A breakaway European football Super League, competing directly with existing UEFA tournaments, would alter the industry structure and may disadvantage non-participating clubs, compounding the pandemic pressures, Fitch Ratings says. However, the founding clubs could benefit from cash injections and potentially lower revenue volatility.
The Super League is currently expected to create a largely ‘closed league’, guaranteeing places for the founding 15 clubs and offering qualification opportunities for another five clubs. This contrasts with the current open promotion and relegation system of domestic leagues, and qualification for European competitions based on performance in domestic leagues. Some 12 popular European clubs have agreed to join the League.
Non-participating clubs will be at a competitive disadvantage as they will not share large up-front payments or the revenues of the Super League (aside from solidarity payments). Furthermore, the domestic leagues may be weakened if the Super League’s clubs prioritise the mid-week Super League games and then field weaker teams for potentially less lucrative domestic weekend fixtures.
Participation in the Super League would be credit positive for the founding clubs due to the substantial up-front cash injections – EUR3.5 billion in total in infrastructure grants, and EUR100 million-EUR350 million in joining advances for each club – and annual payments from broadcast contracts, according to the Financial Times newspaper.
Such cash injections would alleviate the pressure built up during the pandemic due to revenue shortfalls, particularly for clubs in financial difficulties, such as Inter Milan. The European Club Association (ECA) estimated the sector’s revenue shortfall at EUR3.6 billion, mainly the result of lost match-day income, but also because of discounts demanded by broadcasters and sponsors to compensate for cancelled games during lockdowns.
In the longer term, the infrastructure grants could be beneficial for clubs given the importance of modern top-tier stadiums in maximising revenue growth. It could materially reduce the need for debt to fund capex.
The pandemic hit football clubs hard, contrasting sharply with the growing revenues, rising players’ salaries and active transfer markets of the previous decade, fuelled by lucrative media rights deals and viewers’ interest. The annual revenues of the ‘Big Five’ leagues grew by 9% on average between 2014/15 and 2018/19. However, the domestic leagues’ recovery and growth may be jeopardised by the Super League.
European clubs’ finances are under pressure due to rigid costs and reduced transfer activities. Many clubs are scrambling to find alternative ways to raise cash and maintain operations, including government-backed support, such as the Bank of England’s Covid Corporate Financing Facility, utilised by some English Premier League clubs. The ownership of some clubs has changed, including that of AS Roma, Parma, La Spezia and Burnley.
There are still uncertainties about the pace of recovery in football across different countries, with the UK likely to open up earlier than peers. These uncertainties may hinder the industry’s ability to issue debt. We expect stadium attendance in Europe to reach around 40% of capacity during the 2021/2022 season, improving to around 80% in 2022/2023 and fully recovering in 2023/2024.
The creation of the Super League is still in question. It has caused a strong negative reaction from many fans, football governing bodies, including ECA, ex-players and even politicians, who view the breakaway league as anti-competitive and damaging to the sector. The existing leagues’ and competitions’ structures enable any team to win top trophies through open promotion, relegation, and qualification systems, increasing fans’ interest in the sport. UEFA, however, is aligned with national governing bodies, FIFA and top European leagues, in planning to counter the project.
Some top European clubs have not signed up to the Super League, supporting the notion that not all wealthy clubs see it as a long-term benefit. UEFA is planning radical changes to its Champions League competition, including significantly more games each season, which could increase top teams’ earnings.
