European 'Super League' is a dream but it will be a real fight for 'new' UEFA
You may have seen the story this morning. On Tuesday, Manchester United executive vice chairman Ed Woodward, Chelsea chairman Bruce Buck, Arsenal chief executive Ivan Gazidis, Manchester City chief executive Ferran Soriano and Liverpool CEO Ian Ayre met at London's Dorchester Hotel for a "secret" meeting with representatives of Relevent Sports, the company that runs the International Champions Cup (ICC), the preseason, invitation-only tournament held in the United States, Australia and China.
There are photographs showing the above-mentioned Premier League bigwigs leaving the meeting. (Contrary to early reports, multiple sources say Stephen Ross, the American billionaire who created the ICC, was not present.)
Reportedly, they were exploring the possibility of creating a European Super League that would effectively replace the Champions League. The biggest clubs -- and, by biggest, we mean size of fan base, catchment area and revenue-generating ability -- would automatically qualify and revenue would remain "in the family" rather than shared with the likes of Astana, Gent and other little guys.
Most of the clubs present were quick to deny that they met to discuss this, all the while professing their enduring love for UEFA and the Champions League. They say the discussion was almost exclusively about the ICC. There's no doubt that's true, though if you want to be mischievous, you'd wonder why Daniel Levy and Tottenham -- confirmed participants of this summer's ICC and based just up the road from the Dorchester -- were not at the meeting.
My understanding is that the official line is mostly correct: this wasn't an underground cabal looking to turn the Champions League into some franchise-based cash cow. Not yet, anyway. And it wasn't exactly the "secret" meeting with seditious intent that the British media described, either. If you're going to meet in secret, you're not going to do it in one of London's iconic hotels, a place regularly stocked with visiting celebrities to the point that paparazzi are permanently stationed outside. And, after you finish your "secret" meeting, you're probably not all going to walk out the main entrance together, chatting away happily.
Still, the story brought to mind the elephant in the room: the fact that from a purely business perspective, a breakaway European Super League would have plenty appeal to certain clubs.
The tale was last in vogue some 20 years ago, when a company called Media Partners pushed the idea of some kind of NBA-style competition for the continent's biggest clubs. There were several versions of it, the most extreme idea being that teams would cut their national competitions loose and simply play one another in a league format. A more muted version would have seen teams continue to play domestically -- maybe with a B-side -- but the new-look competition would have been the centerpiece.
Of course, the landscape of football was different back then. UEFA had just begun central marketing of the Champions League and transformed it from the old "European Cup" model, but the tournament was not the cash cow it is today. In fact, the transformation of the Champions League into a commercial juggernaut and the expansion of place for teams from the top leagues were factors that helped stave off the breakaway.
But is it a more viable proposition today? Three factors point decisively to yes.
First, revenue at most major clubs has grown by more than 800 percent in the past two decades and therefore income disparity with the rest of the field. Back in the old days, the difference in revenue between clubs used to be primarily down to attendances: if you had the bigger stadium and could fill it, you made more money. Then TV became a factor, especially in Spain or Italy -- less so in England because of the fairly egalitarian way in which Premier League TV money is distributed.
But now, commercial/sponsorship income is where the real difference is. It's why Manchester United can finish fourth and seventh but barely take a hit. And it's why, say, Arsenal probably have a lot more in common in terms of business model with Barcelona than they do with West Ham, just a few miles away.
Central marketing of a league makes it stronger than the sum of its parts. (The Premier League is the ultimate example). And if you can package a whole bunch of brand names together, then the cumulative effect is that much greater.
Second, owners always want more. Back in the 1990s, the biggest clubs either broke even or lost money. Owners saw them as a vehicle for prestige or popularity in the same way a wealthy businessman might give money to a museum or a university; it was a way of winning friends and influence. Today, they want to make a profit. A guy named Farhad Moshiri just bought a 49.9 percent stake in Everton and yet he is reportedly a Manchester United fan who considered buying Liverpool 12 years ago and is bankrolling his purchase by selling his shares in Arsenal.
This is the new brand of owner: A guy who wants to own a well-run, profitable business.
UEFA's Financial Fair Play rules -- and the domestic versions thereof that exist or are being introduced throughout Europe -- make profitability attainable. Indeed, for the second straight year, revenues grew faster than wages according to UEFA's club benchmarking report. For the first time, this has brought in real investors for whom growth and profitability are more important than some of the values of the past. That, in turn, has driven up the value of clubs. It's basic supply and demand -- there are many more investors chasing a finite number of top teams.
As a general rule, folks will invest in something if they think it will be worth more in the future. Football has enjoyed a pretty vertical rise during the past twenty years, but some of that was fueled by factors that may not be around forever. Take the Premier League domestic TV contract, which increased 70 percent in each of the past two cycles. Some of that is down to an arms race of sorts between two huge broadcasters, and not organic growth based on a continually expanding fan base in the UK or untapped revenue streams.
And so you look for bigger, better and more profitable endeavours.
Bayern's Karl-Heinz Rummenigge and Juventus' Andrea Agnelli, both of whom are big hitters at the European Clubs Association (ECA), which is rather skewed toward the European elite), said as much in January when they pointed out how much more profitable the NFL is than the Champions League. "You can't rule out that in the future we could create a European league with the major clubs from Italy, Germany, England, Spain and France, under the auspices of UEFA or a private investigation," said Rummenigge, the ECA president.
The third factor is UEFA itself. Now there is a very obvious power vacuum at the top. Michel Platini, the president, has been banned for six years over the "disloyal payment" he received from FIFA and, while he fights the ban in the Court of Arbitration for Sport, he's holed up in a hotel in Nyon, Switzerland, barred from doing business. Gianni Infantino, the General Secretary, was elected FIFA president last Friday, so he's gone, too. Until UEFA get new leadership, there is no counterweight to keep the big European clubs in check -- in fact, that's one of the things they've done exceptionally well during the past decade: They made sure the big clubs in the big leagues are taken care of.
Nowhere is this more obvious than in the distribution of Champions League revenue. Sixty percent of revenue is allocated as prize money, which already favors the bigger leagues since they have more participants. The remaining 40 percent is distributed based on something called the "market pool," which essentially means clubs get paid based on the size of their domestic Champions League contract and the number of participants from each league -- obviously, this favors the big leagues from bigger, wealthier nations.
For the 2015-18 cycle, the "market pool" was actually reduced from 45 percent to 40 percent though the total revenue increased significantly, which meant that everyone got substantially more. It's not hard to see why stuff like this doesn't sit well with Europe's elite: they would argue that they generate much of the revenue and therefore should get a bigger slice. In fact, lost amid the denials of what was discussed was this line from an Arsenal spokesperson, who said that talks centered around the "ICC and formats of European competitions that would complement the existing Premier League." Note -- existing Premier League, not existing Champions League.
A bit of sabre-rattling and muscle-flexing sends a clear message to UEFA and whoever replaces Platini: The big clubs want to be taken care of and if they're not, they'll consider leaving to do their own thing.
It's happened before in basketball. In 2000, a number of Europe's top basketball clubs broke away from FIBA, the game's governing body, and formed their own competition, the Euroleague. For one season in 2000-01, there were actually two separate European champions (Maccabi Elite for the 2000-01 FIBA SuproLeague and Kinder Bologna for the Euroleague) before sanity (sort of) prevailed. FIBA now runs the international games, while the clubs themselves run the Euroleague.
Clubs participate if they get a "license" and these "licenses" are based on results, attendances and, yes, revenue. These are adjusted periodically (teams can lose them and gain them) but the goal is obvious: to ensure the same teams participate year on year and stay strong.
Could football be headed down the same path? As I see it, it's not unlikely. And, certainly more likely than a full-on breakaway that would present all sorts of legal and logistical hurdles. (Ethical ones, too, though sadly, fewer people seem to care about those.) But the notion of revamping the Champions League to help out the traditional big clubs even further has been around for a long time.
One suggestion an ECA official told me involved a sort of promotion/relegation system. You'd have, say, 16 national champions plus 16 other clubs. At the end of the season, the bottom four of the latter would drop down to the Europa League and four clubs would move up from there. Another proposal would allow clubs who have been in the Champions League for, say, seven of the past 10 seasons, to get a "wild card" entry every five years.
Obviously, what this would do is offset the knock-on effects (and lost revenue) of a bad season; given that three of the five clubs at Tuesday's meeting are currently outside the Champions League places, it would no doubt have its appeal at least to them.
That, more than a rebel Superleague, is the real battle ahead for the new UEFA top brass. If it's someone too aligned with the big clubs in the big leagues, we'll be heading in that direction anyway. If it's not, and we get a new president who looks to turn the tide of (recent) football history, which has seen the rich get richer, we could have a fight on our hands.
Gabriele Marcotti is a Senior Writer for ESPN FC. Follow him on Twitter @Marcotti.