The Political Economy of Football V2

Something potentially big happened on the fringes of the World Cup this week.  European Football Clubs, the (unhelpfully) renamed entity previously called the European Club Association, agreed to set up a joint venture with Fifa to run the Club World Cup. EFC has a similar arrangement in place with Uefa to market media rights for the three pan-European club competitions, a partnership that has already yielded significant increases in TV revenue. The deal is likely to accelerate plans to expand the tournament from 32 teams to 48, perhaps as soon as 2029. Europe already sent 12 teams to last year’s Club World Cup, but with a cap of two teams per country. Assuming the increase is split on a pro-rata basis, Europeans would take up 18 spots in a bigger competition, and the per-country cap will surely be raised. Last year’s CWC suffered from not having several of the biggest clubs in the world involved — Barcelona, AC Milan, Manchester United and Liverpool. Raising the number of Europe...

 Andrea Agnelli, one of the architects of European football’s controversial Super League, is launching a comeback as a sports investor. Five years after his failed attempt to upend the continent’s footballing landscape, Agnelli has established Gamma Waves Partners, an investment firm that will target opportunities in innovative sports competitions and formats, as well as teams and athletes. Based in Amsterdam, where Agnelli now lives, Gamma Waves will manage money invested by the former Juventus boss and co-founders including Rocco Benetton of the eponymous fashion dynasty and former Italian football captain Giorgio Chiellini.  Agnelli acted as vice-chair of the European Super League, a closed league for the continent’s biggest clubs. The project collapsed in 2021 within days of becoming public knowledge after a backlash from supporters and politicians forced clubs to pull out. His new venture will take minority stakes in businesses seeking to boost fan engagement with s...

Barcelona have started the process of withdrawing from the European Super League (ESL), leaving Real Madrid as the only founding member in the project. Of the 12 founding ESL members, nine pulled out swiftly following its launch. Another, Juventus, said in 2023 that they had withdrawn from the proposal, leaving just Barca and Madrid attached to the project. In January 2023, the Catalan club’s president, Joan Laporta, said he remained convinced a new European League to initially compete with England’s Premier League would still be launched. The 20-team, closed-shop ESL was initially launched in April 2021, but fell apart following a substantial backlash from supporters. Six English Premier League clubs — Arsenal, Chelsea, Liverpool, Manchester City, Manchester United, and Tottenham Hotspur — all immediately withdrew, along with Spanish side Atletico Madrid and both Milan and Inter of Serie A. The changes in the Champions League format along with that of the Club World C...

Gerry Cardinale, founder of AC Milan owner RedBird Capital Partners, told the FT Business and Football summit that professional investors should be ashamed of the financial state of play in European football. Speaking alongside legendary Swedish forward and new RedBird partner Zlatan Ibrahimović, Cardinale said clubs needed to break the cycle and that AC Milan would be a “change agent”. “We have to be more self-sufficient, we have to be able to run these things more professionally,” he said. Calls for new competitions, such as the European Super League, were a “distraction” from years of mismanagement across the game, he added. “Let’s own ourselves better. The fact that these things trade on a multiple of revenue is pure laziness. Shame on all of us. These things should trade on a multiple of cash flow. Deficit financing yourself, and blowing your brains out in the transfer market, all this stuff has to change.” Like many on stage, Cardinale warned that football needs to be wary ...

The increasingly intertwined worlds of football and finance came together this week in London for the Financial Times annual Business of Football Summit. Over two days we heard from agents, fans, clubs, broadcasters, regulators, leagues, owners and investors about where they think the game is heading, what’s going right and what needs to improve. One thing stood out through it all: calls for change are growing louder.   People across the game pointed to cracks in the foundations that underpin the status quo. Football’s financial model is not working, too many clubs lose too much money. On the pitch, the issue of competitive balance is becoming more acute, with a tiny group of teams winning their domestic leagues far too often. Young people are beginning to switch off, posing a long term challenge for broadcasters. Fans feel increasingly alienated and exploited by the push to make money from football. And regulation is struggling to keep up. As the gap between the haves and t...

Fifa and Uefa rules blocking a potential European Super League have been ruled to be “unlawful”, a landmark ruling has found.  The European Court of Justice (ECJ) delivered its long-awaited verdict in Luxembourg on Thursday morning after the European Super League Company (ESLC) first took legal action against both governing bodies in April 2021. “The FIFA and UEFA rules making any new interclub football project subject to their prior approval, such as the Super League, and prohibiting clubs and players from playing in those competitions, are unlawful,” said the ECJ. The ruling will embolden those aiming to break down UEFA’s powers, with Real Madrid and Barcelona still fully committed to the notion of a breakaway league. A22, the sports management company aiming to launch a new European competition, has published plans for new men’s and women’s tournaments which it proposes would run midweek and provide “competitive drama and decisive matches throughout the entire footbal...

This is a rather convoluted statement but it appears that Juventus have withdrawn from the European Super League project, leaving Real Madrid and Barcelona:  https://www.juventus.com/en/news/articles/press-release-06-06-2023 More here with greater clarity:  https://www.bbc.co.uk/sport/football/65828703 It may, of course, emerge again in the future in a different form.

A  key legal opinion this week was widely interpreted as a blow to the ambitions of   Real Madrid ,   Barcelona   and   Juventus   to establish a breakaway European Super League. But the battle for the hearts and minds of football clubs isn’t over yet. It all goes back to A22, a Spain-based company that represents the interests of the ESL clubs, and its fight against the incumbent powers that be: Uefa   and Fifa . And don’t forget, A22 isn’t Uefa’s only competitor for the hearts and minds of clubs. The governing bodies might be on the same side of this specific case but on Friday, Fifa set out plans for a 32-team club World Cup in June 2025. Clubs are Uefa territory. A22 had asked the European Court of Justice to judge whether Uefa can continue to act as a regulator with the power to sanction clubs while also organising — and profiting from — tournaments. However, Advocate General Athanasios Rantos, a key adviser to the ECJ, said that EU...

The Swiss Ramble has been busy in his Zurich fastness over the weekend diving into his data base to review the finances of the clubs that backed the European Super League. A year ago 12 clubs announced a European Super League (ESL) before fan protests led to a humiliating climbdown that happened   just days later. However, the factors that drove the 12 clubs to this deeply unpopular move largely remain. It’s still all about money: a combination of fear and greed. [I would add that we may get an ESL by other means through changes to the Champions League, although Uefa seems to be backing down on giving automatic places to clubs with high Uefa coefficients, i.e., historic ‘big’ clubs that have faltered recently like Manchester United]. There is little doubt that many of the 12 Super League clubs continue to face serious financial problems. To some extent, this helps explain why the “dirty dozen” would seek more revenue, but that certainly does not excuse their horribly ill-conc...

Crystal Palace chairman Steve Parish had some harsh words for Uefa at last week's Financial Times Football Business summit. “If you were to ask pretty much any club in Europe outside the gilded 20 that run the ECA, most people would tell you that UEFA are the greatest enemy to domestic leagues that exist,” said Parish. “You’ve got a completely opaque ExCo, with people on it from individual clubs with far too much say, you’ve the ECA [European Clubs Association] in there, you’ve got new Champions League proposals that look so much like a Super League that you can’t tell the difference. In fact, in some regards, they’re worse. “There’s one area where Mr Agnelli [Juventus supremo] and I would agree: the clubs should run tournaments and the governing body should govern. While we have this situation where UEFA, FIFA and the people who run the game are fighting the leagues for control of the calendar, we’re in trouble. “We’re sleep-walking into it while UEFA picks our pockets. Mr Ceferin...

It looked as if this week's Financial Times Football Business summit might be used to revive the European Super League proposal, but at the last minute Andrea Agnelli backed away.   Real Madrid and FC Barcelona also want to keep the plan alive, but it is accepted that Premier League clubs will now not take part. Uefa supremo Ceferin said: “First, they launched their nonsense of the idea in the middle of a pandemic. Now, we read articles that they are planning to launch another idea now in the middle of a war. Do I have to speak more about these people? They obviously live in a parallel world.” Javier Tebas, chief executive of Spain’s top division La Liga, launched an astonishing broadside at Super League cheerleaders. With Agnelli sat in the front row of the audience, Tebas claimed: “they lie more than Putin.” When the Juventus owner took to the stage to close out the summit, he was more guarded on reviving the Super League. Instead, he wants to wait for the out...

The European Super League has been widely condemned as a threat to the game.  However, this article takes the unorthodox view that allowing it to go ahead could have been a good thing.   It would have led to a more sustainable game to the benefit of match going fans:  https://www.theguardian.com/football/2022/jan/04/european-super-league-premier-league-championship-finances

Real Madrid may be at the top of the Spanish league. But off the pitch, the country’s richest and most successful club has suffered a grievous loss.  Last weekend, La Liga signed a €2bn financing deal with private equity group CVC Capital Partners. The fiercest opposition came from  Florentino Pérez , the billionaire president of Real Madrid, who offered up an alternative debt deal. But 37 of 42 Spanish clubs voted in favour of the CVC transaction instead. Real’s defeat is hard to overstate. CVC will invest €2bn to partner with La Liga and be entitled to 8.2 per cent of the Spanish league’s “commercial profits” — meaning its revenues, minus costs from setting up a new commercial entity — for the next 50 years. Opponents, who also include  FC Barcelona  and  Athletic Bilbao , are still seeking to block the deal by filing lawsuits. In the meantime, they have received a carve out. By refusing to take CVC’s cash, they wo...

Real Madrid, Barcelona and Juventus, the three clubs behind the Super League, are taking legal action against Fifa and Uefa.   In a case at the European Court of Justice which could be as significant as the Bosman ruling, the clubs will accuse the game's governing bodies of breaking EU competition rules. The court will be asked to rule whether Uefa can continue to act as a regulator that is able to place sanctions on clubs, while also acting as a participant, profiting from tournaments such as the Champions League. The Super League accuses Uefa and Fifa of abusing their dominant position.  They claim that the governing bodies defend a monopolistic position in European football that goes against competition law. 16 European governments plan to intervene in the court hearing, most of them to defend 'the European model of sport'.  The European Commission will also comment on the compliance of Uefa and Fifa rules with EU competition and internal market rules. Uefa said t...

It is being suggested that a 'tweaked' version of the European Super League is being considered.   It would have no permanent members, one of the features most objected to.   All countries would be able to qualify and there would be a two division structure.   Whether this would overcome fans' objections is doubtful:  https://www.spurs-web.com/spurs-news/report-super-league-project-still-alive-but-with-major-tweaks/ Kieran Maguire of the PriceofFootball has written: 'In 2018-19, the Super League clubs made a collective pre-tax loss of just under £45 million. This, especially for some of the American owners used to their sporting franchises being very lucrative businesses, is unacceptably low. Given that profit is income minus costs, COVID-19-related reductions in income and static costs meant that these losses ballooned to more than £1.1 billion in the most recent accounts. These losses are likely to have grown further once the full set of figures for ...

Uefa has run into trouble over its efforts to punish participants in the European Super League.  It has had to announce that disciplinary proceedings against Real Madrid, FC Barcelona and Juventus were 'null and void'. Whilst other clubs have pulled out of the Super League project, these three clubs have persisted with a legal case against Uefa in a Madrid court.   The Spanish judges have referred the matter to the European Court of Justice on competition grounds.   I also thought that attempting to restrain the ESL could constitute a breach of competition law. This could be another landmark case like Bosman which could profoundly affect football.  The ECJ will have to decide whether Uefa can act as a regulator that can sanction clubs while also profiting from tournaments such as the Champions League. In a message to national associations, Uefa warned that 'the persistent pursuit of the ESL project and the resultant court cases compromise an ongoing existen...

Why did Manchester United back the European Super League - and pull out when they saw the reputation of their brand being threatened? United’s owners, the Glazer family, are footing a UEFA levy that will ultimately cost between €5 million and €10 million (£4.3 million-£8.6 million) as well as a one-sixth share of the £22 million fine imposed by England’s governing bodies after United joined five other Premier League clubs in signing up for the breakaway competition. But that commitment of at least £8 million still falls short of the £10.7 million in dividends United paid to shareholders on July 30 — the second such payment of the year. United are the only Premier League club to pay semi-annual dividends.    The Glazers receive about £8m each time. Since 2006, United have spent more than £1 billion on financing the Glazers’ leveraged takeover the previous year, with dividends and interest payments on the debt costing roughly £44 million each year. When discussing broadcasti...

Barcelona's president believes that the European Super League is still a viable project, but he may be whistling in the dark.   Without the Premier League clubs, it will not get off the ground:  https://www.football-espana.net/2021/09/07/joan-laporta-super-league-premier

As noted in Deloitte’s annual review of football finance, the trade in top footballers is muted. Dan Jones, head of the consultancy’s sports business group, said: “buyers appear to be few and far between as a number of major clubs are in a position where sales are required before purchases can be made.” The two Spanish super clubs are suffering more than most.  Real Madrid   and  FC Barcelona  are eschewing the big money acquisitions they were accustomed to making before the pandemic arrived.  It should be no surprise that neither club has given up on the failed  European Super League , a breakaway competition that would have provided “welcome bonuses” worth €200m-€300m per club. Both were involved in capital-intensive stadium redevelopments when the pandemic hit. Barca also made a series of big-money signings and allowed borrowings to pile up, although this week the club was quick to note that credit rating agency  Fitch  is posit...

The authoritative Swiss Ramble reviews the finances of FC Barcelona.   He states that Barcelona are facing a financial crisis, due to a combination of mismanagement and the COVID-19 pandemic, which means that they need to make significant savings to meet La Liga’s regulations. These are tough times at Barca. As well as the financial issues, their performance on the pitch has been slipping. In fact, 2020/21 was the first season that they finished outside the top two since 2007/08. Their standard big-spending approach is no longer on the menu. The club had a huge €173m operating loss in 2020 (i.e. excluding player sales & interest), making €432m in last 3 years. Three “Super League” clubs had higher losses (Juventus, Milan and Manchester City), but these are all supported by owners – in contrast to Barca. These problems have not arrived overnight, as confirmed by economic VP Eduard Romeu, “COVID is not to blame for everything. Things were going badly before.” Laporta s...