Premier League clubs who regularly qualify for the Champions League have seen the financial benefits of taking part in the most prestigious competition in European football, but its becoming an advantage that is not open to everyone.
Access to the Champions League is an increasingly a rare occurrence outside of the ‘big six’ of Manchester United, Liverpool, Arsenal, Chelsea, Tottenham and Manchester City.
Outside of that once in a lifetime title victory for Leicester City three years ago, you would have to go all the way back to Everton in 2005 to find a time when a team beyond that big six elite entered into the premier European competition.
Champions League TV money adds to wealth
Recently BT announced that they have secured the broadcasting rights for the Champions League for the third consecutive time, for between the 2021-24 cycle.
The deal was worth £1.2 billion, matching the same for the deal for 2018-21, but more than the £897 million they paid in 2015 for the following three years coverage.
Its an amount that highlights just how much that UEFA can reward Champions League teams.
Not that Premier League teams no matter where they finish in the table, are the “have nots” — last season, bottom club Huddersfield still managed to collect £96.6 million. Last season’s champions Manchester City made just under £151 million, as each club claims an equal share of the domestic broadcasting rights. But there is a difference in earnings through facility and merit payments.
UEFA offer high reward
UEFA’s own club competition landscape report for this season forecasts that 26% of Champions League team revenues will be earned through playing in the tournament. In UEFA’s financial cycle between 2018-21, the winner of the Champions League will receive just under 82.5 million euros, according to KPMG’s Football Benchmark report.
In comparison, you would take home 21.3 million euros for winning the Europa League. Other important data includes:
- A Champions League runner-up would receive four million less than the victor. A semi-finalist will earn just below 63.5 million euros, while a quarter-finalist can expect around 51 million euros.
- There is even a starting fee of 15.25 million euros at the group stage, with each team winning 2.7 million euros for a win, and 0.9 million euros for a draw.
- These figures do not include the new coefficient ranking based on the past ten years. These ‘coefficient shares’ are valued at 1.1 million euros each. The highest ranked team will receive 32 of these ‘shares’ overall and will receive 32.4 million euros
- Additionally, there is the 292 million euro market pool, which is distributed according to the proportional value of each national TV market.
Half that last bullet is distributed depending on a club’s performance in the previous domestic championship. So in England, Manchester City will receive the most at 40% of that total, with runners up Liverpool taking 30%. Chelsea will then claim 20%, with Tottenham earning 10% of the total after finishing fourth.
The other half of the market pool is paid out to national associations. It’s done so according to the amount of games a team plays in this season’s tournament.
The figures highlight the value of playing in the Champions League as opposed to coming in fifth in the EPL and playing in the Europa League.
Sports finance critic takes aim
Dr Rob Wilson, is a prominent commentator of sports finance issues, and head of department for finance, accounting and business systems at Sheffield Hallam University. He said:
“Each club in the Premier League receives an equal share of the broadcasting right. So the only ways that you can increase your income is by match day ticketing, which is relatively marginal. Or through commercial and sponsorship revenue, where in European competition its where the big win is.
Liverpool’s Champions League win should naturally contribute to an increase its commercial success, you have had Nike take over their kit manufacturing.
You would expect Liverpool to acquire a handful of extra commercial partners as well, those who are not participating in the Champions League does not have access to that revenue.
Let’s extrapolate that, and say that Liverpool will earn £140 million more than the seventh placed team in the Premier League. This equates to at least two fairly world class player acquisitions.
More significantly you are able to compete in the elite tier, naturally generating more revenue.
Liverpool were runners up in the Champions League for the 2017/18 season, in their first final for 11 years.
This year’s annual money league report from Deloitte reveals the commercial gains from an extended run in the competition. The Merseysiders climbed two places to seventh in the money league table, with a turnover of 513.7 million euros.
The breakdown in figures showed how profitable the run to the final was, as commercial revenues rose to 171 million euros, higher than in the previous five years.
Leicester break the mold again
Yet this season the Premier League has seen Leicester City defy the odds again, sitting comfortably in second after 13 matches.
Its an example that tells us it is potentially possible to break the stronghold that that ‘big six’ clubs have on Champions League places. After all, it is a season where we have seen newly promoted Norwich City beat the champions Manchester City in a 3-2 thriller.
So is it still possible to achieve in the modern era what Brian Clough did with a relatively small club like Nottingham Forest in 1979 and 1980, and win back-to-back European Cups, after winning the title?
Dr Wilson disagrees: “You would expect the top four, and potentially the top six to compete for those Champions League spots every single year.”
“Its effectively a cartel that has been reinforced by the Financial Fair Play (FFP) regulations. Despite the fact that we have seen an improvement in financial sustainability, as a consequence of the break even regulations.”
“That has come as a consequence of broadcasting rights, rather than clubs making themselves deliberately fiscally responsible.”
“The FFP regulations mean that the likelihood of a smaller team breaking into the top four is very remote.”
“It’s a bit of the luck of the draw identifying young talents that other teams have not spotted. I think that is what we are seeing with Leicester City.”
He opined: “Manchester United have been caught up in what I would call over investment in player acquisitions.”
“They are looking for players with Champions League pedigree, when you compete in that market you sign Alexis Sanchez, you forget about the market underneath with emerging talent.”
“And you rationalise that by saying that player hasn’t got European experience, so we are going to pay more money for other targets.”
“That’s why players like Maddison and Tielemans, were not looked at by those six main clubs.”
The competitive gap widens
“We have done some competitive balanced research, and elite clubs are likely to be locked into the Champions League due to FFP. And the competitive balance across European football has statistically dropped.”
In practice, it would need extreme action to reverse these trends, to ensure more of a level playing field.
Dr Wilson reflected: “I would be radical and look at the NFL as a money redistribution model. The big six clubs in the UK have an arrogance about them that the Premier League is popular because of them.”
“They argue for a lions share of the TV rights that perpetuate a lack of competitive balance. I would suggest that the TV deal is unequally distributed, and that teams who finish higher up the table should have a smaller share of it.”
Its an unlikely outcome. We will see if Leicester can last the distance and claim a top four Champions League qualifying spot. That would send a message out that the ‘big six’ can be overcome.