I truly wish the European Super League clubs held their positions against UEFA a little while longer. It was fun to think about: real-life FIFA matchups, a league with the Avengers of Football. Though I am glad it failed, I think we missed a golden opportunity to help football recover from COVID and evolve with the times. If Plan A was the Super League, then Plan B should have been a dramatic improvement of the current European football landscape.
This post will cover the following:
- The Unraveling: an account of the Super League announcement week
2. COVID & the Financials: quick case study of FC Barca during COVID
3. TV & the Eyeballs: discussion of modern viewership patterns
4. The Alternate Reality: problem-solving time
1. The Unraveling
The announcement shocked the football world. Florentino Perez (Real Madrid) and Andrea Agnelli (Juventus) resigned their UEFA posts, just before the governing body confirmed its revised Champions League format, and proclaimed the birth of the “European Super League” to the world along with 12 clubs that represent a significant percentage of global football fans, as well as an estimated 4 billion dollar commitment from JP Morgan.
See below for a brief timeline that spans the 1 day 22 hours and 4 minutes the league was viable. A more detailed timeline can be found here, and broader explanation of the Super League here.
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║ Time(PST) ║ Organization ║ Tweet ║
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║ 4/18 15:21║ Liverpool ║ Announcement ║
║ 4/18 16:17║ Super League ║ Announcement ║
║ 4/20 10:54║ Chelsea ║ Withdrawal ║
║ 4/20 13:25║ Man City ║ Withdrawal ║
╚═══════════╩════════════════════╩═══════════════╝The league and its members faced harsh criticism from the media, fans, commentators, legends, everyone. Fans took to the streets (and internet) to protest the capitalist and elitist forces threatening football as we know it. “Football belongs to the fans” was the message to the greedy owners and executives trying to capture more wealth in the football pyramid for themselves. The protests escalated quickly, with fans blocking the entrances and preventing matches from proceeding. This video of famous Chelsea goalkeeper Petr Cech attempting to calm fans paints the scene:
Public pressure was mounting, including a quote from PM Boris Johnson, and the English clubs were under immense pressure to pull out. Man City, who not too long ago were entangled in their own fierce legal battle against UEFA regarding Financial Fair Play allegations, had their withdrawal acknowledged first, Chelsea’s paperwork arrived shortly after, then all the non-founding English and Italian clubs fell like dominos. And just like that the league was dead since PSG, Bayern, and Dortmund had already declined. Only Real Madrid, Juventus, and Barcelona left.
I was terribly frustrated to find out that Chelsea and Man City, probably my two most disliked clubs, caved first. As we say in retail trading they had “paper hands”, they broke the line, they panic sold, and caused others to jump ship with them. Had they held out a bit longer, perhaps UEFA would be have been forced address the very real issues that motivated the ESL in the first place. Had the clubs explained their reasoning to the public, they may have been able to rally supporters and bring UEFA to the table to negotiate specific topics or issues. Instead we got a slew of withdrawals, resignations, and jokes.
The 12 clubs could have banded together for a few more days and weathered UEFA’s false threats to ban players from other competitions — the players had nothing to do with it! Imagine the UEFA-organized EURO 2020 without Ronaldo, De Bruyne, Pogba, so many top players; how would UEFA justify the ban to broadcasters, sponsors, and most importantly, the fans who they claim to represent? Calling this bluff would have showed the football world the balance of power. Clubs pay, support, and yes, employ these players, without whom there is no competition of any sort. Despite the venomous threats from April, the 3 current Super League members are set to participate in next seasons Champions League. Real Madrid, Barcelona, Juventus: how can they not?
2. COVID & The Financials
These Spanish giants pioneered the initiative and illustrate the depth of the current financial issues. FC Barcelona have the largest football stadium in Europe with nearly 100,000 capacity. When COVID struck, the loss of match day revenue was obviously financially disastrous, proportional to the size of the stadium. But the burden extends beyond fan attendance. Remember this?
This was supposed to be a two-legged quarter final match. Due to COVID restrictions and revised scheduling, the home/away format was scrapped for a single knockout match. Barcelona, and the other quarterfinalists, lost any potential revenue from the cancelled match. And the one match they did play, in a neutral location with no fan attendance or Camp Nou spectacle, was a very different competition than anyone expected at the start of 2020.
From Deloitte Football Money League 2021 report:
Broadcast and commercial partners […] sought rebates on rights fees for the changes to the delivery of the on-pitch product.
I’m not sure why any broadcaster would request a rebate on this thriller. But Barca’s stadium sponsors would not have been displayed in this neutral location, and perhaps certain other sponsors were not displayed due to social distancing protocols. In any case, the rest of the fixtures in the rescheduled Champions League proceeded behind closed doors and in neutral locations. All the broadcaster and sponsor deals had to be renegotiated as the pandemic twisted and turned. The grief doesn’t stop there:
A proportion of sponsors defaulted on contracts through financial difficulties, often induced by the impact of COVID-19 on their own industry, whilst others pursued rebates from clubs
As of 1/25/21, Barcelona are $1.5B in debt, and COVID is not going away fast enough for fans to start filing back into the stadium. They still owe for Coutinho, De Jong and Arthur, but the transfer market only accounts for a portion of the debt. Though it varies by country, most matches in the Big 5 leagues (England, Spain, Italy, Germany, France) were far from 100% fan capacity ending the 2020/1 season, so this in itself does not explain why Barcelona is so much worse off than other comparable clubs such as Bayern Munich and Man Utd. The reason is what the Super League hoped to capture…TV revenue!
Consider this: Barcelona and Real Madrid are the 4th and 5th most valuable sports franchises in the world. In football they have the highest value, fans, and stadium capacity. But in 2018/2019, they earned roughly the same as Everton, Wolves, Leicester in domestic league TV revenue. Athletico Madrid, the 3rd Spanish team in ESL, didn’t even crack the top 20.
Source is an interesting Twitter thread from SwissRamble, a reputed football business blogger.
How can this be? The Premier League has a sweetheart deal, the most lucrative of all football leagues. On 5/13/21 they announced a 3-year renewal (until 2025) of its $7 billion live and non-live domestic broadcast partnerships with Sky, BT, Amazon and BBC. La Liga TV rights, however, are valued at far less: in the USA, ESPN recently snagged the TV rights for 8 years (until 2029) for $1.4 billion. Adjusted for duration this is annually $2.3B for European Premier League rights vs. $0.175B for American La Liga rights, a 13x difference. And this is distributed among 20 domestic clubs.
Despite drawing massive viewership primarily due to superstar players like Messi, the La Liga giants generate less TV revenue from domestic competitions than one may guess. Barca and the Madrids would have a hard time squeezing more money out their domestic broadcasting deals, which ultimately are worth what the highest bidder in each region is willing to pay. The Champions League, however, is different in that qualification itself secures significant finances for the following season. Participation is worth €15M and guarantees at least 3 group stage games worth of TV, performance bonus, sponsors, and matchday revenue.
Champions League revenue calculations are more complex as they revolve around several factors: participation, prize money, the recently established “UEFA coefficient”, and TV pool. Though the English TV rights are the highest in Europe, the UEFA coefficient rewards historically successful clubs rather than those with larger national TV rights deals.
This picture looks fine for now with Bayern atop the list at €82M and Barca second at €81M but it is just after the group stage, pre-COVID. Note that most of Barcelona’s revenue (€34M) is from the “UEFA coefficient” which is based on performances over 10 years, including bonus points for winning UEFA tournaments; the TV revenue of €8M is far less than that of English clubs Man City at €14M and Liverpool at €10M.
This sounds like a lot of money, but consider that by November 2019 Barca had 16 injuries in a 3 month time frame. The cost of injured players routinely costs clubs millions in medical treatment, wages, and additional support. A Forbes report from the 2018/19 season the estimates average Premier League injury costs a whopping £290k/$350k, with a staggering net cost at top clubs:
As Liverpool fans can corroborate, fixture congestion has been a major issue in the 2020/1 season (as Klopp rightly rants), increasing the likelihood of injuries. This is exacerbated by inflexible league policy and broadcast deal obligations, such as when Real Madrid were forced to travel through a record winter storm for a La Liga match in early 2021. These hidden expenses add up on a clubs balance sheet. And despite its best efforts to normalize for differing national TV rights, the €34 UEFA coefficient “loyalty bonus” seems meager in comparison to the €200m-€300m Super League “welcome bonus” offered by JP Morgan. The numbers just aren’t adding up, especially for Real Madrid and Barcelona.
3. TV & The Eyeballs
Think of it this way: Champions League Match Day 3, October 23 2019. Barcelona vs. Slavia Prague, a largely unknown team from the Czech Republic. For what reasons might fans want to watch this match?
- Slavia Prague is playing
- It’s the Champions League
- Barcelona is playing
- Messi is playing
- Messi is injured, I want to see everyone else
- Messi is injured, never mind
Out of these options, I would guess that #4 Messi is the main draw for a majority of football fans followed by #3 Barcelona and #6 never mind. Messi playing in a club competition necessitates #3 that Barcelona are playing. So, who holds all the cards here? The European Super League clubs do. They may have overplayed their hand with the VIP league, but they are the ones who support Messi, Ronaldo, and much of the global football talent financially, personally, professionally, physically. UEFA will never reimburse clubs for players injured in their competitions or help clubs retain groundskeeping staff during COVID furloughs. If the clubs must function as “the bank”, they want more control over league operations but have been repeatedly denied. With this in mind a new Super League governed by the clubs themselves that sets its own prices, margins, schedule, partners, etc. seems enticing. After all, fans eyeballs will follow the football players.
TV revenue, more broadly digital fan engagement, is a crucial part of a football club’s business model. In our increasingly globalized and digitally enabled world, “remote fans” (for whom attending a match in person is a geographical impossibility) far outnumber the “local fans” who regularly attend matches. Barcelona have 250 Million followers just on social media, of which the 100k stadium capacity is 4%. Ronaldo alone is the most “followed” person in the world with over 300M followers on Instagram. This is especially relevant during COVID: all fans were forced to to attend remotely, so revenue was primarily from broadcasters and corporate partners. Increasing viewership is important, but more fundamentally big clubs want a bigger piece of the digital pie.
It is no coincidence that 3 American owners are at the heart of this plan, they know how lucrative the TV rights can be in the NFL and other American sports. And it is interesting that out of the 3 American owners, 2 own clubs competing in the Europa League (2nd tier Champions League). The presence of Man United and Arsenal in the Europa League draws increased viewership to otherwise less prominent matchups with teams such as Villareal (the eventual winners) and Dinamo Zagreb (quarterfinalists). By virtue of having large, loyal, engaged fan bases that drive TV revenue, the ESL clubs felt they deserve a higher split of the revenue regardless of their current level of competitiveness. The Dallas Cowboys have not won a Super Bowl since 1996, yet remain the most valuable sports franchise at almost $6 Billion.
4. The Alternate Reality
12 of the 15 most prominent clubs in world football agreed that UEFA was not living up to its responsibilities as a governing body, to the point that they felt compelled to form a new league. So what is UEFA doing wrong? What could it be doing better? I too would like to learn more about this from someone in the business, but will share some thoughts of my own.
First of all, the money. I mentioned earlier that JP Morgan offered a €200m-€300m “welcome bonus”, compared to the “UEFA coefficient” of €34m. Clearly banks and investors are interested in European football. In fact the general consensus is that European football is undervalued, and investors have taken notice including Fenway Sports Group (Liverpool) and Qatar Investment Authority (PSG). And now JP Morgan, the largest bank in the world with a stellar reputation, and according to Wikipedia $3.3 Trillion in assets. UEFA would not want to a capital injection from the same private equity or sovereign wealth funds as do their clubs, but I think they could have secured financing from a reputable bank, perhaps JP Morgan itself, to help with their COVID response and recovery but I heard no such news. This would alleviate many of the problems across the football pyramid, and probably would have kept the Super League rebel clubs happy.
Perhaps UEFA could streamline certain governance structures to avoid coming out on the wrong side of sensitive issues. Their investigation of Manual Neur’s rainbow LGBTQ pride captain arm-band was of dubious value, and their contradictory decisions regarding displaying rainbow colors on the pitch are puzzling. “UEFA approves pitch-side rainbow adverts despite rejecting Munich display” is not a positive headline, neither is punishing a referee for requesting Haaland’s autograph on his yellow card to auction for an autism charity.
Everyone could do more towards fighting racism and abuse. Supporters like to take credit for pushing their clubs towards corrective actions, but I am not so sure we can generalize this broadly about “the fans”. In the past, hooliganism was a very real concern (excessive drinking, property damage, fights etc.) but has since been reigned in. Racism, however, continues to be rampant in the sport. Any weekend when a leading non-white player such as Rashford, Son, Zaha, Sterling, and so many others, fail to perform at the incredibly high standards of the Premier League, you would find racist insults on social media if you searched. Who tweets this abhorrent shit online? A fan. Many fans. When a national treasure like Andrea Pirlo and his son are receiving death threats from overzealous supporters, I start to question if I really want football to “belong to” any such person who hides behind a screen name and could be standing in the crowd. I understand what the slogan means and what sort of fan it refers to: loyalists, season ticket holders, generational fans who watch matches at the same pub as their grandfather. But I think that if football belongs to anyone, it belongs to the players, who ought to be protected against harmful messages every time they browse the internet.
Most importantly, we could use some fresh ideas in the upper echelons of European football executives and decision makers, both at UEFA and the super clubs. There are untapped sources of income in the existing model without having to break away into a members-only club. Perhaps they already considered these and other options and decided against it, but I don’t think they fully understand this post COVID world we are entering.
Content is king: the more of it you have, the more viewers you grab. The higher you set the bar, the more you can charge. Think of Netflix’s growth in the past decade. If UEFA and/or its clubs could together find additional sources of income, wouldn’t that be something?
UEFA did release one documentary series about referees called Man in the Middle which was actually quite good and has 8.1/10 on IMDB. This was also released on the Paramount+ app (CBS All Access at the time), the hosts of UEFA content in the US. It wasn’t widely advertised and wonder how it did commercially, I couldn’t find any numbers online. But I think this is a step in the right direction, and I would definitely watch documentaries and behind the scenes content. The Amazon “All or Nothing” documentaries are excellent.
These super clubs are large organizations with numerous academies and youth teams. What if the UEFA Youth League competition was offered direct to consumer in HD with professional cameramen and commentators, a Fantasy Youth Football app, YouTube highlights channel, Instagram ads targeting young athletes, and some other elements of a modern brand. The goal would be to grow the European Youth League similar to College Football in America, which generates $4 Billion in revenue annually for its 65 member universities. With enough viewers, the advertising space/time increases in value and the league turns profitable. After all, youth athletes aren’t compensated anywhere close to professionals. This would be beneficial to the overall football pyramid with increased funding at the pre-professional levels of the game.
Another idea to monetize football enthusiasts like myself is offering custom angles of the match broadcast. I have long since wanted to watch a match from a static aerial view, so the entire pitch is in the frame all 90 minutes. I want to be observe the movements of all players in the active and inactive spaces, and more generally see things I would otherwise miss in the standard broadcast. I know that teams record this footage from drone or spider cam for their internal tactical analysis, so perhaps live streaming of these camera feeds behind a paywall is not too difficult to set up. Providing more angles to view the game would appeal to analytical fans and professionals.
I have started seeing “Star Cams” on Paramout+, namely Pulisic in Man City vs. Chelsea finals. I think it is a great way to address the unique situation in football when an entire population or audience is watching for one specific player, who may not touch the ball or be in the camera frame for long periods of time. Just as some in the USA watch specifically for Pulisic, so to do many in South Korea dedicatedly watch Tottenham in support of Son. Clubs should make the most of these situations to further engage and monetize these international fanbases who are eager to show their support.
Next idea. Crypto is everywhere these days: and I came across official “Fan Tokens” for Barca, Juventus, PSG, Man City, AC Milan, Athletico Madrid, Roma on Chiliz who describe themself as “the worlds leading blockchain fintech provider for sports & entertainment”. They are partnered with Socios, an app/platform that provides the actual value:
Be more than a fan. Influence your team, access VIP rewards, exclusive promotions and join a global community of superfans.
To be clear I am not recommending that you buy any of these tokens, I still don’t quite understand what they do. But clubs have made a foray into crypto, and NFT’s are inevitable. NBA Top Shot has already auctioned off its digital collectibles for staggering amounts of money:
But most people including myself probably wouldn’t buy these just for bragging rights. Actually that’s a lie, I might buy the Ronaldo Porto goal if it’s not too expensive.
How else can I be monetized? As it stands today, I have attended exactly one live football match in my life: Barcelona 1–1 Tottenham at the Camp Nou, 2018/19 Champions League Group Stage 2nd Leg. Nonetheless, since 2005 I have watched most Premier League and Champions League matches, La Liga when Ronaldo was there, and over the years grew to appreciate other leagues. Especially since COVID (I remember the first Dortmund 4–0 Shalke match after lockdown, what excitement!) I tend to keep any competitive match on one of my screens. I love watching, reading about, and analyzing football. I did pay about $400 for the FC Barca Innovation Hub “Certified Football Tactical Analyst” course.
My friends consider me a fan of the game rather than a specific team, but I do love Man United. As a remote fan for 16 years, I have not spent a fraction of what passionate away fans or season ticket holders have. In order to watch all the leagues I want across devices from the USA, I need the following logins. (In India you can get most of these with just Disney+Hotstar for a fraction of the cost…)
- YouTube TV: Premier League, Internationals
- Paramount+: UEFA Champions League, Europa League
- ESPN+: Serie A, Bundesliga, FA Cup, League Cup, 2021 onwards La Liga!
- Peacock: Specific Premier League matches
I pay for 2 out of these and bartered with friends for the others. I also buy jerseys and apparel but that’s about it. There’s nothing else for me as a fan to spend my money on, as much as I would like to. Those selling the product of football must recognize certain realities of the modern, post-pandemic football ecosystem and react accordingly — monetizing the remote fan is more important than ever, primarily through TV deals but also additional digital content offerings.
To wrap it up, if I represented the Super League in these negotiations I would have made the following ultimatum:
- UEFA must cover rebates to broadcast and commercial partners resulting from unforeseen changes in the Champions and Europa league formats.
- UEFA must provide adequate infrastructure, personnel, and financing for COVID protocols such as the “bubble” in Portugal for the 2019/20 season finals.
- UEFA is obligated to partially compensate clubs for players injured in their International competitions including EURO tournaments and the Nations League. [I just read this morning that FIFA will have to compensate Barca for Dembele’s injury on international duty]
- UEFA must defer to a medical committee comprised of experts representing UEFA, its constituent clubs, and their domestic leagues, for guidance regarding scheduling and what constitutes “fixture congestion”.
- UEFA must show significant investment and concrete steps to combat racism in the entire European football ecosystem.
- UEFA must be partner with clubs on new content and branding opportunities.
- UEFA must put players first, even before fans. They cannot threaten individual players for matters unrelated to their professional duties.
Unfortunately none of this got addressed. Within 1 day, 22 hours, and 4 minutes the Super League became a story for the internet, a cautionary tale of greedy executives, a victory lap for UEFA and “the fans” for their own respective reasons.
The super clubs should have made their demands and held the line. If Plan A was the Super League, then Plan B should have been a dramatic improvement of the current European football landscape.
