Chief executives of England’s five biggest soccer clubs – Manchester United, Manchester City, Arsenal, Chelsea, and Liverpool – met quietly with Stephen Ross’ representatives. Ross, the Miami Dolphins owner, operates the International Champions Cup, a series of summer exhibition matches.
According to the clubs, the meeting was about the ICC. However, reports believe it concerned the UEFA Champions League. The Champions League TV deal expires in 2018. Major European clubs replacing it with a “breakaway” league has been mooted. We can presume, at least, the chairmen weren’t meeting to discuss their collective irrelevance in this year’s EPL title race.
The breakaway league scares people (or should). Such a league would exacerbate soccer’s chasm between the bigs and the littles. It would be, quite probably, the first step in an inexorable march toward an NFL-style European Super League.
Such a radical change would have a lot of precedent. England’s top clubs, notably, “broke away” from the Football League in 1992 to form the Premier League for similar reasons: greater autonomy and a huge windfall.
Why a Breakaway Could Happen
The FIFA Scandal: International federations have been the biggest check on club power. Broadly, Europe’s top clubs wants to maximize revenue. UEFA curries favor by expanding access and redistributing revenue. The current Champions League is a compromise between those two concerns.
Given recent scandals, however, international federation power is at its lowest ebb. FIFA is trying to avoid further indictments. UEFA’s president, Michel Platini, was just banned six years for corruption. The fallout may only have just begun. If Europe’s super-clubs have the will, it’s hard to see international federations, decisively, getting in the way.
England, England: The status quo is unstable. Much of that has to do with the EPL’s massive new television contract. Starting next season, the league will be earning more than $8.2 billion per season.
For perspective, Spain’s Primera Liga, the next biggest, will earn about $1.6 billion. The Bundesliga’s current deal brings in about $1.2 billion (shared more equitably across the top two divisions). Serie A makes about $1 billion. Ligue 1 will bring in about $792 million.
Even before the new EPL deal, European clubs were at an extreme disadvantage. The last edition of the Deloitte Football Money League had 17 EPL clubs in the World’s Top 30. Major leagues are worried about keeping up with England. Smaller leagues are worried about keeping up at all. The Scottish Premier League’s improved TV deal pays out…$26.4 million per season.
More Revenue Is Always Welcome: Soccer clubs earn a tremendous amount of revenue, but turn modest profits, if profiting at all. Real Madrid, Barcelona, and Manchester United top both the revenue table and the debt table in Europe. Before UEFA lifted the sanctions, PSG and Manchester City struggled to meet financial fair play requirements (only losing $48 million over a three year span) despite nominal, nine-figure-per-year sponsorship agreements from their owners. Those are the top clubs.
What a Breakaway League Would Look Like
Think small. This competition probably would be invitation only rather than tied to league performance. Maybe it’s 32 teams. Maybe it’s 16. You’re going to see huge brands such as A.C. Milan and Liverpool. You’re not going to see lesser champions such as Astana and BATE Borisov. You’re not going to see $100 million plus going out for youth development. Those big clubs would take all the revenue.
Now, think big. Knockout matches could be played all over the globe. Potentially, it’s not even limited to European teams. Manchester United and Real Madrid sold out Michigan Stadium for a summer exhibition. How big and lucrative is the “Soccer Super Bowl” at the Jerry Dome?
This New Champions League would provide a stupid amount of money. That money would be going to a much smaller pool of clubs and countries. That success would then beg the obvious question of big clubs: why aren’t they doing this all the time? Why fritter away value playing Empoli, Watford, Sassuolo, and Getafe?
The European Super League
League consolidation has been proposed before. A notable plan would have the top clubs in Portugal, the Netherlands and Scotland form one, better league. It seems reasonable a similar idea could emerge among the top clubs in France, Germany, Italy, and Spain if the EPL financial muscle becomes too powerful.
There could also be a catalyst from outside the soccer world. Catalan politicians have been pushing toward independence from Spain. Should that happen, it’s likely the Spanish league dumps Barcelona. The club likely becomes a free agent vs. being trapped in a rump Catalan league. Leagues that would want Barcelona? All of them. Dominoes start falling.
English exceptionalism is a factor. But, if there is a movement toward consolidation, how do those five big English clubs react? Would leaving the Premier League be scarier than staying in the Premier League now competing with a behemoth across the Channel offering a better product?
For hypothetical’s sake, we could end up with a 32-team league. Here are four divisions of eight.
Iberia: Real Madrid, Barcelona, Atletico Madrid, Villarreal, Sevilla, Benfica, Porto, Sporting Lisbon
Anglo-Dutch: Manchester United, Manchester City, Arsenal, Chelsea, Liverpool, PSV, Ajax, Celtic.
Franco-German: Bayern Munich, Borussia Dortmund, Schalke 04, Werder Bremen, Hamburg, PSG, Lyon, Olympique Marseilles
Mediterranean: Juventus, AC Milan, Inter Milan, Roma, Napoli, Olympiakos, Galatasaray, Fenerbahce
So, Manchester United would play each division opponent home and home. Then play the other 24 opponents once, either home or away. Those matches would flip the subsequent season. That would be a 38-match schedule. Top eight teams go to a knockout playoff played on neutral sites in the U.S., Asia, or wherever.
World-wide audience. Geographic footprint larger than the United States with no competing sports. This league would be really, ridiculously profitable. The revenue stream would be guaranteed. No risk of relegation. No down year where you miss the $60 million-plus Champions League payout.
It would allow clubs to far better control labor costs. Wages could be reigned in, probably more along the lines of MLB than a hard salary cap. Moving to American-style trades and moveable contracts vs. transfer fees could save clubs tens, if not hundreds of millions per year.
Forming this super league makes too much business sense, which is why it’s a scary thought. Maybe tradition and sentiment thwart it. But, it’s worth remembering who actually owns these teams.
All five English clubs that met with Stephen Ross have foreign owners. Three are Americans. Two own NFL franchises. Spanish and German clubs are owned by their fans. But, France? PSG and OM are foreign owned. Italy? Roma has an American owner. Inter Milan is owned by an Indonesian media magnate. A.C. Milan is half under Thai ownership.
Businessmen generally buy things to increase their value and to profit from them.
This would involve a major perceptual hurdle. Soccer is like college football. Brands are built on winning. Bayern Munich have won 12 of the last 19 Bundesliga titles. They finished lower than third once (4th). Teams accustomed to success would struggle, finish in the bottom half, maybe even finish last.