(Bloomberg) – European football is embroiled in an escalating battle for control of the continent’s most prestigious club competition after a dozen teams declare themselves founding members of a breakaway league.
The announcement of the JPMorgan Chase & Co.-funded € 4 billion ($ 4.8 billion) defect sparked an outcry from fans, governments and UEFA, the governing body of European football. In response, UEFA is currently examining a € 6 billion funding proposal from British asset manager Centricus to finance a revamped Champions League.
The confrontation reflects the evolution of the world’s most popular game as a global company, but also the financial realities during the pandemic. Led by clubs from England, Italy and Spain, teams with a large fan base and significant debt are trying to get more money out of broadcast rights and support revenues after a year in empty stadiums.
Paris Saint-Germain rejects football Super League approach
Of the teams that have so far joined the JPMorgan-backed Super League, all but a few were in the red last season, and at least eight have net debt of more than 100 million euros, according to accounting firm KPMG.
What’s next is likely a high stake brinkmanship. UEFA President Aleksander Ceferin called the runaway proposal a “spit in the face” for football fans, while his organization vowed to take all necessary measures, from contacting the courts to banning teams and players from international football tournaments Stop switching.
According to Kieran Maguire, a football finance lecturer at Liverpool University in North West England, this could depend on the prospect of raising money for clubs that are in debt. “Poor financial management at some European clubs has forced them to generate advanced funding to improve their debt,” he said. “The clubs will either achieve their goal from this competition or deprive UEFA of further revenue and certainties.”
The story goes on
Centricus has been in talks with UEFA about funding for a few months, said a person familiar with the matter. The investment firm discussed an initial package of around € 4.2 billion that was topped up following the Super League’s proposal, the person said, asking not to be identified to discuss confidential information.
Negotiations are ongoing and there is no certainty that UEFA and London-based Centricus will reach an agreement, according to the population. A Centricus representative declined to comment, while a UEFA spokesman did not immediately respond to a request for comment. UEFA will hold its annual congress on Tuesday.
In the background, however, one can see a plan by UEFA to expand the Champions League from 32 to 36 teams and to increase the number of games. This has upset some teams who have complained that the season already has too many games, while reducing the number of games between the continent’s biggest attractions.
According to the Super League plan, the biggest clubs like Manchester United and Real Madrid would start their own competition in August. Six teams from England, three from Italy and three from Spain have registered so far and would play against each other during the week as an alternative to the UEFA tournament.
QuicktakeSoccer Super League would mean a lot of money, big trouble
In addition to the 15 permanent teams, five more qualify for the Super League each year. Clubs in France and Germany, including the 2020 Champions League winner, Bayern Munich, are not included. Qatar-backed Paris Saint-German turned down the plan and joined UEFA. PSG chairman Nasser Al-Khelaifi said Tuesday that “football is a game for everyone”.
Indeed, the possible emergence of the Rebel League has fueled opposition to it, including through British Prime Minister Boris Johnson and French President Emmanuel Macron. Prince William, who serves as President of the Football Association of England, expressed his concern.
The tug of war is at the core of football’s identity in the 21st century. Leading clubs with rich histories have delved into global capitalism, pay-TV deals, and debt-driven foreign ownership for the past several decades. Meanwhile, local fans have regularly complained about being priced out of the game they love and fueled their anger at what they see as a departure from long-standing open-competition football traditions.
“It was a deaf-mute proposal, but the owners of these clubs couldn’t ignore the almost universal roar of outrage from all parts of the football community over the past 24 hours,” UK Culture Secretary Oliver Dowden told Parliament on Monday.
A meeting of the English Premier League clubs is due to take place on Tuesday without the six Super League participants being present. Johnson will also host a round table on Tuesday with representatives from the Football Association and Premier League fans and personalities, a person familiar with the plans.
Read more: The billionaire owners share the new Super League of football
While an outlier has been debated for years, the development has its roots in a proposal – known as Project Big Picture – first tabled by the multi-billion dollar American owners of Manchester United and Liverpool last year.
The plans envisaged structuring the governance of the English Premier League, Europe’s most lucrative national competition, in order to give the largest clubs an oversized voice in their future direction. The idea was rejected by the league, but opened up the possibility of redesigning the game.
Efforts to build a breakaway European league intensified as the pandemic hit football hard. The prospect of cancellations initially prompted broadcasters to seek discounts from clubs and governments that were unwilling to bail out those affected by falling revenue on matchday. According to Deloitte, the top 20 clubs suffered a total of 2 billion euros from the pandemic.
Italy’s top Serie A invited private equity groups to submit offers to participate in the media rights operation. However, the negotiations were intense and there was still no agreement. The German Bundesliga, which restarted the games for the first time after Covid, has opened a similar auction for a stake in its foreign rights.
Earlier this year, Bloomberg reported that organizers were nearing a list of permanent members and that JPMorgan would be providing financial support.
“Covid has provided a useful smoke screen for clubs and the ability to enforce this proposal on the basis that they need to address the financial imbalances caused by the pandemic,” said Maguire of Liverpool University.
The idea that the largest and most successful clubs in European football should compete against each other underpinned the creation of the original European Cup competition in 1955.
Until the 1990s, only the champions of the national national leagues and the trophy holders took part in the tournament. The winners included not only Real Madrid, Barcelona, AC Milan and Juventus, but also smaller clubs such as Red Star Belgrade, Nottingham Forest and Dutch team Feyenoord. It was then expanded into the Champions League to ensure the big clubs stayed in competition longer.
Proponents argue that the Super League would create a more exciting competition as the best teams in the game would play against each other more often. It would also be lucrative for them if permanent membership removed the uncertainty of qualifying after a bad season.
In his first interview since the project was unveiled, Real Madrid President Florentino Perez, first chairman of the Super League, told Spanish television on Monday evening that the plans would “save football”, saying that the clubs’ debts and revenue crunch they are gone “on the verge of ruin.”
“We don’t want the rich to get richer and the poor to get poorer. We have to save football. All I do is for the good of football, which is at a critical moment. “
(Adds the PSG instruction in the 11th paragraph.)
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