In The Premier League, The Sun Always Shines On TV

When Sergio Aguero crashed home the injury time winner to secure Manchester City’s Premier League title, he almost certainly gave little thought to the financial ramifications of his well taken goal, but it could be argued that this sublime moment provided the impetus for last week’s record television deal, which has climbed around 70% to £3 billion over the next three-year cycle. As the Premier League’s chief executive, Richard Scudamore, said, “We couldn’t have gone to market at a better time.”

The Premier League’s relentless publicity machine had already given the award for Best Season to the 2011/12 campaign for its “mix of wonderfully memorable matches, unbelievable drama and continuing excitement at both ends of the table”, but Aguero’s spectacular flash of inspiration delivered the cherry on the icing on the cake.

Scudamore’s revelation that the Premier League would be paid over £1 billion a season from 2013/14 was equally dramatic, leaving most seasoned observers of such deals open-mouthed with astonishment. Even the league’s head honcho was moved to say that he was “as surprised as anyone” that they could achieve such an enormous increase in these recessionary times.

"Scudamore - the deal is this big"

The basic facts of the deal are that Sky and BT have bought the domestic rights for the three years between 2013/14 and 2015/16 in a sealed bids tender. Sky have again retained the lion’s share winning 116 of the 154 matches (the maximum allowed to any broadcaster), but have had to shell out £2.3 billion, a 40% increase on the £1.6 billion they paid last time around.

The surprising new kids on the block are BT, who won the rights to 38 matches, around a quarter of the total on offer. They paid £738 million to replace ESPN, who only paid £159 million, though it should be noted that the home of Disney picked up the rights from the failed Setanta and they only covered 23 games. Interestingly, BT also have almost half of the “first pick” games, e.g. those featuring the leading clubs, which is the first time that Sky have not had all of them.

So the total received for live domestic rights adds up to £3 billion (or £1 billion a year), which represents an amazing 70% rise over the current £1.8 billion. That’s not the end of the story for the TV gravy train, as the BBC has also paid £180 million for highlights (a comparatively minor 4.5% increase on the current £172 million), producing a total of £3.2 billion for domestic rights.

On top of that, there is the money for overseas rights, which is currently worth £1.4 billion. Assuming some reasonable growth, a figure of £2 billion is not out of the question for the next deal, which would mean a total of £5.2 billion for the next cycle, i.e. a mighty £1.7 billion a year.

Even that figure does not include the money received for near-live, on-demand and internet clips, but that’s relatively small – at least in the context of the mega deals for live matches.

Although Scudamore employed typical English understatement when he described the latest deal as a “decent commercial increase”, the reality is that this is the envy of the world. While he may give the appearance of an arrogant blowhard, there is no doubt that Scudamore is a master of the deal. In fact, the growth in the Premier League’s TV rights is quite staggering, if you consider that the original domestic rights sold for less than £50 million a season back in 1992, while the latest contract brings in more than a billion.

Much of the growth is due to more games being televised. This amounted to a meagre 60 in the early days of the Sky revolution, but is now up to 154 in the latest deal, a 12% increase from the current 138. However, that does not explain all of the growth – far from it.

Perhaps the best way of highlighting the magnitude of the increase is to look at the amount paid per game, which has increased from the current £4.3 million to £6.5 million, working out to an astounding £73,000 per minute. Looked at another way, the £637,000 per match in the first Sky contract would pay for less than nine minutes at today’s rates.

The Premier League’s next rabbit out of the hat should be the sale of overseas rights, which will only be concluded in a few months. Deloitte think that these might go for even more than the domestic rights, which would imply them more than doubling from £1.4 billion to £3 billion. Scudamore himself noted, “I can see several chairmen saying, 'You’ve got 70% more on the domestic deals and we want the same from international’”, which would mean £2.4 billion from overseas rights.

My expectation is that there will certainly be an increase in some territories, notably North America, the Middle East and Asia, but I’m going to be more conservative in my calculations and go for an increase of around 40% to £2 billion (£667 million a season) for the rest of this analysis.

Many had believed that the value of the domestic rights had reached saturation point, as they had hardly grown at all in the last 2010-13 cycle, when overseas rights had driven virtually all of the increase (£0.8 billion of the £0.9 billion growth). This had resulted in overseas rights accounting for 42% of the total TV money, up from just 11% in 2000. This might not seem to be significant in the wider scheme of things (after all, who cares where the money comes from?), but it is important to smaller Premier League clubs, as overseas rights are distributed equally in contrast to the methodology used for domestic rights.

Indeed, if you look at the trend in TV rights since the formation of the Premier League, it is overseas fans that have been behind the explosive growth with the revenue more or less doubling each time that the rights are re-negotiated. Per season, that works out to 2001-04 £59 million, 2004-07 £108 million, 2007-10 £208 million and 2010-13 £479 million.

In contrast, domestic rights have stuttered, falling 18% in 2004-07 before surging 66% in 2007-10, then rising only 4% in 2010-13 before the latest 64% increase. Please note that the widely quoted 70% increase in domestic rights only refers to the live matches. Once the domestic highlights are also included, the total increase equates to 64%.

This massive rise is partly due to the tried and trusted economic law of supply and demand, as the previous tender process was effectively a two-horse race, only featuring Sky and a weak Setanta, while this time round there was much more meaningful competition for Murdoch’s empire with BT, ESPN and the threat of moneybags Al-Jazeera entering the race.

Of all people, Sir Alex Ferguson was one to argue that the rights to live football had been under-sold, when he suggested that broadcasters should pay more, “I don’t think we get enough money.” Even that wily old fox must have been impressed by the new domestic agreement, which is 25 times as much as the first Sky deal. In fact, assuming the overseas rights are sold for £2 billion, the overall TV rights have risen an incredible 3,300% in the 22 years since the Premier League came to pass.

"Sir Alex Ferguson - media visionary"

As with any deal, there will be winners and losers. Most obviously, the Premier League clubs will benefit from a substantial increase in revenue, though much of this will go on the players, either via higher wages or transfer fees (plus agents’ commission). Scudamore has often described this as a virtuous circle that allows English clubs to compete with their foreign counterparts, “The continued investment in playing talent and facilities made by the clubs is largely down to the revenue generated through the sale of our broadcast rights.”

However, every silver lining has a cloud and other clubs are likely to suffer, notably those in the Championship, as the revenue gap to the top flight further widens. Other sports might also be hit, as their television budgets are cut in order to fund the higher bill for football. Similarly, Sky subscribers may well be confronted by price rises.

In theory, clubs might soften that blow by using part of their new riches to reduce ticket prices, but I wouldn’t hold your breath on that one. There are also question marks over how big a slice of the pie will be allocated to developing grass roots football and the national team.

The smart money has to be on the Premier League clubs taking the vast majority of this windfall, as is the case with the current distribution of the league’s revenue. As it stands, a great deal of the TV money is shared equally: 50% of the domestic rights, which is worth £13.8 million to each club, and 100% of the overseas rights, worth £17.9 million to each club.

However, 50% of the domestic rights are allocated in a way that does favour the leading clubs. For these funds, 25% is for merit payments, determined by the club’s final league position with each place worth an additional £757,000; and 25% is paid in facility fees, based on how often a club is shown live on television, which benefits the top clubs that are broadcast more often.

Nevertheless, the ratio from top to bottom earning clubs in terms of TV payments is much smaller in the Premier League at 1.6 compared to other leagues: Germany 2.0, France 3.5, Italy 4.2 and (most obviously) Spain 10.8. In this way, the top club in 2011/12 (Manchester City) earned £60.6 million, compared to £39.1 million for the bottom club (Wolverhampton Wanderers).

Scudamore was at pains to emphasise that this approach would continue, “The money is not just put into the hands of the top three or four clubs. The way this money is divided means our smallest clubs are able to compete and, on a match-to-match basis, take on the big clubs. In our league that happens more than anywhere else and as long as we can still have teams in the bottom three beating teams in the top three every season, then we have a compelling competition. And as long as that continues, people will continue to want to invest in buying that content.”

In other words, if it ain’t broke, don’t fix it. Taking Scudamore’s lead, we can fairly safely assume that the future deal will be treated the same way as now. If we apply the overall 64% increase in the domestic rights to that methodology, we can see that the bottom club’s revenue would be increased by £13 million to £52 million, while the top club’s revenue would grow by £26.7 million to £87.3 million.

This is broadly in line with Scudamore’s guidance that each club’s revenue would be at least £14 million higher, but I’m guessing that he simply applied the 70% increase for the live UK rights to get his (slightly lower) figure. Many have written that the new contract would mean that the bottom club in 2013/14 would receive as much as the top club now (£60.6 million), but we can see that this is not quite the case.

It should be noted that even if the percentage increase is the same for all clubs, the absolute increase would be larger for the leading clubs. So, even in the Premier League, the gap would widen between clubs: in 2011/12 the difference between top and bottom is £21.5 million, which would grow to £35.2 million in 2013/14.

If we continue with this logic for the overseas rights, which we have assumed will rise 39% to £2 billion, then the total increase in revenue would be even more: £34 million for the top club to £94.6 million, £20.3 million for the bottom club to £59.4 million. Due to the equal allocation of overseas rights, the gap between top and bottom would still be £35.2 million.

Of course, if the overseas rights come in at a higher figure, e.g. growing by the same amount (70%) as the UK live rights, then the sums would be even higher with the top club earning around £100 million and the bottom club receiving £65 million.

The Premier League was already comfortably the richest domestic league in terms of TV deals, but it is now miles ahead of its peers. At an exchange rate of 1.25, the Premier League deal will grow from €1.4 billion a year to €2.2 billion, which is more than twice as much as Serie A’s €1 billion and around three times as much the other leading leagues: Bundesliga €700 million, La Liga €655 million and Ligue Un €642 million. The principal reason for the disparity is the overseas rights, which are currently worth €0.6 billion a year in England (projected to grow to €0.8 billion), but are negligible everywhere else.

Some leagues have also managed to increase their TV deals, notably the Bundesliga, where the domestic deal for the four years through 2017 rose 52% from €410 million to €628 million and the overseas rights increased by the same rate to €72 million. The Bundesliga’s chief executive, Christian Seifert, was ecstatic, “ We didn’t expect results like this, it clearly exceeded our expectations”, but it paled into insignificance next to the Premier League.

Italy’s TV rights have also been growing since they returned to collective bargaining, but others have not been so fortunate. The French league’s new four-year domestic deal of €610 million with Qatar-backed Al-Jazeera is lower than the current €668 million, though their president considered this to be “more than satisfactory in the current economic climate.” In the same vein, the Scottish Premier League extended their agreement with Sky/ESPN until the 2016/17 season for a combined £16 million  year, an increase of just £3 million on the existing deal – and even that depends on four Old Firm matches a season, which must be under threat due to Rangers’ current crisis.

The rise in the Premier League’s TV rights has been so impressive that on its own its estimated €2.2 billion will be higher than the TOTAL revenue of every other league: Bundesliga €1.746 billion, La Liga €1.718 billion, Serie A €1.553 billion and Ligue Un €1,040 billion.

As yet another comparison, it is also higher than TV rights for the Champions League (£0.9 billion), the European Championships (£0.7 billion) and the World Cup (£1.5 billion), though obviously they feature far fewer matches.

The impact on individual clubs will be striking. Everyone knows that Real Madrid and Barcelona benefit from their individual TV deals in La Liga, which last season amounted to £112 million (€140 million) each. This was getting on for twice as much as the £60 million earned by England’s top two clubs, Manchester City and Manchester United, but the gap will close with the new deal, as I am estimating that this will increase to around £95 million.

It might even close altogether if: (a) the rise in overseas rights is more than the assumed 40%; (b) the Spanish giants come under pressure to adopt a collective deal. Nevertheless, this is still a giant step in the right direction for English clubs, as noted by Scudamore, “Our challenge under a collective selling model is to try to make sure that our top clubs are able to compete with the top clubs that have got an individual selling model. I am pleased that this will take our clubs up a notch closer to those clubs who benefit from that individual selling model, say in Spain.”

There is no doubt that this TV deal will improve the competitive position of English clubs. The last Money League produced by Deloitte had Manchester United in an impressive third position with £331 million revenue, but this was significantly lower than Real Madrid £433 million and Barcelona £407 million, but ceteris paribus this shortfall would be almost entirely eradicated by a combination of the extra TV money and the change in the exchange rate (as the Pound has strengthened from 1.11 to 1.25 Euros).

As a result of these changes, Madrid would still lead the pack with £384 million, but United’s revised £365 million would overtake Barcelona’s £361 million. Similarly, Arsenal and Chelsea, whose revenue would rise to just under £260 million, would be more or less the same level as Bayern Munich, despite the new German TV deal giving them £10 million more a season.

What will be interesting is to see whether this influx of new money into the Premier League changes clubs’ attitudes to European competition. Over the last two seasons, the four English clubs in the Champions League have earned on average around £32 million a season, though that has been boosted by Chelsea winning the trophy in 2011/12 and Manchester United reaching the final in 2010/11.

Next season’s new Champions League TV deal is reportedly worth an additional 21%, taking the average up to just under £40 million, so this is still worth getting excited about, especially if we add in gate receipts and higher payments from sponsors. However, the Europa League becomes an even less attractive proposition, paying out around £5 million, so English clubs might take it even less seriously than before.

The Champions League would still be a game changer, assuming that the Premier League payments remain reasonably equitable in nature, as can be seen by the graph above, which clearly shows the financial importance of Europe’s flagship tournament at the margin.

At the other end of the spectrum, the impact on clubs in the Championship should not be underestimated. There is already a sizeable gap in the TV revenue between England’s top two divisions, with most Championship clubs earning around £5 million a season, largely comprising a £2.5 million payment from the Football League and a £2.2 million payment from those generous folks at the Premier League, compared to the bottom club in the Premier League’s £39 million. Those clubs relegated from the top flight also benefit from parachute payments of £16 million.

So the current gap to the Premier League’s bottom club is £34 million or £19 million (with parachute payment). In the future, as we have seen, the bottom club in the Premier League could expect £59 million, but the money available to Championship clubs is still unclear. When this question was put to Scudamore, he was not particularly encouraging, “I don’t want to get drawn on that. That’s for the 20 clubs to decide. But there’s always a line of people around the block outside Gloucester Place looking for their share.”

Notwithstanding his elusive response, we can probably assume that the overall (estimated) 53% in TV rights would also be applied to solidarity payments, which would increase to £3.4 million, and parachute payments, up to £23 million. Unfortunately, the new Football League three-year Sky TV deal that kicks off in the 2012/13 season will be £69 million lower than the current contract at £195 million, which means a reduction of 26% (or £23 million) a season. This reflected what Football League chairman Greg Clarke called, “a challenging climate in which to negotiate television rights.” That would imply a reduction in the Football League distribution to £1.8 million.

So, from 2013/14 the majority of Championship clubs would receive £5.5 million, a thumping great £54 million lower than the bottom club in the Premier League. Even those clubs benefiting from a higher parachute payment would only get £29 million, though this would be more than five times as much as a “normal” Championship club. This runs the risk of creating a closed shop featuring the 20 in the top flight plus 5-6 yo-yo clubs.

The dangers for clubs in England’s second flight are obvious, as the urge to spend beyond their means might become unbearable, given that the size of the prize following promotion is even larger than before. Although this should be restrained by the implementation of Financial Fair Play regulations in the Championship from the 2012/13 season, they will be squeezed by the contrary impact of wage inflation trickling down from the top tier.

From the perspective of the lesser lights in the Premier League, the new deal is not all milk and honey either, as it places them under even more pressure to survive in the top flight, as QPR’s chief executive, Phil Beard admitted, “It does make it even more important not to be one of the three teams that don’t stay in the Premier League.”

TV money is critically important to their prospects. In 2010/11 television accounted for a staggering 70% or more of revenue at clubs like Wigan Athletic, Blackburn Rovers, Bolton Wanderers and West Bromwich Albion. Without this money, these clubs simply wouldn’t be able to compete and might even struggle to survive.

The new television deal brings more clubs into that category with over half of the Premier League earning more than 70% from this revenue stream. At the extreme, Wigan would earn an almost unbelievable 92% of their total income from TV in future  – they might as well let fans into the stadium for free, especially as they will be constantly messed about over kick-off times to suit television schedules. As the old saying goes, he who pays the piper calls the tune.

So these clubs will also be tempted to splash the cash in order to avoid the nightmare scenario of relegation. Parachute payments might cushion the impact, but it’s still a fearsome drop in revenue. Even those clubs with the foresight to include relegation clauses in their players’ wage contracts would suffer.

Very few things are certain in life, but it’s a fairly safe bet that the majority of the additional TV money will simply flow into players’ bank accounts. Since 2007 total Premier League revenue has grown 48% from £1.5 billion to £2.3 billion, but wages have increased at an even faster rate by 66% from £1 billion to £1.6 billion. In other words, 86% of the revenue growth of £740 million has simply fueled an increase in the wage bill of £640 million.

The important wages to turnover ratio has steadily risen from around 60% to a record 70% in 2010/11. To put that into context, this ratio was only 44% in 1992, the season before the advent of the Premier League, when revenue was £170 million and wages £75 million.

Even Scudamore was moved to comment on this danger, albeit as a secondary objective, “Priority number one is retain and attract top talent, but there ought to be a way of doing that while achieving sustainability. Some of it ought to be used to reduce losses.” The more cynical among you would undoubtedly argue that we’ve heard it all before, but there are some signs of a more sober approach taking hold, as eight Premier League clubs reported a profit in 2010/11. That might not be the most compelling endorsement, but it is twice the number of clubs that were profitable the season before.

Of course, the Premier League could address this issue full on, if they were to amend their current approach of distributing the vast majority of their revenue to the Premier League clubs. In 2010/11 nearly 80% (£953 million) of their total revenue of £1.2 billion was allocated to the clubs with only 8.6% (£105 million) in external payments, which is frankly derisory.

The Premier League argue that 14% (£167 million) of their money goes in external payments, but this includes £62 million of parachute payments, which seems a little disingenuous, not least because it could be argued that this exacerbates the problems for other Championship clubs.

In fairness, the Premier League has given more money in the last few years with solidarity payments to the Football League doubling from £11.2 million in 2008/09 to £22.4 million in 2009/10, and then rising again to £56.4 million in 2010/11. Other external payments include £12 million to the Football Foundation, £10.8 million to the Creating Chances programme, £17.3 million to the Professional Footballers’ Association, £2.9 million to Professional Game Match Officials, £0.5 million to the League Managers’ Association, £3.1 million to Football League youth development and £2 million to the Conference.

In this way, the Premier League have described themselves as the most redistributive league in Europe, but as we have seen, they are also by far the wealthiest. The feeling is that the solidarity payments are little more than the scraps from a rich man’s table and that the Premier League could (and should) do more. Thanks to their supreme negotiating skills, the opportunity is now there in spades to do exactly that, but it would be a brave man that gambled money on this happening.

Some of the additional money could also be used to boost the prospects of the national team, which older readers will remember was one of the original objectives behind the creation of the Premier League. That has not exactly worked out very well, considering the contrasting fortunes of the league with England’s brave lions.

The Premier League has already budgeted £300 million for the Elite Performance Player System (EPPP), the new approach to developing youth players at club academies, but this is deeply unpopular with clubs in the lower leagues, as it takes away another source of income for them.

Sir Trevor Brooking, the FA’s director of football development, says that the number of English players in the Premier League needs to double to 60-70% (like Spain), but the worry is that the greater spending power from the TV deal will only encourage clubs to seek instant gratification by acquiring the top talent from abroad. This is partly addressed by the Premier League’s homegrown player rule, but it is still a possibility.

"It's a whole new ball game"

Scudamore hopes that clubs will act responsibly, “We are entering a new era in football with financial fair play and with general attention to cost constraint. Therefore, I am really hoping that it will get invested in other things besides just playing talent, things like stadia infrastructure and youth development.”

This is a reference to UEFA’s FFP rules that mean that clubs will have to live within their means, i.e. break-even, if they wish to enter European competitions. At the very least, the increased money should help clubs to do that, assuming that it does not all go on player wages. As John W Henry said when he bought Liverpool, “With the FFP rules, it is really going to be revenue that drives how good your club can be in the future.”

It should be pointed out that the first monitoring period covers the two years 2011/12 and 2012/13, but the increased TV revenue only starts the following season in 2013/14, so this is not an immediate answer to any problems a club might have with FFP. That said, it will help them point towards their finances improving, which is an element taken into consideration by UEFA when reviewing a club’s finances.

As for the fans, the good news is that this deal should ensure that they will still have great players to watch every week, but that’s probably the end of it. It would be fantastic if the clubs used this windfall to reduce ticket prices, but that seems unlikely. Scudamore’s free market philosophy towards the clubs was encapsulated in his view that the extra money only “gives them more choices.”

"Platini - delighted at boost to English clubs' FFP prospects"

During the 20 years of the booming Premier League, ticket prices have risen by a gut-wrenching 1,100%, effectively pricing out those on lower income and youngsters. Although the stadiums are still largely full, football’s spectators have become a far more corporate, middle class group, moving ever further away from the community spirit still seen in Germany, where ticket prices are considerably lower.

At best, the new TV deal might prevent ticket price rises, which was a genuine possibility as an unfortunate side effect of FFP. What I would like to see is the Premier League allocate a portion of the money on the condition that it is used to subsidise a proportion of tickets, especially those made available to young people. To put that into terms that the marketing men will understand, this would be an investment in future customers.

Although Sky’s chief executive, Jeremy Darroch, claimed that “this is a good result for our customers”, the chances are that armchair fans will end up having to pay for this via a price increase in their monthly subscription, which they may not consider to be such a “good result.”

This raises the question of why the bids from the TV companies were so high? Scudamore answered this, “It was a very competitive process, which if you are selling is a very good thing.” As well as Sky, BT and ESPN duking it out, there was the threat of Al-Jazeera hanging over the proceedings, while one of the terrestrial channels (ITV or Channel 5) may have bid for one of the packages. Even Google and Apple were mentioned in dispatches at one stage.

"You take me up"

Whoever did actually bid, there were enough “highly credible bidders”, as Scudamore described them, to encourage Sky to step up to the plate and substantially raise their bid. It was imperative for Sky’s business model that they kept the TV rights. They simply cannot afford to lose live football, which is so vital to their revenue. Before they secured the rights in 1992, when they were famously urged by then Tottenham chairman Alan Sugar to blow ITV’s bid “out of the water”, they were really struggling and looked like they might go the way of the defunct BSB.

Since then, it’s been a “whole new ball game”, but Sky are now largely prisoners of their own success, as the name of the game now is to keep other broadcasters away form their prize asset. No wonder Sky chief executive Jeremy Darroch was so relieved that “Sky Sports remains the home of Premier League football” with Super Sunday and Monday Night Football.

Financially, the deal could still make sense for them, as they earn revenue not just from subscribers, but also from pub licences, advertising and a hefty sponsorship deal with Ford. They are also likely to offset much of the football increase by reducing their spend on other sports, which could be bad news for rugby and cricket.

"Everybody's happy nowadays"

For BT this is a strategic decision to use the power of content to push technology sales on their £2.5 billion fibre broadband network. A spokesman explained, “Football will drive our fibre business and give us a real opportunity to win new subscribers and sell more products to those customers.”

Many other companies have tried to make a dent in Sky’s dominant position and failed (On Digital and Setanta went bust, while ESPN have been left empty handed), but BT have an ace in the hole with nearly half of the first picks: “We’ve got the first match of the season and when you look at the kind of fixtures we’ll be able to show, they are the crown jewels. Fans of football will want to see those games.” BT are likely to provide a new sports channel on “as many platforms as possible.”

The financial possibilities offered by the Premier League is the main reason for the arrival of so many foreign owners, especially from America, e.g. the Glazers, Stan Kroenke, John W Henry and Randy Lerner. In contrast to sports franchises in the US, where they have to share all revenue received, including TV money, gate receipts and merchandising, in the Premier League they keep the vast majority of revenue earned. The other attractive aspect of the Premier League for American investors is its global appeal, which again is not something enjoyed by sports like baseball, basketball and American football.

Specifically on television, John W Henry said, “American owners understand media and the long-term global implications. They're going to want to reach their fans in the new media landscape. The Premier League was created in response to changing media. Audiences will drive leagues rather than the other way round.”

"John W Henry - the future's so bright, I gotta wear shades"

It is equally clear that foreign owners see great promise in online delivery, hence Stan Kroenke’s purchase of a 50% share in Arsenal Broadband long before he launched his takeover bid for the whole club. Indeed, the emergence of fast broadband networks might be the catalyst for clubs to launch their own channels to interact directly with their fans, though advances in technology could also provide a threat to revenue (via illegal internet streaming).

The other major threat to football’s huge TV revenue is regulatory, e.g. a pub landlady in Portsmouth won a case to allow her to use cheaper foreign satellite television services to watch Premier League football. However, to date the Premier League has proved very adroit at finding creative solutions to such challenges, so it would not be a great surprise if it found a way to maintain (or even grow) its revenue, e.g. selling rights on a pan-European basis.

Broadcasters will fight tooth and nail to keep their rights, because live football is essential to their business in the digital era. When Sky Deutschland substantially increased their bid for the Bundesliga rights, an analyst commented, “The price they paid is very high, but they had to fire from all barrels, because this is their killer app.” Across the pond, MLS commissioner, Don Garber, said, “Content is king and sports content is the king of kings.”

"Get your Yaya's out"

Closer to home, the astonishing increase in the value of the Premier League rights emphatically supports that argument. As Scudamore explained, “It has continued to wow audiences. It’s a compelling product. People want it. Broadcasters want to broadcast it. I’ve been five times round this block and every time people say the bubble has burst.”

The fear is that all this lovely money will simply further enrich the players at the expense of the fans, so let’s hope that the Premier League surprise everyone by using a large chunk for the good of the game. As Spike Lee said, “Do the right thing.”

UEFA's Trans-Europe Express

The Euro 2012 tournament has started very promisingly with many decent matches, including a rollercoaster of a draw between Poland and Greece, a dazzling display from Russia against the Czechs, an upset victory by Denmark against the much fancied Dutch and a sublime tactical tussle between Spain and Italy.

UEFA’s courageous decision to break new ground by staging the European Championship in Poland and Ukraine has so far been justified with the football good enough to satisfy the most jaded observer. Off the pitch, doubts remain over the wisdom of this choice, as the long travel distances and high prices have once again penalised many football fans. Even Michel Platini, the UEFA president, described some Ukrainian hotel owners as “bandits and crooks.” More importantly, a few violent and racist incidents have left a nasty taste.

Only in a few weeks will we be able to say whether Euro 2012 has lived up to the grandiose vision outlined by Platini in UEFA’s last annual report, “Our mission is always to put football first, to run our competitions as efficiently as possible and to provide the best possible stage on which the top performers can generate the emotions, intensity and entertainment which, in times of crisis and anxiety, have an even greater value within society.”

"Pole position"

Although that sounds like the height of romanticism, UEFA has become a highly pragmatic organisation that is fully aware of the commercial opportunities offered by such events and recognises the need to “create income which UEFA can re-invest in the game of football.”

Amusingly, it almost seems embarrassed by this financial imperative, as can be seen by the reference to the Beatles’ “money can’t buy me love” in their financial strategy, though this is followed by the assertion that it “can be used in ways which nurture love for the world’s most popular game.” Last year they went back even further to make the same point, quoting 17th century diarist Samuel Pepys, “It is pretty to see what money will do.”

This begs the question of how UEFA actually does make its money and indeed what they spend it on; so let’s dig deep into its finances.

In 2011 they reported a net result of minus €86 million, which on the face of it is not particularly good, but this is misleading for three reasons:

(a) As a not-for-profit organisation, UEFA is not about accumulating money, but is duty bound to re-distribute its income, essentially either directly to the teams participating in its tournaments or to the 53 national associations that comprise its membership via so-called solidarity payments.

(b) The result was heavily influenced by currency movements, especially the devaluation of the Euro against the Swiss Franc, as many of UEFA’s operations are located in Switzerland, which resulted in €50 million of unrealised exchange losses. Indeed, this has hurt UEFA’s figures for the last four years.

(c) The results should be reviewed over a four-year cycle, so that they can incorporate the European Championship. This is invariably a money-spinner for UEFA, which creates reserves that can be used to fund shortfalls in future years, e.g. €106 million was used from provisions in 2011.

It is therefore better to consider UEFA’s performance at the operating level, where the €77 million profit in 2011 was 71% higher than the €45 million posted in 2010. Revenue of €1,385 million grew €76 million (6%) with broadcasting rights of €1,086 million representing the lion’s share (78%) and €275 million (20%) coming from commercial rights. The remaining €23 million includes money from FIFA’s Financial Assistance Programme €6 million, hospitality €5 million, tickets €4 million and fines €6 million.

"Old songs are the best"

The solid revenue growth was to some extent offset by an increase in distributions to participating teams, which broke through the €1 billion barrier for the first time, and staff costs, which rose 26% from €35 million to €45 million. The growth in personnel expenses was partly because of currency movements, as most staff are based in Nyon in Switzerland, but also due to an increase in headcount from 281 to 318.

The operating profit of €77 million was virtually doubled by a net increase in non-operating items of €75 million, made up of €19 million interest income less €50 million exchange differences plus €106 million from provisions.

The resulting surplus of €152 million was then used to make solidarity payments to national associations, which remained unchanged at €238 million, leading to the €86 million annual deficit.

All in all, this is a pretty satisfactory performance. As Platini put it, borrowing from Sepp Blatter’s vast stock of nautical analogies, “In a period of exceptional turbulence in the European and global economies, UEFA managed to negotiate the stormy waters on an even keel.”

Just because they can, UEFA include an alternative presentation of their finances in the form of a source and use of income statement. The source of income is essentially the revenue of €1,385 million plus financial items and release of part of the Euro 2008 provision, which gives €1,453 million income. For the first time, the financial items reduced the amount of total income, due to the adverse currency movements.

At least this format clearly highlights the three main uses of income, namely distributions to participating teams (66% of total), solidarity payments (15%) and organisation of competitions (12%). The remaining categories cover just 7% of the total expenditure.

Although UEFA claim to be “committed to maintaining and enhancing the balance between national team and club football”, by far the most important share around €1 billion) was distributed to clubs participating in the Champions League (€831 million) and Europa League (€158 million). Although UEFA is “very satisfied that solidarity payments (made to national associations) occupy second position in terms of use of income”, the €238 million allocated here is considerably lower than the amount given to club sides.

UEFA are also at pains to emphasise the relatively low €62 million spent on its own governing expenses, which “should not be allowed to exceed 4% of revenue.” This covers staff, travel and the maintenance and running costs of offices in Nyon, including a second building, La Clairière, which was inaugurated in October 2010 to add capacity to the splendidly named House of European Football, and a third office, Bois-Bougy, opened this year. Also bundled into this category are the costs of the various committees and panels, including disciplinary proceedings, but it should be noted that it excludes costs allocated to a specific competition or project.

UEFA’s annual revenue of €1.4 billion is impressive enough, but what is really striking is the growth over the last few years, which they explain in their annual report, while throwing aside any false modesty, “Thanks to the concept of central marketing and, of course, the ever-increasing popularity of UEFA’s flagship competitions, it is possible for UEFA to generate substantial revenue.”

Revenue has risen from €659 million in 2005 to €1.4 billion in 2011, which is the second highest revenue ever, behind the €1.9 billion earned in 2008. That year was boosted by the European Championship in Switzerland and Austria (plus €36 million from revaluing office buildings), so in real terms 2011 is UEFA’s best ever year.

The underlying trend can be seen by looking at the three-years excluding the Euros with the revenue generated in 2009-11 of €3.6 billion being 43% more than the €2.5 billion in 2005-07. This is largely due to the €280 million increase in annual revenue from the Champions League, which started a new three-year cycle in 2009/10, and the creation of the Europa League, which generates €150 million more revenue than the UEFA Cup.

In this way, broadcasting revenue has surged from €485 million in 2005 to €1.1 billion in 2011. Rights for the Champions League are particularly lucrative, e.g. Sky and ITV last year renewed their three-year deal for £400 million.

Similarly, commercial revenue has doubled from €135 million to €275 million in the same period, as UEFA have attracted a veritable plethora of multinational sponsors. The Champions League benefits from five main sponsors (Mastercard, Heineken, Ford, Sony and UniCredit), while the Europa League has one main sponsor (SEAT). In addition, they run a Eurotop sponsorship programme that includes rights to all national team events with five partners (Adidas, Coca-Cola, McDonald’s, Hyundai-Kia and Sharp), while five other companies have signed Euro-specific deals (Carlsberg, Orange, Canon, Continental and Castrol).

Looking at UEFA’s profitability by competition in 2011, it’s all about the Champions League, which generates about 80% of the revenue and contribution after the clubs have taken their share. Its revenue of €1,145 million is more than five times as much as the Europa League’s €210 million, while the contribution of €246 million is significantly more than the junior tournament’s €53 million.

About three-quarters of the revenue goes directly to the participating teams via hefty distribution payments with the remainder covering UEFA’s costs and distributions to national associations. After these expenses are deducted, the Champions League provides a net contribution of €78 million to UEFA, but the Europa League requires €2 million of funding. UEFA is a little defensive about the performance of the Europa League, noting, “It should always be borne in mind that the Champions League took some years to acquire its current status and standards.” All other competitions organised by UEFA run at a loss, including women’s football, Under-21s, youth events and Futsal.

Of course, to get a clear picture of UEFA’s finances, we need to look at the four-year cycle from one European Championships to the next. In the first year, when the Euros take place, there should be a substantial surplus (€236 million in 2008), followed by three years of losses. As UEFA is a not-for-profit organisation, theoretically the cumulative result should be zero, though 2008 to 2011 actually produced a surplus of €56 million.

In that period UEFA generated €5.5 billion revenue, the majority of which (70%) was from the Champions League (€3.9 billion) with €1 billion from the Euros (note that total revenue from the Euros was actually €1.35 billion, but this analysis only includes revenue earned in 2008) and €0.5 billion from the Europa League. We can also see how UEFA set up a revenue provision in the year of the Euros to be utilised in subsequent years.

Also evident is the enormous amount of money distributed by UEFA: €3.4 billion to participating teams (all but €184 million to club sides) and €0.9 billion to national associations. In terms of profitability, the European Championship (€253 million) actually delivers a little more than the Champions League (€214 million) over a four-year cycle, though this is partly down to decisions taken by UEFA regarding the size of distribution payments.

So, the Champions League has proved to be a major success story with Platini boasting that, “There is nothing like the setting, the stage, the experience of a Champions League night.” Revenue has grown like gangbusters from just €45 million in its first season in 1992/93 (yes, I know that the European Cup existed for many years before that) to €1.1 billion in 2011, which would make it the sixth highest revenue generating league in Europe.

Most of this revenue (€831 million in 2011) is distributed to participating clubs. Each of the 20 clubs involved in play-offs received €2.1 million, while the 32 group stage clubs received participation payments of €7.2 million. Performance bonuses included: in the group stage €800,000 for each win and €400,000 for each draw; €3 million for reaching the group stage; €3.3 million for quarter-finals; €4.2 million for semi-finals; €9 million to the winners; and €5.6 million to the runners-up.

Participating clubs also receive a share of the TV (market) pool based on the commercial value of their domestic TV market, the number of Champions League matches played in the current season and their final position in the previous season’s domestic league table.

In 2010/11 the two finalists, Barcelona and Manchester United, each collected over €50 million. Although UEFA argue that this is a relatively small amount of a leading club’s total revenue (11-16% for English teams), this does not include gate receipts, which are kept by home clubs, or the boost in sponsorship and other commercial income. There is little doubt that the current Champions League distribution methodology reinforces the status quo at the top of the football pyramid, as the top clubs earn big bucks year after year, leading to suggestions that this should be reviewed if UEFA genuinely wanted to create a more level playing field.

UEFA have constantly tinkered with the format of their premier competition in order to increase revenue – or “to make the Champions League even more attractive to broadcasters and sponsors.” This was confirmed by Niall Sloane, ITV’s head of sport, who said that UEFA show “a flexibility and willingness to work with broadcasters that is not always present in other sports associations and indeed football bodies.”

Recent initiatives include: (a) four additional match days in the second round; (b) moving the final from Wednesday to Saturday; (c) 20 additional matches in the play-off round included in the package; (d) adding the Super Cup, played between Champions League and Europa League winners, to the package.

Domestic leagues are not happy with UEFA’s growing calendar, especially as many of these matches have to be shown on terrestrial television, but as The Jam said, “the public gets what the public wants.” This is evidenced by the Champions League final overtaking the Super Bowl in 2009 as the world’s most popular televised event in club sport.

In comparison, the Europa League is very much the poor relation with revenue of €210 million and distributions to clubs of €158 million, less than a fifth of the money available from the Champions League. The highest amount paid out in 2010/11 was €9 million to Villarreal with the most received by English clubs being the €6.1 million received by Liverpool and Manchester City. In fairness, the money is significantly higher than the old UEFA Cup, partly due to the expanded format (12 groups of four teams, rather than eight groups of five teams), but it might well have risen anyway.

In addition, the money from the Europa League can be important for clubs from smaller countries or those that enter European competitions infrequently, plus the it offers valuable experience of playing in Europe. Nevertheless, it suffers from a poor image with the influential Franz Beckenbauer referring to it as “the losers’ cup”.

Although UEFA’s annual report stated that they were “optimistic” that it would “eventually be able to break through”, Michel Platini has reportedly been considering the possibility of scrapping this competition in favour of expanding the Champions League to 64 teams. That might make financial sense initially, but there is a danger of killing the goose that lays the golden egg, as this would almost inevitably damage the brand of UEFA’s top event.

Revenue from the last completed European Championships in 2008 in Switzerland and Austria of €1.4 billion was 58% higher than the €854 million generated in 2004, living up to UEFA’s statement that, “As is the case very four years, the Euro event leaves its marks in the books.” Note that all income generated during the qualifying campaign remained with the national associations.

However, the net result of €253 million was “only” 13% higher than 2004’s €223 million, largely due to much higher operating expenses, though it should also be acknowledged that no solidarity payments to clubs were made in 2004. Profit from Euro 2012 is expected to be smaller than the risk-free 2008 tournament, mainly due to higher expenses, as confirmed by David Taylor, chief executive of UEFA Events, “The actual net left for UEFA will be less than Euro 2008, but the actual operational performance in terms of revenue will be at or about the same level.”

Taylor believes that this represents a fine revenue performance given the venture eastwards, especially in the current tough economic climate, “At the outset we were unsure how our sponsors would react to go to Eastern Europe, and going to these countries in particular, but the reaction has been positive.” That makes perfect sense, but must be a little disappointing after the spectacular growth witnessed at previous tournaments. Indeed, the €1.4 billion revenue from 2008 was nine times higher than the €147 million from Euro 1996 in England.

Broadcasting revenue has been responsible for the majority of that growth, reaching €801 million in 2008. In contrast to 2004 the rights were sold on a market-by-market basis and no longer through an EBU agreement. Commercial rights have risen to €290 million, while there is also a much higher number of hospitality packages.

Distributions to participating teams in 2008 amounted to €184 million with the eventual winners Spain receiving €23 million. Every team at the tournament received €7.5 million plus €1 million for each win and €500,000 for each draw in the group stage. Quarter-finalists received €2 million, semi-finalists €3 million, the winners €7.5 million and the runners-up €4.5 million.

The prize money for 2012 has been increased to €196 million with the allocation being the same as 2008, except that each team receives a participation fee of €8 million (€0.5 million higher) and the third place team in each group gets €1 million (“to act as an incentive if the top two qualifying places are already decided”).

In addition, the amount that the clubs receive for releasing players for Euro 2012 has more than doubled to €100 million from the €43.5 million distributed in Euro 2008, a significant increase on the €55 million initially proposed. Furthermore, this will rise again to €150 million for Euro 2016 in France.

While UEFA will be able to bank a sizeable profit from Euro 2012, it is far from clear what the impact will be on the host countries. Estimates of the amount invested vary, but the Austrian bank Erste Group has it at €30 billion, split between €20 billion in Poland and €10 billion in Ukraine, which is equivalent to 5% and 9% of Gross Domestic Product (GDP) respectively.

It has become an accepted wisdom that such investment provides little more than a temporary boost to the economy with the legacy being “white elephant” stadiums that “tend to stay and rust”, according to Simon Chadwick, professor of sport business at Coventry University. As an example, Forbes magazine discovered that 21 of the 22 venues used for the Athens Olympic Games in 2004 had “fallen into disrepair.” It is also true that the global economy is a lot scarier than the boom times back in 2007 when UEFA awarded the championship to the former Communist states.

However, there is some cause for optimism this time round, as very little of the investment is actually on the stadiums. Erste Group estimated this as less than 10% with the vast majority of investment on infrastructure modernisation, such as roads, urban transport, railways and airports.

"Heart of Glass"

In addition, in Poland nearly a third of the funding was provided by the European Union. Marcin Herra, head of the Polish organisation committee, said, “Euro 2012 has been a very concrete motivator for development. We ended up completing projects three to five years earlier than they would have happened.”

It’s a similar story in Ukraine, where four new airports have been built and roads connecting the largest cities have been completely renovated. Furthermore, two of the state-of-the-art stadiums have been funded by wealthy football club owners: Rinat Akhmetov at Shakhtar Donetsk and Oleksandr Yaroslavsky at Kharkiv.

The impact of more tourism will not be that significant (Erste estimates €400 million for Ukraine and €400-560 million for Poland), but the infrastructure should benefit the economy for many years to come.

Solidarity payments “represent a cornerstone in UEFA’s philosophy” with the overall aim of “developing the European football family as a whole and promoting the social values of the game.” There are two specific objectives: (a) reduce financial gaps in order to reduce sporting gaps; (b) open up the elite competitions to a maximum number of associations and teams.

That’s all very well, but the reality does not necessarily live up to the dream for two reasons: (a) the sums of money are not that big, e.g. most countries receive less than €3 million a year; (b) the top five countries in terms of solidarity payments are the most important in Europe: England €15.8 million, Italy €10.5 million, Spain €10 million, Germany €9.4 million and France €9.4 million.

This is the logical result of the allocation methodology, which is split between payments financed by national team football and club team football. The former is based on UEFA’s HatTrick programme, which allows up to €2.5 million for infrastructure investment (increased to €3 million for 2012-16 cycle) and various solidarity payments. The latter is financed by the Champions League and Europa League, mainly based on number of clubs eliminated in those tournaments before the group stage plus “substantial” incentives for clubs not involved in Europe for youth development.

To be fair to UEFA, although this is small beer, they have been increasing solidarity payments in line with revenue growth, rising from €55 million in 2001 to €156 million in 2007 and €238 million in 2011, but they are still significantly lower than the distribution payments made to the elite clubs involved in the Champions League.

Considering at UEFA’s balance sheet, which they themselves describe as “very solid”, the impression is that they could do more for the “football family”. Equity stands at just under €500 million, even after the 2011 negative result, partly because of the once-off favourable currency impact of converting it from Swiss Francs into Euros. Thanks to the surplus generated by Euro 2012, this will “increase substantially” in 2012.

Furthermore, UEFA are holding cash and cash equivalents of €1,069 million. If long-term securities of €420 million (invested with top-rated international banks) are added, their financial assets amount to a thumping great €1.5 billion (or 82.5% of UEFA’s assets).

So UEFA are in rude financial health, but how do they compare to other elements of the football fraternity?

FIFA are also a money-generating machine, but, maybe surprisingly to some, they do not produce as much revenue as UEFA, mainly because they only have one real cash cow, namely the World Cup, as opposed to UEFA who have the Champions League every year and the European Championship every four years. As FIFA’s General Secretary Jérôme Valcke said, “We are making quite good money thanks to the World Cup, but that’s the only money we have.”

In 2001 FIFA’s revenue was $1,070 million, which is equivalent to €856 million at the current exchange rates, so over €500 million less than UEFA. For the latest four-year cycles, UEFA’s €5.5 billion is nearly €2.2 billion higher than FIFA’s €3.3 billion ($4.2 billion). Platini 1 Blatter 0.

How about the leading clubs that have been dining at UEFA’s table for so long? That’s a different story, as just three clubs in terms of revenue generate almost as much as UEFA. Real Madrid (€479 million), Barcelona (€451 million) and Manchester United (€367 million) earn a total of €1.3 billion compared to UEFA’s €1.4 billion. As money talks increasingly louder in the beautiful game, that’s a delicate balance of power.

UEFA are not resting on their laurels and continue to seek further revenue growth. Sometimes this backfires, as when the high ticket prices at the 2011 Champions League final were widely criticised, not helped by UEFA’s complacent response, “That’s the market price. Why should we sell them for less?”

More encouragingly, they have already secured large increases in TV rights for the 2012-15 Champions League cycle, as noted by David Taylor, “It is a must-have property for major broadcasters. I think we’ll be about 15% up.” Although some markets like England paid about the same, increases were seen in France, Italy, and Spain with “considerable growth outside Europe in South America, Brazil and certain parts of Asia.” Indeed, Umberto Gandini, an AC Milan director, confirmed that the final increase was 21%, which would mean TV rights of over €1 billion and annual Champions League revenue of €1.3 billion.

The subsequent increase in prize money should be enough to placate the leading clubs, who had been expressing their unhappiness with UEFA and FIFA. Last year, Karl-Heinz Rummenigge, chairman of the European Club Association (ECA), complained, “UEFA have already sold the television rights to the Champions League until 2015 without having the mandate of the clubs beyond 2014.”

"Rummenigge - I didn't know that you cared"

This was a reference to the ECA agreement to recognise the jurisdiction of football’s governing bodies until July 2014 with a not-so-veiled threat that the contract would not be extended if there were “no radical changes in favour of the clubs.” However, the threat of clubs forming an alternative to the Champions League and refusing to release players for internationals was seemingly averted when a new agreement was signed in March with an extension until 2018.

Rummenigge’s comments after the signature were conciliatory, but also hinted at the iron fist in the clubs’ velvet glove, “Today is a historic day for European club football. With this agreement, UEFA clearly recognises the importance of clubs and the significant contribution they make to the success of national team football.”

For the time being, the Europa League struggles on, though the sense is that UEFA are exploring other possibilities that might enhance its earning potential. Taylor admitted, “The Europa League is more difficult, but we will still see some increases.”

Another potential cloud on the horizon could be found in the courts of law, as the European Union has suggested that selling TV rights in separate EU states is against European law. If UEFA were forced to sell rights on a Europe-wide basis, the impact on the overall revenue might be negative.

"Ocean Blue"

In terms of the European Championships, UEFA’s grand plan is to expand the format from 16 to 24 teams, based on the simple equation that more matches should equal more money. However, this focus on the commercial side at the expense of sporting integrity might be a bridge too far, as it would ruin the Euros’ unique selling point of being competitive from the first whistle. A (likely) format of six groups of four teams with the top two and four best third-placed progressing is a recipe for a boring tournament.

It would also require a host country with substantial infrastructure, which might explain why there has not been a rush to host Euro 2020, though the feeble state of the global economy has also played a part. Indeed, UEFA has had to amend the rules of engagement, so that countries can still bid even if they have not expressed their interest, as the list of candidates to date is pitifully thin: Turkey, Georgia and a combined Scotland, Wales and Ireland. To paraphrase Dorothy in The Wizard of Oz, “We’re not in Kansas anymore, Michel.”

UEFA have also adopted a central marketing model to sell rights from 2014 for qualifying matches to the European Championship and World Cup. Their General Secretary, Gianni Infantino, gushed, “This will have a seismic effect on the football landscape. It is all about the promotion of national team football. To see the benefits of such a centrally managed competition, just look at the Champions League.” This should not only increase revenue, but should also provide more predictable, possibly larger, revenue streams to smaller nations.

"L'entente cordiale"

The plan is to spread matches over six days with teams playing double headers over either Thursday and Sunday, Friday and Monday or Saturday and Tuesday, again following the Champions League’s tried-and-trusted method of increasing the number of match days. According to TV Sports Markets, UEFA has estimated that it could earn up to £1 billion over a four-year cycle, significantly higher than the £590 million currently earned by the national associations, but that may prove to be optimistic in today’s economy.

If there is a shortfall, this could be a problem for UEFA, as they have guaranteed each association a minimum level of revenue, including increases for smaller nations, in order to gain their acceptance. In such an eventuality, they would have to dig into their (substantial) reserves.

This is part of UEFA’s constant balancing act, whereby they have to tread a fine line between doing what they believe is good for the game, while ensuring that they cater to the interests of their members.

"Orange Crush"

Another good example would be their Financial Fair Play (FFP) regulations, which are designed to encourage clubs to live within their own means and reduce their spending. Michel Platini was quick to emphasise that this was introduced for the clubs’ benefit, when he launched the initiative, “It's mainly the owners that asked us to do something – Roman Abramovich, Silvio Berlusconi and Massimo Moratti. They do not want to fork out from their pockets any more.”

However, now that the FFP era is actually here, many have expressed misgivings about the implications. For example, if these rules resulted in leading European clubs losing their star players to Asia, where the wages on offer might be considerably higher, then those same owners might suggest some “fine tuning”.

Many clubs now have foreign owners that are not just in it for the love of the game, but also expect a return on their investment. In particular, the American owners might actively look to set up a Super League along the lines of the highly lucrative NFL. Although the forecast Champions League revenue of €1.3 billion is impressive, it pales into insignificance compared to the NFL’s projected €8 billion ($10 billion). In particular, NFL TV rights will increase to €4.2 billion ($5.2 billion), compared to the Champions League’s €1.1 billion. Two tournaments, both featuring 32 clubs, but one earns nearly four times as much TV revenue: you do the math.

"Left to my own devices"

Of course, there are many aspects of the NFL model that would not easily translate into the football world, such as stringent wage regulations, revenue sharing and the draft method of player recruitment, but the size of the prize is immense. There is a feeling among football club owners that there is still a lot of untapped financial potential, so a Super League cannot be ruled out.

As far back as 2009, Real Madrid president Florentino Pérez was banging this drum, “What we need to work out with UEFA is a European Super League that guarantees all the top teams play each other all the time. That is something that does not happen in the current Champions League.” Closer to home, the example of the Premier League is a constant reminder that breakaway leagues can and do happen.

From a sporting perspective, it might actually be no bad thing, as it might increase competition among Europe’s clubs (“on any given Sunday, anything can happen”), while the increased revenue would lead to more money available to drip down into the lower leagues. OK, that last point might be a little naïve, but it could be a condition of Super League teams being allowed to remain in their domestic leagues.

"This is a happy house"

That’s all future music, but there is no doubt that UEFA’s challenge is to strike the right balance between commercial and sporting needs. While defending the soul of football, pushing for fair play and fighting the corner of the smaller nations, UEFA also have to ensure that the leading clubs and nations are happy and kept on board. This means that they have to constantly look for ways to grow their revenue – which they then largely distribute to the richest in their “football family”.

To date, they have largely succeeded in managing this tricky proposition, mainly due to football’s enduring popularity. As MLS commissioner, Don Garber, said, “Content is king and sports content is the king of kings.” In this era of mass entertainment and limited attention spans, live football is one of the few events that still hold a TV audience.

That has worked in UEFA’s favour with their hold on the rights for the Champions League and (to a lesser extent) the European Championships, but there is no guarantee that the status quo will remain unchallenged. For an indication of what might happen in the future, we need look no further than Deep Throat in “All the President’s Men”, whose sage advice was to “follow the money.”