantially higher than those generated by the current European competition and are expected to be in excess of €10 billion (£8.7bn) during the course of the initial commitment period of the Clubs.
In addition, the competition will be built on a sustainable financial foundation with all Founding Clubs signing up to a spending framework. In exchange for their commitment, Founding Clubs will receive an amount of €3.5 billion (£3bn) solely to support their infrastructure investment plans and to offset the impact of the COVID pandemic.
JP Morgan will be financing the Super League and have committed around $5billion for this league
ESL organisers have held ‘early discussions’ with broadcasters about the competition with annual revenues worth €4Bn per year, roughly double the amount earned by #UCL at present.
It’s being reported by the New York Times that the teams involved could earn up to $400 million-a-year from the competition.
It has been reported by the New York Times that the teams involved in the Super League could earn up to $400 million-a-year from the competition
Conclusion – this is definitely not the end
The entire footballing structure got disturbed and rocked on it’s foundation when a “rebel” league had been formally announced on 18th April 2021. This league will potentially change the dynamics of the game, the way Kerry Packer series did for cricket way back in late 1970’s. Termed as the “European Super League”, this challenges the fundamental authority of UEFA (and potentially FIFA) in terms of football administration & it’s associated commercial model.
This conflict between UEFA and the clubs have been going for 6+ years – but instead of catching the bull by it’s horn and coming to a conclusive plan much earlier in the scheme of things, UEFA probably did not act decisively and was on a delaying tactic. Now, this has come to a crescendo when the bomb burst on 18th Apr 2021 with the “formal announcement” of the league by the ‘rebel’ group.
Whether this will go through or not will depend on:
the willingness of the players playing there at the risk of getting “banned” elsewhere and more importantly
how the fans of the participating teams “support” this breakaway tournament
Six English clubs withdraw
The European Super League won't have any Premier League sides in the proposed competition.
This is everything that happened on Tuesday…#bbcfootball— BBC Sport (@BBCSport) April 20, 2021
#SuperLeague official statement
"We are reconsidering the appropriate steps, in order to reshape the project”.
“We're proposing a new competition, because current one isn't working. English clubs have been forced to leave, due to outside pressure”.
It’s gonna be suspended. pic.twitter.com/2GWXSVhTr4— Fabrizio Romano (@FabrizioRomano) April 20, 2021
With a tremendous backlash from the fans, ex-players, current players, managers, many of the teams named as the “founder members” are climbing down their initial stand.
For now, the Super League has come to a “pause”, but I am sure the brains behind this are considering the current events as a temporary setback & will come back in the future,
perhaps in a separate shape and form