On Tuesday (Oct. 20), Sky News reported that Manchester United (MANU) and Liverpool are among six English sides engaged in conversations about joining a new FIFA-backed competition featuring up to 18 of Europe’s most prominent clubs. Manchester United executive vice-chairman Ed Woodward vehemently denied the bombshell report on Wednesday morning’s Q4 2020 earnings call, saying he “candidly [didn’t] know where that story came from.” J.P. Morgan, which is said to be assembling a $6 billion debt financing package that would fund the launch of the European Premier League, did not respond to our request for comment on the story. But even if the plans fall apart (or never existed in the first place), Stefan Szymanski (author, Money and Soccer) says the latest rumors surrounding the potential formation of a “super league” are bound to spur “UEFA to expand the Champions League, [ultimately enabling] the big clubs to meet each other more often.”
Our Take: The concept of a European super league is certainly not new. In fact, when Szymanski first wrote on the subject back in 1999 (in a paper titled “The Americanization of European Football” for the journal Economic Policy), the idea was already at least 15 years old. He said the conversation “seems to come up over and over again”—and will continue to do so until the fans’ demand for more games between the top clubs is fulfilled.
It’s reasonable to wonder if things will be different this time around, with COVID-19 having amplified two persistent themes in European soccer that have frustrated power players for much of the last two decades: the untapped revenue opportunities that exist, and insolvency. MANU estimates the pandemic had a $91.6 million impact on FY ‘20 revenues, and Szymanski said the lack of gate receipts this year has hundreds of clubs on the brink of financial catastrophe. But the University of Michigan sports economist insists that there’s no need to blow up a system the majority prefers, and that the ‘Big Six’ could fulfill their desire to increase the number of games played against the top clubs from other leagues (games that would generate massive broadcast revenue) by increasing the size of the Champions League. Maintaining the existing structure of European soccer would also allow the English sides participating to retain their share of EPL broadcasting revenues (which far exceed what clubs in other European Leagues bring in). If the value of Premier League broadcast rights (particularly international rights) begins to stagnate, then perhaps breaking away to join a super league becomes a more attractive option for the likes of MANU and Liverpool.
The European Premier League report is closely related to another story that made headlines within the last couple of weeks, even if the two weren’t planned in tandem. The Daily Telegraph recently reported Manchester United and Liverpool were backing a plan that would trim English football’s top division from 20 to 18 teams (the League Cup and Community Shield would have also been eliminated). The logic behind eliminating two spots was that it would give the biggest clubs some free dates on the calendar to play more lucrative games against other European powers. In exchange for the scheduling flexibility, the clubs towards the bottom of the English football pyramid would have been bailed out; 25% of future league revenues would have been redistributed to the 72 clubs outside the EPL (which would also receive access to an immediate $325 million rescue fund). It has since been announced that Project Big Picture is no longer under consideration.
It’s certainly possible the recent media stories are part of a concerted effort to pressure UEFA into growing Champions League (as Szymanski suggested they might). Woodward willingly acknowledged his club was “actively involved” in conversations about potentially increasing the number of clubs that participate in the competition, from 32 in the group stage to as many as 36. Expanding Champions League would give the top international clubs more games against each other (enriching themselves in the process). It’s far less clear how the lower-level clubs— those in need of a bailout—would benefit.
Szymanski says that shouldn’t be anyone’s concern (presumably other than the officers and shareholders of the clubs facing bankruptcy). He explained, “The majority of clubs [across the continent] live permanently on the edge of financial collapse and have done so for decades. Financial failure is a feature, not a bug, of professional soccer in Europe [due to the promotion/relegation system that encourages spending]. It would be a problem if these clubs failed financially and were lost forever. But that never happens. All of these clubs get revived. Leicester City, which won the Premier League in 2015, was bankrupt in 2002. When the club went bankrupt, it didn’t disappear. They played in a lower division for a few seasons and then got promoted up and won the Premier League. The problem here is thinking bankruptcy is the end of things for a soccer club, as it is with many businesses—it’s really not.”
The majority of European soccer fans (and teams) oppose a “closed” super league because promotion/relegation gives everyone a chance to play at the top level. But because the economic forces driving the conversation (a closed league would allow the biggest clubs to make the most money) are bound to persist, so too will the conversation. Szymanski suspects that “in the end, who wins is probably more a matter of politics than economics” (i.e. the current system will prevail). In fact, the Michigan professor suggested local governments might bail out some of the distressed clubs to ensure that it does. After all, many of these clubs exist on a much smaller basis, so it is not as if we’re talking about a fortune of money in most cases.
(This story has been corrected. The current number of Champions League teams is 32, not 24.)