Wednesday, June 13, 2012

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.”

8 comments:

  1. Swiss:

    If you have some time, can you give some thoughts on the United IPO issue:

    http://www.cnbc.com/id/47805676

    http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9329250/Manchester-United-ditches-Asia-for-US-IPO.html

    Thanks!

    ReplyDelete
  2. Can you possibly write an article on the new EPL TV deal?

    ReplyDelete
  3. Great piece, with some very interesting facts about UEFA and FIFA. I wrote a piece on the Polish economy and Euro 2012, would love to hear your thoughts on it.

    http://www.just-football.com/2012/06/euro-2012-will-polands-economy-benefit-from-hosting-european-championship/

    ReplyDelete
  4. Swiss:

    On the TV deal, it looks like the past numbers being thrown around are a little different from what you've used. Yours:

    http://swissramble.blogspot.com/2011/10/revolution-will-be-televised.html

    A piece that's consistent with the reporting yesterday/today of the new deal vs old deal:

    http://www.yookos.com/groups/football-plane/blog/2012/06/14/english-premier-league-seals-record-3018billion-tv-deal

    1992-1997: BSkyB, 60 games of the season, £190m — deal value is £633,000 per game
    1997-2001: BSkyB, 60 games, £670m, £2.79m per game
    2001-2004: BSkyB, 110 games, £1.2bn, £3.64m per game
    2004-2007: BSkyB, 138 games, £1.024bn, £2.47m per game
    2007-2010: BSkyB/Setanta, 138 games, £1.706bn, £4.12m per game
    2010-2013: BSkyB/ESPN 138 games, £1.782bn, £4.3m per game
    2013-2016: BSkyB/BT 154 games, £3.018bn, £6.53m per game

    Not quite sure the cause for the £1.782B vs £1.953B value of the last deal. Yours tend to be slightly higher, with % growth between the two very similar.

    ReplyDelete
    Replies
    1. @jdw,

      The numbers I used in that article also included the money paid for delayed rights, e.g. the £1.953 bln for the 2010-13 cycle is equal to £1.782 bln from Sky/ESPN plus £171m paid by the BBC for Match of the Day.

      In the same way, the total Premier League revenue from TV for 2013-16 deal will include £180m for the highlights package - see the last paragraph from this article yesterday http://www.sportspromedia.com/news/sky_and_bt_pay_uk3.018_billion_for_uk_premier_league_rights

      Delete
    2. Swiss:

      Thanks! Knew there had to be something off in the number rather than in yours. :)

      So the total domestic number is £3.198B, about a 63.7% increase.

      I don't want to get ahead of / spoiler any piece you write on it, but are you surprised by how flat the domestic rights were the last time around? It looked like the growth would be from the overseas rights again, which when they come in make this whole package look mind boggling.

      Delete
  5. The sentence 'This begs the question of how UEFA ....' should read 'This raises the question....'. Sorry, but the misuse of this pharase bugs me. Otherwise great read.

    ReplyDelete
  6. "The amount that the clubs receive for releasing players for Euro 2012 has more than doubled to €100 million"
    I'm a fan of your club team analysis, and the passage above raised the following question in my mind: Do the clubs receive compensation from Uefa on a per-player basis? This would be the most logical way to divvy up the compensation funds and would likely have the support of the biggest European clubs as they own a disproprtionate number of the players in international tournaments. However, are the payments based on player participation in qualifying, or only in the Finals?
    Assuming that they are based only on the Finals, and based on my crude calculations, each player should be worth just over 270,000 Euros (100,000,000/(23*16)) to his respective club. This is peanuts in the context of the revenues and expenses of larger clubs like Real Madrid or Bayern Munich, but could potentially make a difference to the Dynamo Kievs (10 players) and Olympiacoses (6 players) of the world.
    Keep up the good work.

    ReplyDelete

Related Posts Plugin for WordPress, Blogger...