Very soon (most likely in late April), UEFA will confirm the introduction of several changes to the Champions League, both in its format and in terms of access to the competition. These reforms (which will take effect from 2024), will greatly benefit teams already well-established in already affluent leagues, as has happened in most of the changes we have witnessed since the tournament was created 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. Concessions will be made to the big clubs, but this represents a better alternative than watching them separate to form their own Super League, thus completely ignoring the Champions League. We’ve already heard similar threats, but this time they seemed credible, as I commented last October. With interest rates close to zero percent, private equity firms full of money and big clubs running out of liquidity thanks to the pandemic, a perfect storm had formed in which different teams the size of Real Madrid, Barcelona and Manchester United, or they would form their own competition separately to share the profits between them; or, as seems to have been the case, they would pretend to do just that, harnessing their power to get a better deal in their favor.
The effects of the pandemic, the need to create (using a buzzword among football executives) “innovative formats” and the reminder that club football is a business will be used as a whole to justify the burden of additional dice to favor rich and powerful. However, this argument has no way of being substantiated. Christian Seifert, executive director of the Bundesliga expressed it better than anyone in recent times, during his dissertation 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 and were not able, during a decade of incredible growth, to at least approach a model business in some sustainable way, ”the executive said.
Somehow, despite a decade of steady growth in which European clubs ’revenues doubled (with most of these increases flowing to the top) and even the rules on Fair Play Financing have helped keep the low-cost costs (making sure the system as a whole was profitable in the three pre-pandemic campaigns), some of the biggest clubs in world football have realized that they are overburdened with costs and short of money. .
And their solution is to make virtually permanent changes, which will only help widen the gap between those who have and those who don’t. Details remain scarce and are subject to last-minute negotiations; but, after consultations between clubs and leagues, everything seems to indicate that the Champions League will include four additional contingents, presenting something called “Swiss Model” which will increase from 6 to 10 the number of matches played in the group stage, giving the French league an additional place automatically, apart from having a safety net that will allow up to two clubs with good European lineage (read: ranking of UEFA club coefficients) 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 confirmed. However, broadly speaking, the idea is to stage more European parties and generate more economic resources, with the intention of helping to mitigate the damage caused by the pandemic. I make it clear that I am not against clubs playing more matches in Europe, and that includes the Europa Conference League, which will kick off next month.
There are hundreds and hundreds of first division clubs all over Europe that never get to play matches internationally and, among those who manage to do so, the season ends in September for everyone with the exception of 80 clubs. Why shouldn’t they play? I also don’t necessarily have trouble trying to squeeze more money into the Champions and Europa League. They are professional clubs. They are running a company. Also, of the € 3.25 billion ($ 4 billion) generated by these competitions, approximately € 400 million ($ 485 million) is earmarked to support grassroots football, national federations and other development initiatives.
There is no doubt that we are in the midst of a tough time for clubs, especially considering that the COVID-19 prevention measures imply that stadiums must remain closed for a longer period of time. anticipation and the requirement for reductions in payments made by televisions for broadcasting rights. Last September, the Association of European Clubs projected that the teams would take on a financial impact in the order of € 4 billion ($ 4.85 billion) over the next two seasons. In January, ECA President Andrea Agnelli raised these estimates, stating that losses would range from € 6.5 billion ($ 8 billion) to € 8.5 billion ($ 103 billion).
And, of course, the larger clubs, owners of larger stadiums (and therefore higher-income on match dates) and television rights contracts have been, in absolute terms, the hardest hit by these losses. . However, the most annoying thing is the de facto hoarding by the big clubs, who not only want a bigger piece of the cake, but also aspire to additional insurance in case (go!) Not being able to qualify in the Champions League, in the form of additional quota. (Let’s face it: if you’re part of the half-dozen super clubs that play on different Premier League circuits, you’d have to put your foot down to the bottom to not qualify).
All of the above is wrong in two ways. First and foremost, it is simply unethical. Friends of big clubs always justify making a larger portion of their income by the fact that they take on a greater “business risk”; that is, investing more resources to get hold of the biggest figures and sponsors, which motivate fans to pay to see these players. This is why 15% of the revenue generated by the Champions League is distributed based on the “market pool”; that is, according to the size of a club’s national league television market. If you play in the Premier League, Serie A or Bundesliga, you get a lot of money, because these are big TV markets within big economies. If you are a club from Albania or Denmark … then you don’t get that much.
This is also the reason why another 20% of the profits are distributed according to the “ranking of coefficients”. In short: if a team performed well in Europe over the last decade, it receives more resources than it would have won if its performance had not been so good. The allegation is that teams with good results in the past have helped build the Champions League brand; consequently, they deserve to reap a larger share of the profits (It is also, in practice, a way to channel more money towards the established elite).
All right. However, the so-called “business risk” is just that: a risk. You risk your skin more in the game; consequently, you get more benefits when things go well. It also means you lose more when things go wrong. Basic lesson of free market economics. The other aspect is that we are talking about implementing de facto permanent changes that would only make it even more difficult for other clubs to participate in the tournament. Of course, in theory, these changes are not permanent (UEFA operates in three-year cycles); but in the real world, all the format changes introduced since the creation of the competition in 1992 have served to benefit the biggest clubs in the biggest nations.
This means that the genius will not be able to return to the bottle once it has come out. No one wants to see a club go bankrupt. But do they know what? This is virtually impossible at the highest level. Payrolls can be reduced. Debts can be renegotiated. Players can be transferred. Rules can be relaxed to help meet obligations. Does that mean you can do all this and stay competitive? Well no. Chances are, if you do, your athletic performance will be impaired. It may take some time to get back to the site where you were. But that’s life. That’s how businesses are. If you spend too much, you pay the price.
In the 10 years leading up to the pandemic, club revenues across Europe almost doubled, from € 117 billion ($ 14.2 billion) to € 21.1 billion ($ 25.6 billion). We’re not talking about profits similar to Bitcoin, but they’re not negligible either. And thanks to Fair Play Financial regulations, the system as a whole has been profitable for the past three years.
So, yes, Seifert is a bit right. If you are currently complaining about your poverty (and trying to change the whole system to try to get out of it and additionally, you create more permanent dominance for an already dominant club elite), you should expect to play the world’s smallest violin . UEFA will probably say it had no choice but to give in. The alternative (for clubs to comply with their threat and withdraw from the Champions League to mount their own tournament) would have nailed a direct stab to the heart of their competitions and their ability to redistribute financial resources throughout the system.
However, the truth is that UEFA has consistently yielded over the last twenty years. I’m tired. And it’s not positive for football.