The importance to a football club’s bottom line of qualifying for Europe has been evident for many years, as the money distributed to teams competing in UEFA’s competitions can have a significant impact on their revenue.
This is even more the case with the latest cycle of UEFA’s TV deals that has seen the total funds available for distribution to clubs rise by 38% in 2015/16 from €1.270 billion to an amazing €1.756 billion. The lion’s share of €1.345 billion went to the Champions League, but the Europa League also received a much larger proportion than the previous arrangement, amounting to €411 million.
Despite the steep growth in the Premier League’s TV deals, Europe is still important for English clubs, as seen by Manchester City earning more than any other club with €84 million, followed by Real Madrid €80 million, Juventus €76 million, Paris Saint-Germain €71 million, Atletico Madrid €70 million and Chelsea €69 million.
In other words, City received more money for reaching the Champions League semi-finals than Real Madrid did for actually winning the trophy. This puzzling anomaly is down to the high value of the British TV deal, which means that English clubs can earn more than teams from other countries who progress further in the tournament.
This was also demonstrated in the Europa League, where the top earners were Liverpool €38 million and Tottenham Hotspur €21 million, followed by Villarreal €16 million, Lazio €15 million, Fenerbahce €15 million and Borussia Dortmund €14 million.
The amount earned by Liverpool for reaching the final showed that clubs can now generate useful cash from the Europa League. The Reds’ distribution of €38 million was the 14th highest overall in Europe last season, i.e. more than the money earned by 19 clubs that qualified for the Champions League group stage.
The discrepancy between different countries’ receipts is highlighted by comparing the top two earners. Manchester City’s €84 million total was geared towards the TV pool €47 million (56%) with prize money €37 million (44%), while it was the opposite for Real Madrid, who earned more from prize money €54 million (67%) compared to the TV pool €26 million (33%).
The contrast is just as stark for the Europa League, e.g. Villarreal received €16 million for reaching the semi-final, split between prize money €8 million (49%) and TV pool €8 million (51%); while Tottenham received €21 million, i.e. €5 million more, for only reaching the last 16, split between prize money €6 million (28%) and TV pool €15 million (72%).
This is linked to the huge British TV deal with BT Sports, who paid a hefty €299 million a season for the 2015-18 three-year cycle. This is more than double the €132 million paid by the combination of Sky Sports and ITV for the previous agreement.
As a result of the higher deal, English clubs did much better (at least from a financial perspective) in 2015/16 with Manchester City leading the way, as their revenue increased by €38 million (84%) from €46 million to €84 million. Similarly, Chelsea’s revenue rose by €30 million (76%) from €39 million to €69 million, while Arsenal’s revenue grew by €17 million (47%) from €36 million to €53 million.
Liverpool’s revenue was also 11% higher, even though they competed in the Europa League, as opposed to the more lucrative Champions League the previous season. Tottenham’s revenue was an astonishing 244% (€15 million) higher for going one round further in the Europa League.
Last Five Years
To emphasise the value of the Champions League to the leading clubs, it is worth exploring how much they have earned in the last five years. At the top of the pile are Juventus with €281 million, which is perhaps somewhat surprising, given that they have only reached the final once in that period, but is again testament to the might of the TV pool.
Next come Real Madrid €277 million (winners in 2014 and 2016), Bayern Munich €256 million (winners in 2013), Chelsea €253 million (winners in 2012) and Barcelona €246 million (winners in 2015). All to be expected.
However, this table also highlights a core element of the strategy of the nouveaux riches clubs, i.e. spending for success, as we find Paris Saint-Germain and Manchester City in sixth and seventh places with €228 million and €222 million respectively.
In England consistency has been rewarded with the three clubs ever present in the Champions League leading the way: Chelsea €253 million, City €222 million and Arsenal €177 million. Manchester United would have been higher if they had qualified for Europe in 2014/15, but they still earned €159 million.
Despite qualifying for the Champions League in 2014/15 and reaching the Europa League final in 2015/16, Liverpool are a long way back with €77 million, while Tottenham’s Europa League residency has earned them only €41 million.
In Germany Bayern’s Champions League exploits have earned them €256 million, almost €100 million more than Borussia Dortmund’s €162 million. Europe has allowed the Bavarian giants to put even more distance between them and their domestic rivals.
All of these have earned much less: Bayer Leverkusen €117 million, Schalke 04 €101 million, Wolfsburg €61 million and Borussia Mönchengladbach €39 million (the latter two almost all from 2015/16).
The gap between the top club and the others is even wider in Italy, as Juventus’ €281 million is around €150 million more than the next club Milan, whose €129 million was restricted by not qualifying for Europe in the last two seasons. Juve’s performance is even more impressive, given that they did not even qualify for Europe in 2011/12.
Milan’s place in the Champions League has been taken by Roma, who have earned €116 million in that period. The next highest are Napoli €100 million and Lazio €51 million. Inter’s recent difficulties are highlighted by the nerazzurri only earning €45 million from Europe in the last five years. This is less than the €49 million they earned in 2010/11 when they defeated Bayern Munich to win the Champions League.
Spain is all about the big two with Real Madrid €277 million and Barcelona €246 million a long way ahead of Atletico Madrid €179 million, who are in turn much higher than Valencia €89 million, Sevilla €69 million and Athletic Bilbao €51 million.
Sevilla are an interesting case, as their reward for winning the Europa League three times in a row is clearly much less than qualifying for the Champions League. Following a change in the rules, Sevilla’s victory in 2014/15 gave them a place in the following season’s Champions League, so their 2015/16 €35 million revenue is split between €21 million from that competition and €14 million from dropping down to the Europa League.
France demonstrates Paris Saint-Germain’s domination, as their €228 million is €150 million more than Lyon’s €78 million, closely followed by Marseille €73 million and Monaco €69 million.
Paris Saint-Germain’s competition has been weakened by the other French Champions League spots being shared among their domestic rivals, e.g. Lille and Montpellier have also featured in this period. In fact, PSG only earned €2 million in 2011/12, so their earnings in the last four seasons have been really high.
Portugal demonstrates the rivalry between Benfica €111 million and Porto €98 million, while the others are nowhere: Sporting €31 million, Braga €22 million, Estoril €5 million and Belenenses €4 million.
Galatasaray’s “welcome to hell” has been worth €98 million, even though there was no revenue in 2011/12, a long way ahead of Trabzonspor €37 million, Besiktas €27 million and Fenerbahce €26 million.
UEFA Distribution Model
As we have seen, the amount of revenue available to distribute to the clubs increased significantly in 2015/16 by €487 million (38%) from €1.270 billion to €1.756 billion, but this masked a couple of interesting developments.
First, UEFA decided to give proportionally more to the Europa League, whose pot rose by 71% (€171 million) from €240 million to €411 million, while the Champions League fund “only” rose by 31% (€315 million) from €1.030 billion to €1.345 billion. The Europa League has always provided a platform for smaller clubs to compete in Europe, but now has the added bonus of being financially worthwhile (though obviously still no match for the Champions League money).
In UEFA’s terms, clubs in the Europa League now receive about €1 every €3.3 received by clubs in the Champions League, compared to €4.3 under the old arrangement. This might be considered a step in the right direction, but, put another way (and rather less impressively), the Europa League still only has 23% of the total pot, albeit up from 19% the previous season.
"At The Height Of The Fighting"
Second, UEFA has endeavoured to reward success more by increasing the amount allocated to prize money compared to the TV pool. In 2014/15 the split was 52% for prize money and 48% for TV pool, but the 2016/17 budget is essentially a 60:40 split in favour of prize money.
UEFA’s 2016/17 estimate provides a useful break-down of how the distribution model works. Based on gross commercial revenue of €2.350 billion, 12% (€282 million) is required to cover organisational and administrative competition-related costs, while solidarity payments have been significantly increased to €200 million, comprising €82 million for those clubs participating in the qualifying rounds and €118 million to national associations for club development projects.
After these deductions, we are left with €1.868 billion of net commercial revenue. Of this, €149 million (8%) is reserved for “European football”, i.e. remains with UEFA, which gives a €1.719 billion pot for distribution to the clubs. This is equivalent to the €1.756 billion in the 2015/16 season, which was higher than expected due to more commercial revenue proceeds than budgeted.
Looking at the payments by country for the Champions League, it’s a case of the rich getting richer, as the payments are dominated by the Big Five leagues (Spain, England, Germany, Italy and France). They accounted for 71% (€949 million) of the total €1.345 billion pot.
Spain earned the most with €254 million, closely followed by England €245 million, though Spain’s money was largely due to success on the pitch with €105 million from prize money, nearly twice as much as England’s €54 million. In contrast, England’s share of the TV pool of €143 million was considerably higher than Spain’s €89 million.
Italy were also boosted by a relatively high TV pool of €112 million, while their prize money was just €23 million. Germany’s €52 million prize money was almost the same as England, but their TV pool was less than half at €68 million.
Champions League – Prize Money
In 2015/16 each of the 32 teams that qualified for the Champions League group stages was guaranteed a minimum participation fee of €12 million - even if it lost every single game. This was a significant 40% increase on the 2014/15 fee of €8.6 million.
In addition, the performance bonuses in the group stage were increased by 50% to €1.5 million for each win, though stayed at €500,000 for a draw. So if a team were to really put the pedal to the metal and won all six of its group matches, it would get €9 million on top of the participation fee.
If a team qualifies for the last 16, it is awarded €5.5 million, while there is additional prize money for each further stage reached: quarter-final €6 million, semi-final €7 million, final €10.5 million and winners €15 million.
Therefore, the maximum that a club could have earned (by winning all its group matches and lifting the trophy) was an impressive €54.5 million (not counting the TV pool), up from €37.4 million in 2014/15. The prize money for 2016/17 has been tweaked upwards again, so the maximum will rise to €57.2 million this season.
Clubs involved in the play-offs shared a total of €50 million: €2 million for each winner and €3 million for each club that was eliminated. Teams defeated in the qualifying rounds received: first qualifying round €200,000; second qualifying round €300,000; third qualifying round €400,000. In addition, each domestic champion that did not qualify for the group stage received another €250,000.
As we have seen, Spain earned much more money from prize money in the Champions League than any other country with their €165 million, far ahead of England €102 million and Germany €100 million. This is a fair reward for the two Madrid clubs reaching the final, meaning that the winners Real Madrid trousered €54 million with their city rivals Atleti earning €48 million, while Barcelona got €31 million for reaching the quarter-finals.
The two other semi-finalists, Bayern Munich €39 million and Manchester City €37 million, helped boost Germany and England. France and Italy were a long way back earning just €48 million and €47 million respectively, partly due to their third clubs not reaching the group stages.
Champions League – TV Pool
In addition to prize money, clubs received a share of the television money from the TV (market) pool, which amounted to €578 million for the Champions League in 2015/16. Each country’s share of the market pool is based on the value of the national TV deal, which means that English clubs have prospered from the huge BT Sports deal, though it should be noted that around half of this goes into the central pot, so they do not receive the full benefit.
Half of the TV pool depends on the position that a club finished in the previous season’s domestic league. For countries with four clubs, the team finishing first receives 40%, the team finishing second 30%, third 20% and fourth 10%. If only three clubs reach the group stage, the share would increase to 45%, 35% and 20% (for national associations ranked 1 to 3, i.e. Spain, England and Germany).
For countries with only two representatives through to the group stage, the share is 55% and 45% (for national associations ranked 4 to 6 and 13 to 16). If only one team gets through to the group stage, they would take 100% of that country’s TV pool.
In other words, from a purely financial perspective a club would hope that the other clubs from its country would be eliminated in the qualifying and play-off rounds, as the available money would then be divided between fewer clubs.
The other half of the TV pool depends on a club’s progress in the current season’s Champions League, which is calculated based on the number of games played (starting from the group stages).
Thanks to BT Sports’ exclusive “game changer” of a deal, England’s TV pool was the highest in Europe at €143 million. Nevertheless, the club that earned the most from the TV pool in 2015/16 was Juventus, whose €53 million was higher than Manchester City’s €47 million, despite only reaching the last 16. This is because the Italian TV pool of €112 million was only shared between three clubs compared to the four in England.
It was even worse for the Spanish clubs, where €89 million was shared between five clubs after Sevilla were awarded a place in the Champions League for winning the Europa League in 2014/15. German clubs were hit by the “double whammy” of having the lowest TV pool of €68 million, allied with having to share this sum between four clubs.
England’s TV pool increased by a hefty 52% (€49 million) from €94 million to €143 million in 2015/16. Manchester City earned the most with €47 million, even though they only finished second in the Premier League in 2014/15, due to their achievement in reaching the semi-final when no other English club got beyond the last 16.
One little known fact is that English clubs receive less from the TV pool when a Scottish club (usually Celtic) qualifies for the group stage, as they are awarded 10% (based upon the population split), because there is no separate Scottish broadcasting deal with UEFA.
If an English club were to enjoy a perfect season, I estimate that they could earn around €113 million from the Champions League: the maximum prize money for winning the trophy and all six group games would be €57 million; while the TV pool could be as high as €56 million. This assumes: (a) they won the Premier League the previous season; (b) the other English clubs were all eliminated at the group stage.
Bayern Munich only received €26 million from the TV pool in 2015/16, even though they won the Bundesliga the previous season and reached the Champions League semi-final, highlighting just how low the German TV deal is. Moreover, last season this only increased by 4% to €68 million.
Spain’s TV pool rose by 6% (€5 million) from €84 million to €89 million, but the most earned was only €27 million by Barcelona, as this had to be shared between five clubs including Sevilla from the Europa League.
This demonstrated a new rule, whereby a club that qualifies for the Champions League by winning the Europa League (i.e. like Sevilla) or indeed the Champions League, but would not have qualified via their position in the domestic league, does not receive any money from the first half of the TV pool.
The Italian TV pool grew by an impressive 19% (€18 million) in 2015/16 from €94 million to €112 million. The last two seasons' payouts show how Juventus and Roma have benefited from the inability of Italy’s third club to reach the group stages, first Napoli in 2014/15 and then Lazio in 2015/16.
Even though a new rule introduced last season meant that a club eliminated in the play-offs would be allocated 10% of that country’s TV pool, the vast majority of the large Italian TV pool was still shared between just two clubs.
It was a similar story in France with Monaco eliminated in the play-offs in 2015/16, thus receiving 10% of the French TV deal, which increased by 11% (€7 million) from €68 million to €75 million. Lille received nothing for losing their play-off in 2014/15, as the rules were only changed the following season.
Paris Saint-Germain have benefited from regularly winning Ligue 1, but the relatively small differential between first and second place (55% vs. 45%) has resulted in good payouts to Monaco and Lyon in the last two seasons.
The payments by country show a more equitable revenue distribution in the Europa League. The share received by clubs from the Big Five leagues was still the highest, but only 52% (€216 million) of the total €411 million, compared to 71% of the Champions League money.
The Europa League features clubs from many more countries than the Champions League, e.g. in 2015/16 24 countries were represented in the Europa League (group stages onwards), compared to 16 in the Champions League group stages.
England led the way with €63 million, ahead of Spain €47 million, though again this was more down to the TV pool (England €44 million vs. Spain €20 million) with Spain once again doing better on the pitch, resulting in higher prize money (Spain €22 million vs. England €14 million).
Europa League – Prize Money
The allocation of prize money in the Europa League is much the same as the Champions League, though the sums involved are clearly smaller and there are a couple of other differences.
In 2015/16 each of the 48 clubs involved in the group stages received a participation fee of €2.4 million, up from €1.3 million the previous season. In addition, there was €360,000 for each win and €120,000 for each draw in the group stage, up from €200,00 and €100,000 respectively.
One difference in the Europa League, presumably to encourage clubs to give their all in this secondary tournament, is an additional bonus for teams that qualify for the knock-out stages, with the group winners earning €500,000 and runners-up €250,000.
"One More Time"
Clubs receive a further €500,000 for reaching the last 32, €750,000 for the last 16, quarter-finalists €1 million and semi-finalists €1.5 million. The Europa League winners collected €6.5 million and the finalists €3.5 million.
Thus, the maximum that a club could receive is €15.31 million, 55% up from the previous season’s €9.9 million. That’s now a pretty good incentive, compared to the €6.2 million prize money awarded to the 2011/12 winners Atletico Madrid.
One other difference to the Champions League is that only clubs eliminated in the play-offs receive a payment (of €230,000). Teams defeated in the qualifying rounds received: first qualifying round €200,000; second qualifying round €210,000; third qualifying round €220,000.
Europa League – TV Pool
The allocation of the TV pool in the Europa League is again similar in principle to the Champions League, as half is based on performance in the previous season’s domestic competitions and half on the progress in this season’s Europa League, but there are some subtle differences.
The percentage split for the first half again depends on the number of teams qualified from a country, but if a domestic cup winner reaches the group stage, then that club receives a higher share for this element. For example, if four clubs qualified, then the cup winner would receive 40% with the other three clubs getting 20% apiece; if no cup winner, then each of the four clubs would receive 25%.
OK, that’s relatively straightforward, but the second half of the TV pool is more complicated. First, it is divided up between each round of the Europa League: group stages 40%, last 32 20%, last 16 16%, quarter-finals 12%, semi-finals 8% and final 4%.
The stage money is then split into as many portions as there are countries represented by at least one club in the round concerned, proportional to the value of the relevant country’s TV deal. Each country’s share is then split equally among all the country’s clubs participating in that round.
Let’s take the England TV pool in 2015/16 as an example. As the total TV pool was €183.1 million, €91.6 million was available for participation and €91.6 million for performance. England contributed around 20% of the TV pool, so their share of the first (participation) half was 20% of €91.6 million, i.e. €17.9 million. As there was no cup winner qualified from England, this was split evenly between Liverpool and Tottenham, resulting in €8.9 million each.
For the second (performance) half, I have estimated England’s share of the TV pool in each round. The assumptions are pretty solid in the latter stages of the tournament, e.g. the final is a simple carve-up between England (62%) and Spain (38%), but the earlier stages require more guesswork.
In the group stage, England’s share was divided evenly between Liverpool and Tottenham, while Manchester United were added for the last 32 and last 16, having dropped down from the Champions League, which meant one-third for each club.
From the quarter-finals onward, Liverpool were England’s only remaining representative, so they took 100% of England’s share. This success resulted in Liverpool earning the substantial sum of €26.4 million from the TV pool.
"Everybody's Happy Nowadays"
As anybody who has opened a newspaper recently will know, Brexit has had a dramatic impact on the exchange rate. In particular, the weakening of the Pound against the Euro has significantly increased the UEFA revenue in Sterling terms.
To illustrate this impact, Manchester City’s 2015/16 distribution of €84 million would be worth £72 million at the current exchange rate of 1.17, compared to just £60 million at the mid-2015 rate of 1.44. As the saying goes, every cloud has a silver lining.
In addition to the TV money from UEFA, clubs playing in Europe also benefit from additional match day revenue. Not every club analyses this revenue stream between different tournaments, but as an example of how much this can be worth, Roma’s €52 million match day revenue in 2015/16 included €29 million from the Champions League.
Furthermore, participation in the Champions League should boost a club’s sponsorship revenue, both in the short term through contractual bonuses, and longer term by strengthening the attractiveness of the brand through increased exposure and a better profile.
However, there can also be a downside, as shown by Manchester United’s kit supplier deal with Adidas. This is worth an astonishing £750 million over the next 10 years, i.e. £75 million a year, but if United fail to participate in the Champions League for two or more consecutive seasons, then the payment for that year would reduce up to 30%, i.e. £22.5 million.
"When the Angel sings"
Here’s To Future Days
To place the €1.756 billion from UEFA’s competitions into perspective, it is still considerably less than the €3.3 billion a season from the new Premier League TV deal. Incredible as it may seem, this means that the bottom placed club in the English top flight will earn more than the Champions League winners this season.
Nevertheless, European money still makes a difference for the elite clubs and there’s little sign of the gravy train slowing down with UEFA predicting a 30% rise in revenue for the next 2018-21 cycle. That’s useful, but what is really thought-provoking is that there are plans to change the distribution model.
First, the big four leagues (England, Spain, Germany and Italy) will each receive four guaranteed places in the Champions League group stages, thus taking up half of the available 32 places. This is no big deal for Spain, England and Germany, as their four representatives invariably qualify for the group stages. However, Italy are the big winners here, as they currently only have three places – and also have a disastrous record in the play-offs.
"Love don't Costa thing"
In addition, the distribution of the TV pool will be amended, so that each country will retain much less from its national TV deal than the current arrangement (reportedly down from around 50% to 15%) with the vast majority going into the central plot in future. So far, so good, as a more even distribution of the richer countries’ TV wealth is probably no bad thing and should help boost competitive balance.
However, here’s the rub: the future split will be based on individual clubs’ UEFA co-efficient, which has been modified to include credit for historical performances. Again, this just happens to favour Italian clubs like Milan and Inter, who have not even qualified for the Champions League recently, but can boast several trophies in their glorious past.
It will also prove advantageous to the old establishment, e.g. Manchester United would do better out of the new approach to co-efficients than their “noisy neighbours” Manchester City.
The new model has unsurprisingly drawn criticism, not least from the European Professional Football Leagues (EFPL), leading to the European Club Association (ECA) promising to increase the "support" to the Europa League by €60 million.
"New Gold Dream"
ECA chairman, Karl-Heinz Rummenigge, boasted, “I am pleased that we have managed to reach quick and simple decisions for the good of football.” That’s one way of putting it, Kalle.
In fairness to UEFA, they are caught between a rock and a hard place, as the leading clubs carry the persistent threat of forming a breakaway Super League, but this proposed change still leaves a sour taste in the mouth.
That man Rummenigge, also Bayern Munich’s chief executive, had shown his hand back in 2013, when he complained, “The highest prize is the Champions League, but it is a competition where there are no guarantees, and the things you take for granted in domestic football don’t always work.”
Hence, the desire of the leading clubs to make Europe’s premier tournament as much of a closed shop as possible. As The Clash once sang, it is indeed a “Safe European Home”, at least for a privileged few.
Hence, the desire of the leading clubs to make Europe’s premier tournament as much of a closed shop as possible. As The Clash once sang, it is indeed a “Safe European Home”, at least for a privileged few.