INITIAL THOUGHTS ON THE IMPLICATIONS OF THE PROPOSED EUROPEAN SUPER LEAGUE AND WHAT MIGHT HAPPEN NEXT.

For European leagues, the impact of the US attempted Super League (TSL) is almost impossible to comprehend. Should it succeed - which is doubtful for European audiences - the removal of qualification to a meaningful Champions League or Europa League renders domestic leagues impotent. The appeal and value to sponsors and broadcasters diminishes with the stroke of a pen. At the same time, the proposed riches offered to the participants of the TSL are designed to create even greater resource imbalance. Any financial advantage increases exponentially – up to four times what the current Champions League offers its participants each year plus enhanced commercial contracts. Without the introduction of new financial regulations and cost limits everyone else would be expected to play for 'best of the rest'

The Super League proposal

Essentially, twelve clubs have signed letters of intent to form a breakaway league, pan European, played midweek, independent of UEFA. The twelve clubs are Liverpool Manchester United, Barcelona, Real Madrid, Atletico Madrid, Juventus, AC Milan and Inter Milan. Plus Arsenal, Chelsea and Tottenham . These twelve clubs plus three others would have permanent membership of the 'league' and a further five clubs would be invited to join each season. As of yet, what the qualification criteria is, is unknown. The new League would feature two groups of ten clubs playing nine home and nine away games. The top three of each group automatically qualify for the quarter finals. The fourth and fifth clubs would play a two legged knockout to determine the last two places in the quarter final. Then two legged knockout quarter and semi finals followed by a single legged final at a neutral venue.

The League also intends to create a women’s league with the same format.

The funding of the league is substantial. The fifteen founder clubs would share an initial sum of US$ 3,500 million – approximately US$ 233 million (￡166 million approximately). Expected annual revenues would amount to US$ 400 million (￡285 million) a year – a 300 to 400% increase on expected earnings from the current Champions League.

To fund the league initially, financing would be provided by the US investment bank JP Morgan Chase to the tune of US$ 5,000 million – debt that would be repaid from the broadcasting rights.

So what action will the non TSL clubs take?

Firstly, direct action – the shareholders and owners are being made aware of the thoughts of communities towards this scheme. Co-ordinated social media activities are being formulated and will be followed by merchandise and season ticket boycotts when people are allowed back into grounds. In the UK, Everton Football Club, a founding member of the football league in 1888 and Premier League in 1992 (and with more domestic titles than the combined totals of several of the UK based TSL hopefuls ) has re-taken its role as guardian of the national game and is leading the response. In Germany, current world champions Bayern Munich - one of the true giants of the European game and with 9 major European trophies- have released a statement denouncing the plan.

Can the domestic leagues simply throw out the clubs, if they don't withdraw from the scheme? Would they wish to do so in the knowledge of how damaging that will be to future revenues. Given the parlous state of finances for many league clubs, especially in a post pandemic environment, could clubs afford to take that risk? Broadcasters would demand extensive revisions to existing contracts given the material change to their league with the absence of major clubs. Plus, the next broadcasting round 2022-25 has yet to be determined. Broadcast rights payments could fall substantially in the absence of certain clubs and without the competitive element of European qualification, domestic leagues becomes a much less attractive proposition. Equally sponsors at league and club level would want to revise existing contracts

From a legal perspective, can leagues such as the UK Premier League deny the clubs the right to set up another competition? There’s sufficient legal precedent (FIA Formula One Championship [2001] OJ C169/5, Hendry v World Professional Billiards and Snooker Association [2001] All ER (D) 71, and perhaps the most famous of all relating to Kerry Packer’s Cricket Circus, Greig v Insole [1978] 1 WLR 302 which suggests they would have difficulty in doing so. If they could then the clubs would resign from the league. Again is that a position the Premier League really wants to find itself in?

Government action is a realistic possibility. Across Europe. EU competition law will not provide a framework for speedy recourse. In the UK the situation is different. No longer a member of the EU and with a populist Prime Minister leading a beleaguered government, the conditions for legal intervention are ripe.

So what else might be done?

Perhaps the only way to countenance the retention in the national domestic leagues of the participants in the TSL, is to apply strict financial regulation with financial penalties (not sporting penalties as that seem to have no bearing on these clubs) for non-adherence.

They could (i) introduce League Financial Fair Play which imposes restrictions on spending – a comprehensive wage and operating expense cap. Further to that (ii) set a zero limit to operating losses, i.e. clubs can only (within the cap) spend what they earn from “approved revenues”. Approved revenues would remove the Super League revenues (broadcasting, matchday and sponsorship) from the calculation. Thus the six clubs can not receive a financial advantage over the rest of the league by virtue of Super League revenues.

Whilst that helps maintain a semblance of sporting integrity it could mean that the TSL clubs become extremely profitable. Perhaps that is the absolute intent of their owners. Become a serviceable cash cow as a result of not being able to spend their new found riches on player wages and other operating costs.

Alternatively, introduce a wealth tax on the income derived from the Super League, a punitive tax of pick a figure 50%, 60%? Tax the clubs and redistribute the revenues to the other members of the League to compensate for their reduction in earnings and value as a result of the actions of the TSL clubs.

An alternative football – back to the future?

The really bold move is for domestic league to admit it has lost the arms race, the race for more money, higher transfers, big sponsorship deals, corporate entertainment at games, ridiculous ticket prices and astronomical player salaries. Create a league with cost controls (much lower than current costs) – a league that created value by being sustainable and thereby benefiting the football pyramid below it? Isolate the profiteers and asset strippers by refusing to bow to their demands. In many ways this is closer to what Germany currently has.

In the case of the UK, a return to a simpler game more closely attached to its past rather than the last 30 years of the Premier League would create huge losses for current owners and would shelve current and future investment plans. Would that bother the “ordinary” fan? Would football be any worse for a massive but short deflationary period where all the excesses of the last couple of decades are removed?

Is this the Premier League’s opportunity to do something of this nature? To reintegrate with the Football League, to reduce the enormous gap between itself and the Championship which forces clubs to commit financial suicide each year in an attempt to reach the promised land. Rule changes within the Premier League require fourteen clubs to agree to change. The six might now have forever created a unified block of 14 clubs - who must now vote.