The big continental European clubs want a more valuable European competition to keep up with (and maybe rein in) the EPL and its largest clubs, whereas the top EPL clubs want more guaranteed participation in a European competition
Mark Oliver
Mark Oliver is the chairman and founder of Oliver & Ohlbaum Associates, leading the firm’s advice on media, entertainment and sports investments to both investors and target companies/organisations, covering over £20 billion of deals since 1995.
Where next for European club football after ESL debacle?
11th June 2021, 18:35

Two months on from the attempted breakaway, Mark Oliver, chairman of Oliver & Ohlbaum Associates, the London-based strategic advisers to the media, sports and entertainment industries, analyses the possible implications of the ESL affair.

The clues over where European club football goes from here after the very short-lived breakaway European Super League fell apart in April can be found in: the reasons for its failure; the motivations for its formation; and some of the specific ideas adopted by the ESL.

The ESL was above all a political misjudgement. At one level a failure by a group of billionaires on the one hand (in England and Italy), and fan elected football club presidents (in Spain) on the other hand, to understand the broader political storm that might result from its formation.  A storm that led to both a populist prime minister of the UK (Boris Johnson) and an increasingly Gaullist president of France (Emmanuel Macron) France to not just condemn it but call for direct legislative action to prevent and/or punish it if necessary.

Had the owners not noticed the recent rising antagonism around about out-of-touch global elites caring little for national traditions? Maybe you don’t notice such things from a private jet or private yacht, but the elected Spanish club presidents should have known better surely?

And in this difference lies a clue about the future. Fan power at Real Madrid and Barcelona did not prevent the two clubs being founder members of the ESL, and indeed, at the time of writing, two of the three clubs (the other being Juventus) that have not abandoned the ESL project. A club accountable to fans can, if anything, be more susceptible to irrational miscalculation as a club run as a business or personal plaything by a billionaire. One suspects German clubs are more constrained in their spending and finances than Spanish clubs because they are German, and not because they are more accountable to their fans through their rule that fans (members) must control one share more than 50 per cent of the business.

There were no big fan demonstrations outside the Santigao Bernabeu or Camp Nou, as there were outside Old Trafford and Stamford Bridge. Maybe this was because the Spanish and Catalan fans quite liked the idea of the ESL and realised that contrary to Real president Florentino Perez’s statement that there was “three years to save European football,” the real driving force was that Real Madrid and Barcelona had six months to save their broken business models of outspending the top English clubs for the world’s top players while being part of LaLiga, whose commercial income is just 60 per cent of that of England’s Premier League

And here perhaps lies another clue – there are two super leagues currently in Europe that enjoy global profile and the highest income – the Uefa Champions League, which the largest clubs in continental Europe easily qualify for each year due to the lack of competitiveness at the top of their national leagues (and if they don’t it’s because they don’t run their clubs properly), and the English Premier League, which is still the most competitive among the big five leagues and is worth the most globally, but where the largest six clubs that can all claim to be global brands can’t all qualify for the Uefa Champions League each year even if they are well run.

The big continental European clubs want a more valuable European competition to keep up with (and maybe rein in) the EPL and its largest clubs, whereas the top EPL clubs want more guaranteed participation in a European competition. This differing perspectives in the UK versus continental Europe – in a mirror of larger political events in the last five years - will remain.

The pushback by fans at guaranteed participation, something the top EPL clubs need more than the top continental European clubs, offers another clue to the future. Fans want their clubs to succeed, or at the very least have chance of success, but they also want it to be a good fight worth winning, not a walkover, they want jeopardy to make each victory more sweet, and they want a season-long narrative to help create the compelling story. While the ESL itself might have provided a good season-long narrative and plenty of match-by-match jeopardy for fans of the largest eight or nine sides in Europe, it might not have done for the other nine or 10 clubs, and the manner of qualifying for it would have undermined the narrative of the national leagues significantly - most damaging to the EPL narrative and value in all likelihood.

Analogies the ESL club owners made with US sports leagues that have no relegation threat or promotion to a larger more global league but remain hugely popular were misplaced. There is a form of promotion in terms of the status of the playoffs versus the regular season games, and each element of the system is designed to maintain some competitive balance between the teams to increase the season-by-season jeopardy and the longer-term narrative of the rise and fall of individual teams.

Wage caps, top college player draft pick ordering, and the willingness to move city franchises to follow wealth and population changes are all designed to even up the league. US sports create their compelling stories in a different way, which includes an exemption from US competition law to act as the “only form of socialism” in the USA. Taking one element of the US system – automatic participation – and applying it alone to European football, completely misses what else might be needed instead of relegation to help the narrative.

The ESL plan did mention potential salary caps and reforms to the transfer system, and the founder member teams were selected on the basis of all having significant fanbases to even up the competition, and they had put aside a solidarity payment budget in part to compensate the national leagues – but it wasn’t fully thought through or communicated.

The last clue from the whole experience was the differing views of traditional domestic market fans and those outside of Europe. While the responses on news outlets were largely anecdotal there was the clear impression that fans in Asia were a lot less spooked by the ESL than those in Europe – some even spoke up in favour. I would guess the same would be true of fans in the USA, the Americas, the Middle East and Africa.

This betrays perhaps the biggest long-term issue for world football to wrestle with – how to grow the game globally, and what the role of Europe, the traditional heartland of club football should be in that – an issue that often puts Uefa and Fifa in conflict. Fifa wants to grow the sport in each of its global regions (all regions and countries have equal votes in Fifa even if Europe is by far the wealthiest), and this might be best pursued by developing national club football outside of Europe – the J.League in Japan and the A-League in Australia, for example. Europe is keener on growing the global appeal of the Uefa Champions league and the clubs within it.

10 potential consequences

So what might this all mean for the future of European club football after the dust has settled and the punishments and legal cases have been resolved?

First, the proposed reforms to the Champions League post 2024 – the move to a 10-match group stage based on the ‘Swiss model’ – will probably go ahead, but the wildcard entry for some ‘heritage’ teams that have performed well in Europe over a number of years (even if they don’t come near the top of a league in a given year) might be removed or watered down. This will antagonise the 'big six' in the EPL (Manchester United, Manchester City, Liverpool, Chelsea, Arsenal and Tottenham Hotspur) the most.

Second, the three ESL holdouts might challenge Uefa’s attempt to ban them from the competition – if for no other reason than to prove they were right when they said Uefa couldn’t stop the ESL under current EU competition law. But in the end, I suspect they will come reluctantly back into fold even if the Champions league reforms remove wildcard entry for heritage clubs (they need that less than the EPL big six).

Third, the moves by the big five national leagues to adopt new rules that allow them to expel any club from their leagues should they try something like the ESL again might well hold the top clubs in check for a while, but they will increase the likelihood in the longer term that any new ESL will be a complete season-long, weekend-based breakaway from the national leagues as well as the Champions League. And if that is attempted then maybe this time the founder clubs – or the new Super League backers - will do their political homework and lobby politicians as well as employ lawyers to fight Uefa.

Fourth, the ESL debacle will bring politicians back into the debate about football’s future in Europe after they have largely kept away since the Nice Protocol in 2000. Prompted both by the first failed rogue plan for a European Super League in 1999 and the attempts by the European Commission to reduce national league’s ability to negotiate TV rights deals collectively – as it distorted pay-TV competition – the European heads of state committed in 2000 to exempting sports from European general competition policy rules and regulations if necessary to protect the integrity and special status of sports, and in particular football. Indeed, in the UK the path to direction intervention has already appeared with the Crouch Review.

This could have implications not just for the extent to which football can set its own rules, but also might limit the potential for other sports breakaways in the future. It is under current EU competition rules that Fina was prevented from stopping the International Swimming League, and Fiba prevented from stopping the alternative European basketball competition. If sports get an exemption from these rules, this might empower current sporting bodies to punish those involved in such breakaways.

Fifth, as a way of combating the future threat of another ESL project, there will be momentum behind a larger Fifa Club World Cup, perhaps every two years, with up 24 teams, as envisaged by Fifa president Gianni Infantino.

Sixth, the top clubs in Europe will look for other ways to change the system to their benefit, focusing initially on ending the transfer payment system for players in contract, where the top clubs are almost all net payers to other clubs, and even if they don’t get that reform through they will move to limit the commission and behaviour of players’ agents in the that market, something Fifa is keen on too.

Seventh, the arms race both between the top national leagues in Europe and between them and the Champions League to gain in appeal outside of Europe will continue in what looks increasing like a winner-takes-all game – the top-ranked European league in the US gets twice the media rights fee of the second-ranked league. which gets twice the third-ranked league etc. This is likely to be exacerbated by attempts to make the national domestic leagues outside Europe more attractive, which will mean those European leagues lower down the global rankings will slide further behind the others. Some leagues might bring in private equity partners to help in this arms race.

Eighth, top clubs in each European league will tone down any demands to gain a higher share of domestic league revenue for a while – some might even find their share declining as the failure of the ESL has reduced their bargaining leverage. But resentment to owners of the large clubs will smoulder, and some may exit and sell on, and those that remain will continue to push for further reforms to the Champions League and perhaps for an expanded Club World Cup (with wildcard entries), which may well increase the gap between the top clubs and the rest.

Ninth, beyond the top clubs and top leagues in Europe there may be renewed attempts by the second tier of leagues to merge in some form or reform the Europa League into a bigger event, with perhaps regional conferences.

And tenth, women’s football may become the home for a proxy war for control between federations, national associations, national leagues and top clubs as it doesn’t suffer from the same constraints of history as the men’s game. This might well be damaging for the whole sport as growing the appeal of football – both men’s and women’s - to the 51 per cent of the population that tends to follow sport less, is probably the best way to ensure it counters the trend of the under-25s being slightly less into football than previous generations. And all the politics may well further put off Generation X.

In many ways the failure of the ESL project may mark the beginning of a period of large-scale change for European football, and that maybe its greatest legacy.