By Charlie Whiteley
For decades, football clubs
On the surface, the UEFA Conference League will indeed provide a greater opportunity for clubs less likely to compete in established European competitions. According to UEFA, the Conference League will give second and even third placed teams a legitimate shot to qualify, bringing smaller clubs much needed revenue. For example, Scottish clubs outside the Celtic/Rangers duopoly will benefit greatly, as the new competition will give these clubs more money to close the competitive gap within Scottish football. This same principle is applicable to other smaller European leagues with clubs bereft of money.
However, the UEFA Conference League is largely a consolation to the clubs and domestic leagues left out of the revamped UEFA Champions League format. Under the new format, the barriers to entry for clubs outside of Europe’s top five domestic leagues will grow larger. Traditionally powerful clubs will always be assured of participation in the group stage, while the champions of weaker domestic leagues will have to endure more qualification rounds. To many, these format changes will effectively bring about the inevitable European Super League. As the dominance of the English Premier League grows, the pressure on UEFA from top clubs outside of England has drastically increased.
For big European clubs in smaller domestic competitions, like Celtic or Rangers, revenues from UEFA competitions are paramount to success. UEFA guarantees a payment of €15.25 million for clubs reaching the group stage of the Champions League. Good results and progression through the tournament bring even more income. For example, the 2018/19 underdogs Ajax made nearly €77 million from their campaign, placing the club back into Europe’s financial elite. By comparison, Celtic and Rangers both competed in the Europa League, UEFA’s second tier competition. Celtic, even with progression into the Europa League knockout stage, only made €9 million in income, while Rangers made just €5 million. Celtic’s failure to qualify then lost them at least €6 million of revenue. With such fine margins between financial stability and turmoil, clubs are under intense pressure to perform. For this reason, historically large clubs have championed a more corporate and stable tournament format.
UEFA have been trying to achieve the perfect balance between the corporate model championed by top clubs while keeping the unpredictability and excitement that European football brings. European sports have largely lagged behind the revenue produced by leagues in the USA. While US teams have always valued profit overall, Europe has traditionally centered its business model around strong local fan bases. For example, while American sports franchises frequently move locations to realize greater profit, this has almost never happened in European football. However, this loyalty to the fans comes at an economic cost to European football clubs. Though football is still the most popular sport in the world, its revenues are significantly lower than American sports competitions, such as the NBA (National Basketball Association). Since 2014, the value of an NBA side has increased nearly 200%, up from $555 million to $1.56 billion, a staggering increase over just five years. Meanwhile, the top twenty most valuable European clubs have increased in valuation by a smaller 74% since 2013.
Much of this 74% growth can be attributed to the revenue explosion of the English Premier League; Nine of the world’s twenty most valuable football clubs are in the Premier League. While still keeping traditional elements of English football like the promotion/relegation system, the Premier League has effectively adapted the American model to achieve rapid growth. This is largely due to the television rights to Broadcast Premier League matches. For the 2016/17 season, the Premier League made £1.1 billion globally through television deals, around £200 million more than Europe’s other four top leagues combined. Combined with a focus on hospitality experiences, merchandise sales, and new sponsorship opportunities, Premier League clubs maximize their potential business. In order to remain competitive, the rest of Europe must follow the Premier League’s example.
Does UEFA have any way to slow this corporate trend, or is this change inevitable? Judging by these recent changes, the footballing authorities have resigned themselves to a future dominated by the continent’s elite. UEFA’s policies are focused more on keeping the status quo than introducing innovative ways to increase competition. The concessions made to Europe’s elite clubs will only enhance the disparity in revenues. With more barriers to Champions League entry, the revenue gap will stretch even further. New proposals like the Conference League are an attempt to distract from the continent’s corporatization trend. Sports clubs and leagues need to evolve just like corporations, or risk falling into obscurity.
European football is on course to become two separate entities. One will blend with other global sports competitions, with a focus on revenue growth and global expansion. The other will be a shadow of its former glory, acting as a warning towards complacency. While smaller clubs will no doubt keep their loyal supporters, they will find expanding into international audiences nearly impossible. As the importance of emerging African and Asian consumer markets explode, only playing on a global stage will ensure growth. These clubs must adapt to the modern football club model or guarantee their decline into obscurity.
While it’s easy to resent football’s transition to corporatization, audiences will still tune into midweek contests between Europe’s elite. However, while weekly clashes between major heavyweight clubs will provide the viewer with big-name, high value spectacles, the Ajax-esque underdog run will be undoubtedly missed.
Image Source: Sky Sports
The opinions expressed in this article are the author’s own, and may not represent the views of The St Andrews Economist.