Very soon -- most likely in late April -- UEFA will confirm changes to the Champions League, both in terms of format and access. Those reforms -- which will kick in from 2024 -- will be heavily tilted in favour of already wealthy teams in already wealthy leagues, much like most of the changes we've seen since the creation of the competition in 1992.
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It will be presented as UEFA having no choice but picking the lesser of two evils. It'll be making concessions to big clubs, but that's a better alternative than watching them break away and form their own Super League, ignoring the Champions League altogether. We've had these threats before, but this time they felt credible, as I wrote in October. With interest rates close to zero, private equity firms flush with money and top clubs short on cash due to the pandemic, it was the perfect storm for the likes of Real Madrid, Barcelona and Manchester United to either form their own breakaway competition and divvy up the revenue among themselves -- or, as appears to have happened, pretend they would do just that and use the leverage to carve out a better deal for themselves.
GAB MARCOTTI
Read all the latest news and reaction from ESPN FC senior writer Gabriele Marcotti.
The effects of the pandemic, the need for -- to use a buzzword among football execs -- innovative formats and the reminder that club football is a business will be used to justify loading the dice even further in favour of the rich and powerful. But that argument doesn't hold water, and Bundesliga CEO Christian Seifert put it best recently, speaking at the Financial Times' Business of Football Summit.
"The brutal truth is that a few of these so-called super clubs are in fact poorly managed cash-burning machines that were not able, in a decade of incredible growth, to come close to a somehow sustainable business model," he said.
Somehow, despite a decade of continuous growth that has seen European club revenue double (with most of the increase flowing to the top) and despite Financial Fair Play keeping costs down (and ensuring that the system as a whole was profitable in the last three seasons pre-pandemic), some of the game's biggest clubs realize they are overextended and short on cash.
And their solution is to make pretty much permanent changes that will serve only to increase the gap between the haves and the have-nots. Details are still sketchy and subject to last-minute horse-trading, but after consultations with clubs and leagues, it looks like the Champions League will be adding four teams, introducing something called the "Swiss Model" that will increase the number of group games from six to 10, giving the French league another automatic spot and having a safety net allowing up to two clubs with a good European pedigree (read: UEFA coefficient ranking) to automatically qualify.
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There'll be time to analyse the new format -- especially the "Swiss Model," which, I guarantee, few will understand -- when it's confirmed. But, broadly speaking, the idea is to have more European games and generate more money to help off-set the damage done by the pandemic. For what it's worth, I'm not averse to clubs playing more European games, and that includes the Europa Conference League, which kicks off next season.
There are hundreds and hundreds of European top-flight clubs that never get to play international football and, even among those who do, for all but 80 of them, the season is over by September. Why shouldn't they get to play? Nor do I necessarily have a problem with trying to squeeze more money out of the Champions League and Europa League. These are professional clubs; they're running a business. What's more, of the €3.25 billion ($4 billion) these competitions generate, some €400m ($485m) goes back to support grassroots, national associations and other development initiatives.
There is no question either that these are tough times for clubs, particularly as COVID-19 measures mean stadiums have to stay closed longer than expected and broadcasters demand rebates. Back in September, the European Club Association estimated that clubs would take a hit of around €4 billion ($4.85 billion) over two seasons. In January, ECA president Andrea Agnelli revised that estimate upwards talking of losses of between €6.5 billion ($8 billion) and €8.5 billion ($10.3 billion).
And, obviously, in absolute terms, bigger clubs with bigger stadiums (and therefore more matchday income) and bigger TV deals bear the brunt of these losses. What grates though is the de facto land grab by big clubs that not only want more for themselves, they also want added insurance against -- gasp! -- failing to qualify for the Champions League in the form of the extra places. (And, let's face it, if you're one of the half dozen super clubs outside the Premier League, you really have to screw up something fierce to fail to qualify as it stands.)
Is UEFA going the wrong way in its attempts to reform the Champions League? Julian Finney - UEFA/UEFA via Getty Images
It's wrong on two levels. First and foremost, it's simply unethical. Folks from big clubs always justify the fact that they have gotten a bigger share of revenues with the fact that they take on more "entrepreneurial risk" -- i.e., spending more to get the biggest stars and sponsors, with fans paying to see those players. It's their presence that generates the money, not Skenderbeu vs. Midtjylland. That's why 15% of Champions League revenue is distributed based on the "market pool" -- the size of the TV market in a club's domestic league. If you're in the Premier League or Serie A or the Bundesliga you get a lot, because these are big TV markets in big economies. If you're from Albania or Denmark ... not so much.
It's also why another 20% of revenue gets handed out based on "coefficient ranking." Basically, if you performed well in Europe over the past decade, you get more than if you didn't. The argument here is that teams that have done well in the past have helped to build the Champions League brand and deserve to reap more of the rewards. (It's also, in practice, a way of funnelling more money to the established elite. )
Fine. But "entrepreneurial risk" is just that: risk. You have more skin in the game, so you get more of the upside when things go well. But, equally, it means you lose more when things go badly. It's free-market economics 101. The other aspect is that we're talking about making de facto permanent changes that only make it even more difficult for others to compete. In theory, of course, they're not permanent -- UEFA operates in three-year cycles -- but, in the real world, every format change that has been introduced since the creation of the competition back in 1992 has benefited bigger clubs from bigger nations.
That means that once the toothpaste is out, it's not going back into the tube. Nobody wants to see a club go bust. But -- guess what? -- at the highest level it's virtually impossible. Wage bills can be cut. Debts can be renegotiated. Players can be transferred. Regulations can be loosened to help meet obligations. Does it mean you can do all this and still remain competitive? No, odds are, if you do that you'll be worse on the pitch. It might take you some time to get back to where you were. But that's life. That's business. You overspend, you pay the price.
In the 10 years before the pandemic, club revenues around Europe nearly doubled, from €11.7b ($14.2b) to €21.1b ($25.6b). Not quite Bitcoin, but not too shabby either. And, thanks to Financial Fair Play, the system as a whole was profitable in the past three years.
So yeah, Seifert kinda has a point. If you cry poverty now -- and if you try to change the whole system to help bail you out and further create a permanent ruling class of clubs -- you should expect the world's smallest violin. UEFA would probably say it had no choice but to cave. The alternative -- clubs making good on their threat, withdrawing from the Champions League and doing their own thing -- would have gutted its competitions and its ability to redistribute money through the system.
But the fact is that it's been caving for the past two decades. It's getting old. And it's not good for the game.
Source: espn.co.uk