03 May 2021
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Like many professional sports around the globe, football is big business. Twelve of Europe's leading football clubs recently announced their plan to set up a new midweek competition, the European Super League (ESL), governed by its founding clubs. The proposal involved the clubs forming their own competition to rival the UEFA Champions League. The Premier League's big-six clubs - Manchester United, Manchester City, Liverpool, Arsenal, Chelsea and Tottenham - were all involved. So, what’s the story? The clubs say ‘the formation of the ESL comes at a time when the global pandemic has accelerated the instability in the existing European football economic model’ and fans say it’s unforgivable, damaging, greedy, callous and anything but ‘super’.
Fans, pundits, current players, ex-players, governing bodies, associations, leaders of supporters’ groups and many people in-between have reacted with outrage at the thought of 12 clubs signing up to be part of a closed-shop league. Fears were voiced over the potential damage to the game and grassroots football in general at a time when many lower-league clubs are struggling to survive. This led to mass protests, threats of government intervention and talk of banning the clubs from domestic competition and the players involved from playing for their countries.
What exactly was the motivation behind the scheme? The 12 clubs that initially agreed to form a breakaway ESL are already among the richest and most prestigious in the world. Between them, according to data compiled by Deloitte, the clubs earned nearly €5.6bn (£4.8bn) in revenues in the 2019/20 season. Barcelona had the top spot with €715.1m followed by Real Madrid with €691.8m. The highest ranked British club was Manchester United with €580m in revenues. Some clubs have managed to stay in the black over the last year, like Real Madrid who just managed to make a profit of £330,000, but the pandemic has hit a lot of clubs seriously hard. In 2019/20, Manchester United saw the biggest decline with a fall of €131m and a reported loss of £23m for the year to end June 2020 and Barcelona are currently in the red to the tune of €97m.
The figures aren’t always transparent or straight forward. Some football clubs have used money to invest in infrastructure such as new stadiums and others have so-called ‘soft loan’ arrangements with their owners, but the picture is clear; clubs have piled up debts totalling hundreds of millions of pounds. Barcelona's net debt has more than doubled to €488m in the year to June 2020 and for Real Madrid, the figure was €354.3m. Latest numbers for Manchester United show its debt pile at £455.5m and Tottenham at £604.6m. There is no denying that the pandemic has had a devastating impact on their finances and the formation of the ESL was an attempt to generate an additional and much needed revenue stream.
Could it be argued that fans have also played a part in their clubs running up huge debts? Revenues have been seriously diminished by the pandemic, but expenses have been creeping up for years. Fans want the very best players in the world for their club and they want to compete at the highest level, encouraging clubs to splash out with money they may not have.
So, what’s the attraction for an investor? Most football clubs are either privately owned or run by supporters’ trusts but there are some that are publicly traded, such as Manchester United (although the majority of the club is owned by the Glazer family) and Juventus, two of the clubs involved in the ESL. Why buy into a football club? They have incredibly powerful brands tied in with some very large and loyal fan bases and unlike many non-football club membership schemes, where consumers can be fickle, football fans are generally intensely loyal to their clubs, staying with them for most of their lives and passing that passion down to generation after generation. The exploitation of that customer base can present a very attractive opportunity for an investor.
The sheer scale of the ESL controversy led to some clubs pulling out and the eventual collapse of the scheme. Has the attempt at forming the ESL damaged the reputation of the clubs involved? To an extent, their reputation has been blemished and their brand tarnished, which could affect the negotiation of those lucrative sponsorship and licencing deals but despite their initial protests, fans will undoubtedly remain loyal to their clubs.
Ian Wright called it ‘absolutely shameful’ and Gary Lineker tweeted ‘Football is nothing without its fans. If fans stand as one against this anti-football pyramid scheme, it can be stopped in its tracks’. Immense pressure from all sides had the desired effect and fans of the game were victorious this time, but football is big business and with billions of pounds at stake, the commercial side will inevitably be back.
With many clubs drowning in debt and the full cost of the impact of the pandemic still unknown, perhaps investment in football should be left to those with immeasurable bank balances for now, or genuine fans who wish to own a stake in the clubs they have loved and supported all their lives.
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