The European Super League: A short-lived project!

By Jonathan Copping, Lawyer, Stone King, London, UK

At approximately 23:00 GMT on Sunday 18 April 2021 a press statement was released on the website www.thesuperleague.com. The start of the press statement read as follows:

Twelve of Europe’s leading football clubs have come together to announce they have agreed to establish a new mid-week competition, the Super League, governed by its Founding Clubs.

AC Milan, Arsenal FC, Atletico de Madrid, Chelsea FC, FC Barcelona, FC Internazionale Milano, Juventus FC, Liverpool FC, Manchester City FC, Manchester United, Real Madrid CF and Tottenham Hotspur have all joined as Founding Clubs. It is anticipated that a further three clubs will join ahead of the inaugural season, which is intended to commence as soon as practicable.

The statement and announcement took nearly everyone by surprise and resulted in widespread condemnation by fans, players, the media, politicians and the football governing bodies. Approximately 72 hours later, the European Super League was dead. Its existence was extremely short lived.

According to reports, the ringleaders behind the Super League were Real Madrid and Manchester United. Real Madrid President, Florentino Perez, was named as the Chairman of the League. Manchester United’s Co-Chairman, Joel Glazer, was named as the Vice-Chairman of the league.

The fundamental problem with the European Super League was that nobody wanted it except the owners of the Founding Clubs. Whilst reports acknowledge that the Founding Clubs were braced for a backlash to the announcement, it seems that the backlash was far more ferocious and wider than anticipated. The Founding Clubs played their hand terribly.

There was no engagement with the fans or any other interested party, other than it seems JP Morgan, the American Investment Bank that was going to fund the League to the tune of somewhere between US$3.5billion and US$4billion.

Once the press statement was released, the Founding Clubs failed to make any further announcements, save for Arsenal and Chelsea releasing statements on their websites and social media platforms confirming their participation. The players and management of the Founding Clubs knew nothing about the proposed League. The Liverpool, Chelsea and Manchester United managers were left to answers questions from the media about the announcement yet knew nothing about it themselves!

Aleksander Ceferin, the UEFA President, released a scathing attack on some of the individuals behind the creation of the league. It should be noted that UEFA has recently agreed to reform its club competitions: the Champions League, the Europa League as well as the introduction of the Europa League Conference League. The Founding Clubs had agreed to the UEFA reforms. In relation to Juventus President, Andrea Agnelli, Mr Ceferin remarked:

Andrea Agnelli is the biggest disappointment of all, I’ve never seen a person that would lie so many times, so persistently as he did. It’s unbelievable.

Regarding Manchester United’s Ed Woodward (who resigned from his position as Manchester United’s Vice-Chairman 48 hours after the announcement of the Super League), Mr Ceferin commented:

If I start with Ed Woodward, he called me last Thursday evening saying he’s very satisfied with and fully supports the reforms and the only thing he wants to talk about was Financial Fair Play, when obviously he had already signed something else.

Whilst the Super League has created almost universal uproar, what were the real reasons for its intended inception by the Founding Clubs? The answer is, no doubt, a complex issue, including multiple reasons, arising out of both corporate, financial and regulatory issues; however, the overarching theme appears to be that the Founding Clubs no longer have a primary focus on the football, but a greater focus on commercial revenues. It would be difficult to argue against this when the format of the Super League was going to be a closed shop, with only five teams being able to qualify and the fifteen Founding Clubs being exempt from relegation, thus creating a steady business model that is not under threat from rivals.

This is the model used in American sports – and it is to be noted that a number of the Founding Clubs are American owned – although there is a draft system in place to supposedly rebalance competition.

The six English Founding Clubs have been the dominant forces in the Premier League since its inception nearly 30 years ago, winning the league between them every season except two (Blackburn Rovers and Leicester City winning the other two). The Premier League has been extremely lucrative for the six Founding Clubs, creating huge TV revenues and commercial deals. Stadiums have been built (or redeveloped) into some of the best football stadiums in the world and a significant number of the best footballers have been enticed to Clubs with huge transfer fees and salaries.

The result of the huge increase in revenues for the Founding Clubs, is that they have subsequently been purchased by foreign owners, who have little interest in the traditions of the English game, but more of a focus on maximising revenues. It should be noted that a number of foreign owned takeovers of football clubs have been by way of debt finance, Manchester United, being probably the most notable club to be purchased this way by Malcolm Glazer in 2005.

This has created a problem for the English Founding Clubs in that the huge TV revenues have resulted in the broadcasters demanding that they air more and more matches on TV (on subscription only channels) and their rivals have also been snapped up by foreign based owners, who now have more funds to challenge the status quo. There is a belief that the TV revenues may have reached saturation point. This may well turn out to be correct and we will know that once the next round of Premier League broadcasting packages are sold.

Florentino Perez also appears to believe that TV revenues might be at saturation point. In a statement he released after the announcement of the Super League, Perez stated:

Young people are no longer interested in football. They have other platforms on which to distract themselves……..”

The first sentence in the above quote is patently not true. There is huge interest in football amongst young people, but there might be some truth in the argument that young people (and people in general) are turning off from watching football on TV, which is where Real Madrid and the other Founding Clubs will feel the squeeze. If this view is correct, then the reasons for that have ultimately been contributed to by the Founding Clubs. For the Founding Clubs to receive more revenue, the broadcasters need to buy the rights at higher prices. This results in the broadcasters needing to sell their TV packages to consumers at higher prices. But consumers only have finite resources. Consumers also have many more options to consume entertainment, which Perez is surely referring to when he stated that “They have other platforms on which to distract themselves.”

If the Super League clubs want to increase revenues and profits, which they do, then they could all make a concerted effort to focus on reducing their largest outgoings: players’ salaries.

In the Deliotte Annual Review of Football Finance 2020, it was stated that:

Over the last two completed seasons the combined increase in wage costs has outstripped revenue growth of Premier League clubs.

This is a startling position and, as a result of football clubs not receiving match day revenues for approximately one year due to the Covid-19 pandemic, wages to revenue ratio is likely to be much higher, possibly at unsustainable levels.

The reason why footballers’ salaries are so high is a simple case of supply and demand; however, some of the Founding Clubs have been major drivers in increasing players’ salaries in order to maintain their lofty positions at the top of the football pyramid. In order to attract the best footballers, the Founding Clubs need to pay the biggest salaries, which, in effect, increases the salaries of all other players. Seventeen out of the twenty most expensive player transfers in football have involved a Founding Club as the purchasing club (the other three transfers involved Paris St Germain and Bayern Munich – whose failure to commit to the Super League is a potential reason why it failed from the outset.

The announcement of the Super League is now approximately two weeks’ old. Following the dramatic collapse on Wednesday 19 April, there has been very little in the way of follow-up from the football authorities. It is understood that executives at the six English Founding Clubs have been forced to resign from their advisory roles at the Premier League. Various sanctions have been mooted against the clubs, but none so far have been handed down. Sanctions appear to be a double-edged sword as the Founding Clubs still remain the biggest attractions in terms of commercial revenues to the authorities, whether that be the Premier League in England, La Liga in Spain, Serie A in Italy or UEFA.

Whilst we do not know what the exact outcomes will be of the failed Super League project, it appears unlikely that it, or a similar project, is going to happen anytime soon. The Founding Clubs have been well and truly stopped in their quest for greater control and autonomy of their businesses.

This is a good thing for both fans, who have proved supreme in this controversial affair, and also for sporting competition, which has also triumphed!

Jonathan Copping may be contacted by e-mail at ‘JonathanCopping@stoneking.co.uk’