• Football Leaks investigation suggests 16 clubs sharing plans for a European Super League
• But European Club Association and Uefa show united front in the face of allegations
• Sources say Team Marketing proposed expansion of the Champions League into summer months ahead of latest rights cycle
Uefa president Aleksander Čeferin and Andrea Agnelli, the chairman of the European Club Association, put on a united front in late November, holding a joint press conference at the EU headquarters in Brussels in which they tried to downplay the threat of a ‘European Super League’.
“With Uefa we already have all the tools to work happily together,” said Agnelli, who is also the chairman of Serie A club Juventus. “In the medium- and long-term we have all the tools to shape football together.”
The mood music, and even the choice of setting, spoke of harmony between the governing body for European football and the organisation that is said to represent the interests of 232 European club football teams. Yet to most observers, this appeared to be completely at odds with revelations that came to light earlier in the same month from the Football Leaks investigation – particularly its contention that Agnelli’s Juventus was one of 16 large European clubs recently engaged in discussions to create just such a breakaway league.
Other revelations from the 1.9 terabytes of leaked data held by the whistle blower platform serve to confuse the picture further. Der Speigel chose to focus on a series of emails purportedly sent by senior European football figures between 2015 and November this year. The publication reconstructed a timeline and alleged that the continent’s leading clubs had, on different occasions throughout the period, created several “cartel-like” structures to examine the legal obstacles to various breakaway scenarios. These included backing out of European competitions or leaving their national leagues entirely.
In the most recent example, the investigation claimed in October it had seen a “binding term sheet” for a 16-team Super League that would include 11 leading European clubs as ‘founder’ members that could never be relegated. If the plans went ahead, it said, Real Madrid, Barcelona, Manchester United, Chelsea, Arsenal, Paris Saint-Germain, Manchester City, Liverpool, AC Milan, Bayern Munich and Juventus would break away from Uefa and exit the Champions League as early as 2021. Five ‘initial guests’ – Atlético Madrid, Borussia Dortmund, Olympique Marseille, Inter Milan and AS Roma – would round out the competition.
The incomplete picture provided by the leaked emails, which SportBusiness has not seen or been able to verify, makes it hard to gauge how seriously Uefa should treat the risk this time – especially because the idea has reared its head repeatedly.
It is widely thought the biggest European clubs used the breakaway threat in 2016 as a negotiating ploy to extract greater concessions from the governing body when the terms of the 2018-21 Champions League cycle were up for discussion.
Uefa subsequently agreed to reward clubs for success over the previous 10 years – which is to say, the biggest clubs – and invited them to jointly oversee the management of its competitions. It was unquestionably a victory for the larger European teams.
What is less clear is why the group of 16 clubs would resurrect the breakaway idea this year, having so recently secured a more favourable deal.
At a superficial level, a European league featuring the 16 clubs that do most to drive revenues at Uefa would have a certain logic. In a recent interview with SportBusiness, former Manchester City chief executive Garry Cook argued that that the formation of such a league was inevitable as a symptom of “industry rationalisation”.
But another source familiar with the workings of the leading European clubs prefers to downplay the significance of the emails, seeing them instead as evidence of a sort of advanced consultancy exercise.
“I am not surprised at all if various business concepts find their way onto paper and into a business modelling exercise, because that’s what good businessmen do when they run their businesses,” he says.
In the same spirit of commercial curiosity, we decided to examine the commercial and legal impediments to the clubs carrying out their perennial threat. As the most recent plans are based on removing 16 clubs from the Champions League, it is sensible to model this scenario rather than the greater and more complex impediments to clubs breaking away from their national leagues as well.
As a fundamental requirement, any new league would have to provide a massive long-term guarantee to persuade the clubs they would be better off outside of the Champions League and for them to trigger the nuclear decision of leaving it.
The likely model for this would be a joint venture between the clubs and a private equity house or a sports marketing company, along the lines of breakaway Euroleague Basketball’s 10-year commercial rights deal with IMG.
One media rights specialist said he thought a Super League would have to guarantee a minimum of €10-15bn for clubs to walk away from the roughly €8.16bn (€2.72bn a season) Uefa is targeting – and on course to exceed – from Champions League media and sponsorship rights in the next three-season cycle, from 2018-19 to 2020-21.
The founders and any investors would have to believe there are vast untapped opportunities from the continents’ media and sponsorship markets. In a less harmonious mood during the last rights cycle (2015-16 to 2017-18), Juventus’s Agnelli insinuated that this was the case when he drew a comparison between the efforts of Uefa – and Team Marketing, its commercial agent for club competitions – and the NFL.
“The media rights to the Champions League are worth $1.6bn a season, compared to $7bn for the NFL, despite there being 1.6 billion football fans in the world and only 150 million American football fans. This gives you some sense of the unrealised potential.”
The comparison is hardly analogous (and may have been issued simply to put pressure on the governing body). The value of the NFL is driven by its US home, the biggest media market in the world, whereas the Champions League has no ‘domestic’ market.
Even if one assumes that Team, which is projecting revenue growth of 28 per cent for the next cycle, had been doing a terrible job, it’s hard to see where a breakaway league could find the additional revenue.
Outside Europe, Uefa and Team are hamstrung by the fact that Champions League matches must be played on Tuesdays and Wednesdays, so they have very limited ability to rejig kick-off times to reach international audiences. The same would apply to any European Super League, unless it took the even more destructive option of removing teams from their domestic leagues.
In Europe, Uefa and Team have already earned significant growth over the past two to three cycles by moving more of the Champions League and second-tier Europa League on to pay-television in territories across Europe: there is little more to give, and there are indications that pay-television competition in some of the biggest markets can no longer be relied upon, as evidenced by the decline in the UK values for the English Premier League in its most recent cycle.
Moreover, the new generation of big tech companies that were supposed to underwrite the next wave of growth have so far proved reluctant to pay substantial amounts for sports rights.
And then there is the balancing act between paywalled coverage and sponsorship revenues, which Robin Clarke, SVP international at Endeavor Global Marketing, says Uefa and Team have managed impressively.
“The Champions League is inarguable as a premium proposition,” he says. “It continues to grow in its quality, in its interest outside of European borders and therefore offsets a lot of that decline in linear TV audiences by its appeal,” he says.
“For all of the agencies that make lot of noise, Team don’t, but they are probably the most impressive. They quietly go about increasing revenue and have a phenomenal track record in delivery of broadcaster contracts and sponsor contracts to Uefa.”
Der Speigel alleges that Charlie Stillitano, co-founder of Relevent Sports, the organisers of the International Champions Cup summer tournament, sent the clubs a presentation in 2016 that claimed they could achieve revenues of “€500m plus” a year from a putative breakaway league featuring 18 teams.
A 16-team league with equal revenue shares would need to generate a minimum of €8bn a year just to pay the clubs this sum. This is so far from the figures Uefa currently generates from marketing the Champions League rights that it would appear impossible for a breakaway to arrive at this figure through a combination of operational efficiencies and a more innovative commercial strategy.
Uefa shared a total of €1.41bn between the 42 clubs that competed in last season’s Champions League – 32 of which qualified for the group stages and 10 of which were eliminated in the earlier play-off rounds. Even if this figure was shared between just 16 clubs, it would amount to just €88m per club.
The final 16 clubs in the Champions League already out-earn those eliminated at the group stage by a ratio of just under 2.5:1. When the new revenue distribution model rewarding success in the last ten years of the Champions League kicked in this season, the gap grew even more. The new distribution is estimated to be worth €30m a season more to clubs that routinely qualify for the latter stages of the competition.
The argument goes that bigger clubs are the commercial engine of the Champions League and that they could make much more money if they were freed of their obligation to share the competition revenues with the smaller clubs. Yet this ignores the disruptive impact this would have on the European footballing ecosystem and the way that would be treated by the European Union.
In 2003, Uefa was cleared by the European Commission to collectively sell the broadcasting rights of the Champions League on behalf of the clubs and decide how to distribute revenues further down the football pyramid.
“Maintaining the balance between the clubs is accepted as objective justification for any restrictions coming out of sport that are not disproportionate,” says Katarina Pijetlovic, sports law module lead at the University of Liverpool and author of EU Sports Law and Breakaway Leagues in Football.
She says any breakaway league of the kind recently reported would enjoy no such exemption and that the EU might take a dim view of the undertaking because of the impact it would have on the market. This would include disruption to the competitive balance in the downstream sponsorship and media markets and the upstream market for players because of the size and power of the clubs taking part.
“The big clubs that are involved in this project ongoing, are in fact collectively ‘dominant undertakings’ in the terminology of competition law which means that as such it’s much easier for them to break the law,” she says.
Pijetlovic says clubs might be forced by Uefa to pay ‘solidarity payments’ to other clubs in the football pyramid to offset any disturbances they would cause as a price for the governing body to sanction the league. She says Uefa would be within its rights to ask for such a sum, provided this reflected normal market standard and was not disproportionate to make the prospects of any rival league commercially unattractive.
To illustrate the point, she says she has seen the finer detail of a much earlier attempt by the Milan-based Media Partners group in 1998 to form a closed “SuperLeague” featuring 16 major European teams as permanent members. Surprisingly, this included provisions to make solidarity payments to the rest of the football ecosystem.
To get a sense of how much the clubs might be expected to contribute, the Champions League currently pays seven per cent of its revenues in solidarity payments to national associations and to fund the development of youth football.
The Euroleague precedent
Another impediment would be the dim view EU governments take of closed sports leagues and Fifa’s commitment to the principle of promotion and relegation. The governing body created a de facto, albeit controversial, exemption for Major League Soccer in the United States and the A-League in Australia, but it would be difficult to create a league along these principles within Europe where the pyramid structure is already well established.
The admittedly incomplete proposals for the latest Super League appear to try to sidestep this issue by including an option for a second league. In this, the best domestic teams at the end of each season could play a series of matches in an effort to win promotion to the Super League, but only against clubs that are ‘initial guests’. Der Speigel says the semi-closed structure is explicitly based on Euroleague Basketball’s top-tier EuroLeague, which is not entirely closed to try to avoid violating European competition law.
But if the football teams were planning to follow the example of the EuroLeague, they ought to be prepared for the attendant aggravation. The drawn-out dispute between Euroleague Basketball and the International Basketball Federation (Fiba) indicates the way a legal battle between a breakaway European Super League and Uefa might play out.
In that case, 16 teams decided to break away from the existing structures in European basketball and threaten Fiba Europe’s position as the sole organiser of club competitions at this level. Fiba responded by founding its own Basketball Champions League in 2016 and by calling on national federations to sanction clubs that continued to participate in the breakaway competition. This in turn provoked Euroleague Basketball to schedule its fixtures at the same time as the qualifying window for Fiba Basketball World Cup, forcing players to choose between their clubs and their national teams.
Both organisations have now filed complaints before the European Commission alleging anti-competitive behaviour and abuse of dominant position, and Pijetlovic argues that a similar scenario would be conceivable if the 16 football clubs decided to split.
“Clubs could complain that Uefa was anti-competitive in not letting them do their project, not sanctioning their league,” she says. “Uefa could complain that clubs were abusing their dominant position and endangering the domestic leagues and survival of football.” That the rumours of a Super League have already caused Fifa president Gianni Infantino to threaten to ban players who play in such a league from competing in the Fifa World Cup, demonstrates the potential for a breakaway in European football to develop along equally messy lines.
So how serious were the clubs in their intention to leave? The popular interpretation is that the exchange of messages in October was evidence that clubs were continuing to apply a proven formula. Examine most of the previous breakaway rumours and a pattern emerges in which the clubs threaten to leave and Uefa makes generous concessions to keep the elite happy.
There’s little doubt that the 2016 rumours proved successful in holding Uefa’s feet to the fire ahead of the most recent revenue distribution deal. Go even further back to the Media Partners proposal in 1998 and the impact of the threat was even more explicit.
“Plans for an independent Super League forced us to act quickly and improve our co-operation with the clubs,” said Uefa general secretary Gerhard Aigner after clubs dropped their plans to separate and backed the governing body’s proposal to expand the Champions League to 32 teams.
Another possibility is that the clubs cannot afford to ignore breakaway plans, in case other teams move forward without them. Borussia Dortmund chief executive Hans-Joachim Watzke said as much when he told Der Speigel that the club had to “keep all its options open,” because if a super league ever became a reality, “that couldn’t happen without BVB”.
Andrew McGregor, associate in the sports law team at Brabners, says he just can’t see the clubs triggering a split. “There has to be a happy medium and I just don’t see Fifa or Uefa or any of the other stakeholders just simply allowing a breakaway to happen and allowing a dilution of their control over the organisation of sport,” he says.
This analysis doesn’t discount the possibility that the European clubs’ behaviour can be explained by the appearance of a new suitor on the scene. Lurking at the edges as Uefa and the ECA downplayed the threat of a Super League was Gianni Infantino and his proposal to revamp Fifa’s Club World Cup.
Although uncertainty continues to cloud the Fifa president’s offer to reportedly inject $3bn of Saudi Arabian, Japanese and Emirati money into a new quadrennial club tournament, it hints at a new battle line being drawn in the football calendar. If the chances of a European breakaway are limited by the disruption it would cause and the difficulty of squeezing any more out of midweek winter formats, then why not create a new platform for the biggest clubs in the less cluttered months of the summer?
The ECA says the clubs would weigh up Infantino’s offer just like any other commercial proposal, provided Fifa can engage stakeholders in the process.
Intriguingly, Fifa might not be the only body working up plans for a new summer tournament. We spoke to two senior figures in European football who believed Uefa was developing ideas of its own.
SportBusiness understands Uefa and Team Marketing approached Europe’s clubs ahead of the 2018-2021 cycle with an idea to expand the Champions League into the summer months, arguing that they could earn the big clubs twice as much as they get paid to play in the International Champions Cup.
The same source says the clubs rejected it on the basis that they didn’t want to put all their eggs in one basket – the pressure placed on Uefa by their continued participation in the ICC was worth more to the teams than the summer plans.
Conversely, another senior source had heard Uefa might even try to partner with the ICC to scupper Fifa’s Club World Cup proposals. He argued that the flip side of this is that Infantino might also make an offer to work with the ICC, or that he might even contact the clubs to underwrite the cost of their breakaway.
At this stage, the only thing that is certain is the strong hand the clubs would play in any negotiation. With Fifa on one side and Uefa on the other, the Football Leaks data shows the top teams are acutely aware of the power they wield, and aren’t afraid to use it.