- Euroleague looking to western Europe to consolidate and grow its business
- Clubs no longer have to participate in domestic leagues to play in the competition
- Rule change eases path of entry for future London franchise
Euroleague Basketball’s annual revenue has more than doubled since Euroleague Ventures – Euroleague’s joint venture with IMG – began in 2016-17. It earned about €28m ($32m) in central revenue during 2015-16, and sources say that number reached about €62m during 2018-19.
That amount is set to keep increasing over the next two seasons. New media rights deals in Turkey and Spain (both from 2019-20) are likely add a total of €8m to €10m per season. A new title sponsorship deal and a new media rights deal in Greece (both from 2020-21) could conceivably add more than that.
In fact, revenue is rising so quickly that Euroleague Ventures scrapped its original income target of €872m over ten seasons – from 2016-17 to 2025-26 – in favour of more ambitious goals. Sources say the partnership is now all but guaranteed to last 20 seasons, from 2016-17 to 2035-36, as the deal will automatically be extended after the 2023-24 season should certain revenue targets be reached.
For the past three seasons, Euroleague’s growth has been due to huge revenue increases from its core markets: Greece, Turkey, Spain, Lithuania, Israel, Serbia and Russia. Growth in these markets has been the driving force behind the competition’s ascendance.
Since the change of format from a Champions League-style tournament to a league comprised of a regular season and playoffs, income from media rights and sponsorship has skyrocketed. The value of media rights in Greece and Israel has doubled in comparison with pre-IMG contracts, and that trend is expected to continue in Turkey, where a new media rights deal is currently being negotiated.
On the sponsorship side, revenue has almost doubled thanks to an explosion in the number of partner brands, which has now reached 27 across multiple tiers and regions.
But while strong performances in key markets were crucial during the first three seasons of Euroleague and IMG’s joint venture, many of these markets don’t provide the long-term security and stability that Euroleague is looking for.
Markets like Israel, Lithuania and Serbia are fairly small television and sponsorship markets, while Greece, Russia and Turkey’s media markets – and wider economies – are relatively volatile.
For the kind of consistent growth Euroleague wants, expansion into Europe’s big five television markets is a must. Its new media rights deals in Spain – the only one of Euroleague’s core markets among the big five – have produced the largest overall increase in value since the beginning of the joint venture, increasing by about 400 per cent.
Its new deal with streaming platform DAZN will yield about €15m per season from 2019-20, and the potential for growth in the UK, France, Italy and Germany isn’t lost on Euroleague or IMG. Phase two of the project – turning Euroleague into a true European super league – is about to begin.
It’s fair to say Jordi Bertomeu is a little less diplomatic than he used to be.
Bertomeu has served as Euroleague Basketball’s president, chairman and chief executive since 2011, but has been wedded to the competition since its inception in 2000. Over the past 19 seasons he has handled European basketball politics with an unrequited sense of calm. But as the 60-year-old Catalan enters his 20th season at the helm, there are signs his patience has worn thin.
One of the Euroleague’s most important clubs, Olympiacos, is currently embroiled in a bitter dispute with the Greek Basketball Federation over the selection of referees in its domestic playoff series against long-time nemesis Panathinaikos.
Olympiacos’ refusal to complete the series – and subsequent forfeiture – will almost certainly result in their relegation to the Greek second tier. It is unclear whether the club will play domestic basketball at all next season, which would ordinarily have contravened Euroleague rules.
Bertomeu has come too far to see such pettiness get in the way of his dream of a truly European super league, stretching from London to Istanbul with roots in every major city in between. The rules were changed almost immediately.
“We had a rule that clubs have to play domestically, but if the domestic leagues cannot control their product, we cannot suffer the consequences of this mismanagement,” Bertomeu says, firmly. “If Olympiacos is not playing in the top division in Greece, that is not going to affect us. We will change the rules. We cannot be contaminated.”
“The problem is that this isn’t only happening in Greece,” Bertomeu continues. “The finals of the Adriatic League were controversial, too.”
The domestic playoff finals between reigning Adriatic League champions KK Budućnost and FK Crvena Zvezda also descended into chaos, this time on the court. Both sets of players were attacked by opposing fans over the course of the best-of-five series, with Budućnost players struck by coins, stones, bottles, chairs and even broom handles during the warm-ups for their Game 5 decider in Belgrade.
The game went ahead regardless and Budućnost were thrashed 97-54. Their defeat – despite taking place in extenuating circumstances – was upheld, meaning Crvena Zvezda clinched the ABA’s only Euroleague qualification spot.
Bertomeu has previously been coy about Euroleague’s continued relationship with governing bodies and federations, but recent events in Greece and the Balkans – as well as Euroleague’s expansion plans – have emboldened him.
“At a certain moment in the future, there will be a discussion about whether clubs continue playing in their domestic league or only in the Euroleague,” he says. “This will be the next discussion, probably in five years’ time. This is the only way we can establish a clear frontier from one side to another.”
He continues: “We believe the domestic leagues are important. We would like to have them developing the game with success. But in the meantime, the only the thing we can do when it’s not happening – like in Greece or in the Adriatic League – is establish a barrier. We have to protect ourselves.”
On Thursday, July 11, Euroleague confirmed it had changed its eligibility criteria. Clubs no longer have to participate in their respective domestic leagues in order to play in the Euroleague or the company’s second-tier competition, Eurocup. In addition, teams no longer qualify for Euroleague via their domestic league. In place of domestic qualification, Euroleague will have sole discretion over which teams it accepts into its competition via the expansion of its wildcard system.
A Euroleague spokesman told SportBusiness International that the main reason behind this change is to enable a ‘pyramid’ system between the Euroleague and Eurocup. Winners of the Eurocup are automatically entered into the following season’s Euroleague, but if that Eurocup winner did not play in a domestic league with a Euroleague qualification spot, it would have no way of qualifying for the Euroleague in consecutive seasons.
“Amplifying the access from the EuroCup was also a long-time request from the clubs, as that gives more chances for teams from domestic leagues that previously had no window to the Euroleague to have a chance access it now,” the spokesman said.
“The remaining spots awarded previously to the domestic leagues will now become annual wild cards, although these will be warded to those leagues that previously had access to the Euroleague whenever possible.”
While its public reasoning is careful to emphasise inclusivity and fairness, the new rule is also designed to give Euroleague both the freedom to eschew domestic leagues and the ability to create franchises that aren’t part of any domestic league system – a crucial part of its expansion plans.
One such franchise that will only play in the Euroleague will be based in London, a city that has become Bertomeu’s holy grail. He has wanted to expand Euroleague to London for the best part of a decade and originally wanted a team in the city ready for the 2016-17 season. When investors showed little interest, he began clearing room for a London team to play in the EuroCup before graduating to the big leagues.
However, after lengthy conversations with UK investors, Bertomeu has now settled on a Euroleague-or-bust plan that he believes will lead to a London franchise slotting straight into the highest level of European competition at the beginning of the 2022-23 season.
“Our belief is that the operations of the clubs should have something on the ground 18 months to two years in advance. This is the process we are seeing, we are following this process, and I believe that in a few months we’ll have some news,” Bertomeu says.
“We have ongoing conversations with potential investors, we are in conversations with the owners of the different facilities in the market. In May, we had preliminary conversations and we are happy that we have more interest than we perhaps expected.”
Not everyone seems so optimistic. In the opinion of Xavier Bidault, commercial director of basketball at Euroleague’s joint venture partners IMG, the competition has a little bit of work to do before a London team can become a success.
“I think the assumption is we should have a club based in the UK to grow revenue, which might be true,” Bidault says. “I’m also saying that, regardless of that, we need to grow our brand there. And I think we can do a better job at creating some local relevancy and building our brand, regardless of whether we’re going to have a team or not.”
He continues: “We need to grow and prepare the market before we have a local team, because there’s a lot of factors and a lot of different aspects that have to be considered before you can get a team in place – the infrastructure, the relationship with the local league, having an investor willing to commit on the same level as all the European clubs. All of that can’t happen if you don’t at least have a framework to grow that fanbase.”
Bidault suggests that holding pre-season games in London that appeal to the city’s Lithuanian, Turkish and Greek expat population would be a good place to start building that framework. It’s an idea that leaves Bertomeu cold.
“We believe that having Euroleague events in London is not useful for this purpose, because it’s one shot and then you leave,” he says. “The impact on the market is very limited. London is a city with thousands of entertainment offers, so you can’t have an impact based on one shot in a very, very short period of time.”
Euroleague isn’t just targeting London. Bertomeu speaks of the potential to have two teams in each of France, Italy and Germany, and sources close to Euroleague believe he harbours ambitions to have Euroleague teams based in Paris, Rome and Berlin.
Starting from 2019-20, Euroleague has given two-year wildcards to reigning French champions ASVEL and back-to-back German champions Bayern Munich. While these teams will fit seamlessly into Euroleague competition, growing the number of teams from France, Germany and Italy will be difficult – especially if Euroleague targets capital cities.
Teams in Paris and Rome are a long way from being able to compete at the highest level, but Berlin currently has a strong basketball team that reached last season’s Eurocup final. Alba Berlin will play in the 2019-20 Euroleague, and a good performance could see the team become a permanent feature.
“We will start, of course, with markets that are easier for us like France and Germany. We’re seeing quicker progress of our business there because the impact of having teams in Lyon and Munich next year has already been enjoyed in our bank accounts!” Bertomeu says, speaking of the much-improved media rights deals agreed with French telco Altice and German telco Deutsche Telekom.
“Our ambition is that at the end of this three-season cycle [2019-20 to 2021-22], we will have a stable presence in the UK market, we will have been in Germany, and we will have another team in France or Italy. This is our goal now. Those decisions are fundamental not only to increasing revenues, but also balancing the business in terms of territories and moving from the Mediterranean area to the North.”
A key part of hitting the ground running in western and northern European markets will be securing brand partnerships to increase the visibility of Euroleague in target markets.
“It’s kind of weird to say this as the head of commercial, but in a sense, our partnerships are absolutely not all about monetisation,” says José Luis Rosa Medina, Euroleague’s senior director of corporate partnerships and licensing. “In Spain, Greece, Turkey, Serbia and Russia, we are monetising every single partnership we close. In Germany, France, or even China, we’re closing deals that in some cases… not a lot, but some… there’s actually no exchange in fee.”
Rosa Medina has been in Euroleague’s commercial department for almost 15 years, and he now has a key role in Euroleague’s expansion plans. Those deals that involve no fee are almost always designed either to give value-in-kind – such as its deal with networking hardware company Cisco to provide wi-fi during this year’s Final Four – or to grow Euroleague’s brand in markets targeted for expansion.
“Monetisation is not important in every single market,” says Rosa Medina. “Activation and growing the footprint of the brand is the focus for strategic markets.”
The envy of Europe
The taboo may still be strong in football, but the Euroleague has normalised the concept of a business-focused, pan-continental super league over the course of just three seasons. It’s an idea many European football club owners and administrators would love to discuss outside of boardrooms and Chatham House rules, but can’t without fear of reprisal.
“Honestly, I don’t want to be seen as arrogant, but it’s true that basketball – not only Euroleague, but basketball in general – goes ahead of other sports in terms of organisation,” Bertomeu says. “I think the most important thing for football clubs is to see an organisation that has the ability and the capacity to take decisions on its own.”
When Euroleague began its new era in September 2016, the new format came under heavy criticism from national federations and basketball’s world governing body, Fiba. Since 2016-17, qualification from domestic leagues became only a secondary way to play in the Euroleague. 11 of the 16 clubs competing in Euroleague over the past three seasons are guaranteed to play in the competition until the end of 2025-26, regardless of their performance. In 2019-20 and 2020-21, that will become 13 out of 18 teams.
All the revenue growth, expansion and talk of London franchises has been made possible by switching from a Champions League-style knockout tournament that relies on domestic leagues, to a US-style closed league, with a regular season and playoffs. And while domestic leagues and federations continue to protest against Euroleague’s continued path toward a complete breakaway, their power to prevent it slips away.
For Bertomeu, the move was essential for the growth of European basketball.
“This has been the main reason why we have been successful in growing the business. With the knockout system, it’s always about seeing if the clubs are lucky, or who they get in the draw. We could have spent five years without watching a single match between Real Madrid and Panathinaikos, or perhaps Maccabi… well, you are familiar with this concept. It’s like that in football.
“There are many football teams that are also Euroleague shareholders, so they know our experience and they have the aspiration to play a similar role in the football side,” Bertomeu says. “But football is much more complicated. When we are seeing these discussions in football about the potential new format of the Champions League, you see many parties involved. Everybody has something to say. Then, you’ll see a decision that will be the consequence of politics. In our case, the owners decide according to their business interest.”