The vampiric European Super League… the proposal that refuses to die

Of all the unimportant things, football is the most important, to paraphrase the late Pope John Paul II.?As war rages in Ukraine, sport, and football in particular cannot be held to a higher standard of moral accountability than the society it serves… and yet Roman Abramovich’s two decade legacy as owner of current FIFA Club World Champions Chelsea has thrown once again into stark relief the complicated relationship between football, politics and money.

?The business of football in 2022

Two weeks ago, as Chelsea was being put up for sale, before the UK government sanctioned Mr. Abramovich, I attended, with many of the great and the good of the game’s administration, the FT’s Business of Football Summit in London’s Mayfair. I will not add to the countless column inches on the rights and wrongs of sanctioning Chelsea, and the next twists and turns of this saga… but I do want to ?look ahead to the future of game, and whether it gets the types of owners and investors it deserves.

The closing keynote speech at the two day conference was reserved for Andrea Agnelli, scion of the FIAT empire, Chairman of Juventus, former Chairman of the European Club Association (the self-appointed lobby group for Europe’s largest 40 football clubs), former executive committee member at UEFA, and most pertinently to this story, one of the chief architects of the doomed European Super League concept. As Signor Agnelli was keen to remind the audience, by reading a slew of European newspaper headlines on the financial unsustainability of European club football in a polyglot pastiche of then Liverpool manager Rafa Benitez’s much parodied ‘facts’ press conference, the logic for a European Super League has not gone away. In fact, despite all the public outcry and fan opprobrium, reports of its demise have been greatly exaggerated. Here was one of the worst executed concepts in football refusing to die and rearing its ugly head, like Bela Lugosi’s Dracula in countless B-movies.

Signor Agnelli and his table of advisers and financiers involved with the original ESL plans had spent ?the morning suffering the slings and arrows of speeches from UEFA President Aleksander ?eferin (declaiming by video the ‘nonsense’ of the Super League being launched during a pandemic and then re-tabled as war broke out in mainland Europe); and Javier Tebas, President of Spain’s La Liga (according to whom’ they’ – Signor Agnelli and his counterparts at Real Madrid CF and FC Barcelona, Snrs. Florentino Perez and Joan Laporta, as the three amigos left standing from the ESL’s 12 founder members, ‘lie more than Putin’). In reply, Signor Agnelli was keen to tell us that the idea for a closed league across Europe’s biggest clubs, with no relegation nor promotion and owned by its members, was as old as the hills – from the financial wizardry of ‘Project Gandalf’ to ‘Project Big Picture’ and then the ESL itself. Under such a model, historic giants such as Juventus would be spared the inconvenience of qualifying under sporting merit for the latter stages of elite European competitions, or playing upstart minnows such as Villareal (who at the time of writing are the latest team to dump Juve out of the Champions League at the last 16 stage, for the third season straight). Even UEFA’s plans to reformulate the Champions League from 2024 to a mini league based on the ‘Swiss model’ (after the one used in competition chess, nothing to do with UEFA’s country of domicile) to guarantee qualifying teams more big ticket fixtures each season, could be characterised, according to Signor Agnelli, as a super-league in everything but name. The essence of his argument is that UEFA is fundamentally conflicted in playing the role of regulator, ‘monopoly’ competition owner, and ‘gatekeeper’ (to broadcast revenues)- or, put another way, it all comes down to money and who keeps what share of the growing value of broadcast rights.

Fundamentally strong, temporarily challenged

The fundamentals of football are strong. But in a steeply tapering pyramid the riches of the game accrue to the pinnacle of the league system, and more specifically to the English Premier League. The financial impact of the pandemic has hit clubs hard in leagues that rely predominantly on ticket revenue from filling their stadia rather than on broadcast rights, such as France, Holland, Spain and the EFL Championship – English football’s second division. But the inexorable upward trajectory of the value of international broadcast rights for the Premier League continues – as seen during the pandemic when armchair sports fans pined for live action, and given the demographic trends in North America where soccer fans are younger, more Hispanic and more female than the traditional sports fan base.

Leicester City winning the Premier League in 2016 proves the exception to the rule of a non ‘big four’ team winning the league – and proponents of the American sports model of closed leagues (albeit with wage caps and draft systems to level up competition) will point out that in the same period there have been six different winning teams in seven Super Bowls. But on any given Saturday any one Premier League team can beat another. In this season’s FA Cup, another winner from outside the Big Four is again possible following Leicester’s triumph last season. This level of domestic competition is unthinkable in Italy, France or Spain in particular, where even a FC Barcelona hamstrung by a billion Euros of debt and a stringent financial fair play system looks set to finish in the top three, if not second to Real Madrid CF.

The Premier League’s relative unpredictability for an open competition, and the fervour of away fans, sets its TV ‘product’ apart for broadcast partners, who have realised it is key to subscriber retention in a fragmenting media environment, especially with non-traditional competitors, from DAZN to Amazon, circling. ?And this is why Juventus, Real Madrid and Barcelona need the ESL to succeed more than their English counterparts, even if the concept risks sucking the lifeblood further from their own domestic leagues. The biggest clubs argue – as they always have – that they draw the crowds and therefore should command the biggest share of revenues. UEFA will argue for the importance of solidarity in maintaining a competitive ecosystem, but they themselves are locked in competition for those same revenues with the clubs, and with FIFA whose intentions to expand the remit and frequency of its own tournament properties has been made clear.

Some of the smart money from Private Equity houses like CVC has seen them take a partnership approach with leagues like Spain’s La Liga and France’s Ligue 1, lending the money up front for investment in stadium infrastructure in return for a share of broadcasting rights for decades to come. This breaks the mould of traditional debt financing. Much as they have done in sports from F1 racing to rugby, CVC will back their ability to lend skills from digital to marketing to improve the overall competitions and the value of their media rights.

Nothing without fans

The share of voice given to the match-going fan in this debate, even at enlightened football summits such as the FT’s, is remarkably small - too often their (our) loyalty is viewed as a seemingly inexhaustible and price inelastic commodity. Scornfully, the fan who is prepared to shell out his or her hard-earned cash to travel and watch 90 minutes of live football home and away is referred to as a ‘legacy’ fan. ?But there is a beacon of hope that the very thorough Fan Led Review of Football Governance by former Sports Minister Tracey Crouch MP, sparked in part by the failure of the ESL but given fresh oxygen by the sanctioning of Roman Abramovich, will finally offer the protections, baked into primary legislation, that fans have called for. Namely an Independent Regulator for English Football (IREF), overseeing financial regulation of the game, with beefed up Owners, and Directors, tests for football clubs that will need to be passed every three years by both new and incumbent owners, plus a slew of measures aimed at protecting football clubs as assets of community and cultural value. IREF could feature in the legislative programme set out in the Queen’s Speech as soon as May; without this, Gary Neville’s assertion that the ESL will ‘come back, rehashed with a cherry on top’ seems astute.

New rules; OFTEN much at stake

None of this is to deter potential owners for English football clubs, which as institutions have professionalised from the days of the local butcher, baker or car dealer running them, as record investment has flowed into the game. And the upside remains clear for teams either currently in the PL or with ambitions to be promoted into it – from the value of broadcast rights to the growth of the women’s game, only in its foothills. International expertise and investment remains much needed, but some new rules of engagement for prospective owners will apply:?

1.????Owners should be able to prove they are people of good character: just as owners of other significant, public businesses should be able to demonstrate they act in line with clear ESG values, purpose and policies. This approach should flow through to how they explain their funding and justify the company they keep in sponsors and partners, for instance in (unregulated) crypto currency, and sports betting sectors.

2.????Fan representation and Shadow Boards: while stopping short of the golden share 51% fan ownership model used in Germany, listening to the voice of the customer can at the very least help owners avoid the most egregious own goals and, at best, may spark innovative ideas that lead to further growth and success for clubs.

3.????Transparency: absentee landlords are no longer likely to be tolerated by fan groups or governments. Owners must be prepared to show up and engage.

4.????Everybody profits at a well-run club: profit should not be a dirty word for a well-managed football club – not least as UEFA will reintroduce new Financial Fair Play mechanisms post Covid19 to pre-empt excessive financial doping by wealthy owners. But profit should be reinvested rather than siphoned off in excessive dividends.

5.????Not owners, but custodians: owners must recognise that they are custodians of a club during their family’s lifetime. They will not have carte blanche to move or rename the team nor its ground, nor change the club’s crest or colours.

We are all stakeholders in a better run, better regulated future for European club football. The first use of that stake may be to drive it through the heart of the ESL for good, to pave the way for better custodians of the people’s game.