Very soon (most likely at the end of April), UEFA will confirm the introduction of several changes to the Champions League, both in terms of format and access to the competition. These reforms (which will take effect from 2024) will largely benefit already prosperous teams in already prosperous leagues, as has happened with most of the changes we’ve seen since the tournament’s inception in 1992.
These changes will be presented with the intention of making us understand that UEFA had no choice but to choose the lesser of two evils. There will be concessions to the big clubs, but that’s a better alternative than seeing them split up to form their own Super League and completely ignore the Champions League. We have already heard similar threats, but this time they seemed credible, as I said last October. With interest rates approaching zero percent, private equity firms full of money and big clubs lacking liquidity thanks to the pandemic, a perfect storm had set in that would form different teams of Real Madrid, Barcelona and Manchester United status. . their own separate competition to divide the profits between them; or, as it appears to have been the case, they would pretend to do that, use their power to get a better deal in their favor.
The effects of the pandemic, the need to create (to use a buzzword among football managers) “innovative formats” and the reminder that club football is a business will all be used to justify the extra dice load to the rich and powerful. to favor. However, this argument cannot be supported. Christian Seifert, executive director of the Bundesliga, recently expressed it better than anyone in his speech at the Business of Football Summit event organized by the British newspaper Financial Times.
“The brutal truth is that some of the so-called ‘super clubs’ are in fact poorly managed money-burning machines that, in a decade of incredible growth, couldn’t get close to a business model of any kind. .
Somehow, despite a decade of steady growth in which European club revenues doubled (with most of those rises flowing to the top), and despite Fair Play financial regulations helping to maintain the low cost (making the system as a whole was profitable in the three campaigns that led to the pandemic), some of the biggest football clubs in the world have become overburdened with costs and are short on money.
And his solution is to make near-permanent changes, which will only help widen the gap between the haves and the have-nots. Details remain scarce and are negotiated at the last minute; However, after consultations between clubs and leagues, everything seems to indicate that the Champions League will include four additional seats, with something called the ‘Swiss model’, which will increase the number of matches played in the group stage from 6 to 10 , which automatically gives the French league one extra place, in addition to a safety net that allows up to two clubs with good European descent (read: UEFA club coefficient ranking) to qualify automatically.
We will have time to analyze the new format (especially the so-called “Swiss model”, which I guarantee will be understood by very few) once it is confirmed. Broadly speaking, however, the idea lies in organizing a greater number of European parties and generating more economic resources, with the aim of helping to limit the damage from the pandemic. I make it clear that I am not against clubs that play more games in Europe, and that also applies to the Europa Conference League, which starts next month.
There are hundreds and hundreds of first division clubs in Europe that never make it to international matches and among those that do, the season ends in September for all but 80 clubs. Why shouldn’t they play? I also don’t necessarily have problems squeezing more money out of the Champions League and Europa League. They are professional clubs. They run a business. Likewise, of the € 3.25 billion ($ 4 billion) generated by these leagues, approximately € 400 million ($ 485 million) is intended to support grassroots football, national federations and other development initiatives.
There is no doubt that we are in the midst of a difficult time for clubs, especially given that COVID-19 preventive measures imply stadiums to be closed longer than expected and the demand for cuts in the payments that television stations make broadcast rights. Last September, the European Club Association predicted that teams would have a financial impact on the order of € 4 billion ($ 4.85 billion) for the next two seasons. In January, ECA President Andrea Agnelli put forward these estimates, stating that losses would range from € 6.5 billion ($ 8 billion) to € 8.5 billion ($ 10.3 billion).
And, as is clear, in absolute terms, the biggest clubs, owners of larger stadiums (and thus with higher earnings on match dates) and television rights contracts are the most affected by these losses in absolute terms. More annoying, however, is the de facto hoarding by the big clubs, who not only want a bigger piece of the pie, but also pursue additional insurance in the event of (wow!) Not being able to qualify for the Champions League. , in the form of additional quotas. (Let’s face it: if you’re one of six super clubs playing on circuits other than the Premier League, you’d have to completely screw it up to not qualify.)
All of the above is wrong in two respects. It’s just unethical in the first place. Friends of the big clubs always justify taking a larger share of the income by taking a greater “business risk”; that is, invest more resources to get the best figures and sponsors that motivate fans to pay to see these players. That is why 15% of the revenues generated by the Champions League are divided according to the “market pool”; that is, according to the size of the television market of a club’s national competition. If you play in the Premier League, Serie A or Bundesliga you get a lot of money as these are big TV markets within big economies. If you’re a club from Albania or Denmark … well you don’t get that much.
That is also the reason why an additional 20% of the profit is distributed according to the “ranking of coefficients”. In short, if a team has performed well in Europe over the past decade, it will get more resources than it would get if it underperformed. The claim is that teams with good results in the past have helped build the Champions League brand; consequently, they deserve to reap a greater share of the benefits (it is also, in practice, a way of channeling more money towards the established elite).
Everything is fine. However, the so-called “business risk” is just that: a risk. You risk your skin more in the game; consequently, you will receive more benefits if it goes well. It also means you lose more if something goes wrong. Basic lesson in free market economics. The other aspect is that we are talking about making permanent de facto changes that would only make it more difficult for other clubs to participate in the tournament. In theory, these changes are of course not permanent (UEFA operates in three-year cycles); But in the real world, all the formatting changes introduced since the league started in 1992 have benefited the biggest clubs in the biggest countries.
That means the genie cannot return to the bottle once it is out of the bottle. Nobody wants to see a club go bankrupt. But you know what? That is virtually impossible at the highest level. The payroll can be reduced. Debts are negotiable. Players can be transferred. Rules can be relaxed to help meet obligations. Does that mean you can do all of this and stay competitive? Well, no. This will most likely adversely affect your athletic performance. It may take a while to get back to where you were. But that’s life. That’s how business is. If you spend too much, you pay the price.
In the 10 years leading up to the pandemic, club revenues across Europe nearly doubled, from € 11.7 billion ($ 14.2 billion) to € 21.1 billion ($ 25.6 billion). We are not talking about similar gains to Bitcoin, but they are also not negligible. And thanks to Financial Fair Play regulations, the system as a whole has been profitable for the past three years.
So yes, Seifert has a point. If you are complaining about your poverty at this point (and trying to change the whole system to get out and moreover create more permanent dominance for an already dominant club elite), you should expect to play the smallest fiddle in the world. . UEFA will likely say it had no choice but to give in. The alternative (that the clubs honor their threat and withdraw from the Champions League to set up their own tournament) would have struck a direct dagger at the heart of their leagues and their ability to redistribute economic resources throughout the system.
However, the truth is that UEFA has been steadily giving in over the past twenty years. It is already getting tired. And it is not positive for football.