“If it’s a business, then it’s a losing business.”
Such is the nature of owning a soccer club, or at least that’s what the late Gianni Agnelli, owner of Fiat and patron of Juventus, warned long ago.
The purpose of owning a soccer club was to give back to your community, build business relationships and endeavor to win trophies. It was about recognition and glory, not turning a profit.
His son, Andrea, had a brighter idea. He and the leaders of the biggest soccer clubs in the world, the ones that tried to form the runaway European Super League (ESL), decided they could earn a lot more money the American way — by creating a cartel.
They failed, and Agnelli and his brethren were forced to abandon their plans, and apologize, and figure out why they underestimated the blowback they would get from soccer’s governing bodies, governments more generally, players, managers — and fans of clubs big and small.
The die was cast in the United States in 1876 when the National League of Professional Baseball Clubs — a.k.a., the National League — replaced the National Association of Professional Base Ball Players.
The implications were many and they shape American sports to this day. The Reserve Clause, which allowed clubs to effectively control labor, and antitrust exemption spring to mind. But the most important implication was that the National League had no institutional responsibility to look after the best interests of baseball as a sport. Franchise owners were free to treat baseball as a business. Although the NFL, NHL and NBA were not granted antitrust exemption, they followed suit and evolved into de facto monopolies.
For soccer, the process of turning a game into a business has proven far more complicated.
The English Football Association (FA) took several steps to constrain the ambitions of club owners. They did establish a kind of reserve clause, which for a long time tamped down player wages and restricted their ability to demand transfers. However, limits were placed on owner salaries and profits and the ability of clubs to relocate. Relegation and promotion were immutable facts of competitive life. Clubs could not negotiate their own TV deals. And when TV deals became significant revenue streams, a healthy percentage went to the FA, which in turn was supposed to use those funds to support lower division clubs, youth development, and whatever they thought best to promote soccer.
The FAs in most countries enjoyed a similar measure of control of their domestic leagues.
That began to change in the early 1990s when the 1st Division of English soccer partially broke away from the other English leagues. Spurred to an important extent by the out-of-date condition of many stadia, hooliganism and a series of fatal tragedies, the big clubs argued that they should have more autonomy, and be allowed to keep more of the revenue they generated. However, they still had to turn over a significant percentage of that revenue to the FA and lower division clubs. To this day, by way of protecting smaller clubs, matches cannot be aired on TV at 3 pm Saturday. And no one dared propose the abolition of promotion and relegation.
The ESL, by contrast, proposed to protect the 15 founder clubs (assuming Paris Saint-Germain, Bayern Munich and Dortmund would have joined if the political climate permitted) from relegation and only five other clubs would be able to take part in any given season.
They did claim that they would donate record amounts of “solidarity” money to the less fortunate teams and that they would still compete in domestic leagues on the weekends. The problem with this idea is that the domestic competitions would be significantly weakened for several reasons. The ESL clubs would view their local leagues as secondary priorities. They would often field weakened sides, like they now do for domestic cup competitions. And domestic cup competitions would be devalued to the point of irrelevance.
One of the defining successes of the American cartels has been their ability to successfully promote their champions as “World Champions.” This is not inaccurate in the sense that the NBA champion probably is the best basketball team in the world. But this success speaks volumes about the NBA’s power and priorities (and American Exceptionalism).
The NBA works with the international governing body for basketball, FIBA, they do not answer to FIBA (a lot of American basketball fans don’t even know FIBA exists). The NBA has embraced the Olympics because it helps grow the NBA. They would throw FIBA to the curb in a heartbeat if the Olympics threatened to eclipse the NBA Playoffs. The NHL threatens to do just that to the Winter Olympics hockey competition every four years. They could care less about what’s good for hockey unless it also is good for the NHL.
Many of the owners of the biggest soccer clubs in the world, which are all in Europe, have long harbored similar ambitions. As the former president of AC Milan, Silvio Berlusconi explained in 1992 that the endgame is to make the Champions League itself the most prestigious and popular competition in the world. “The concept of the national team will, gradually, become less and less important. It is the clubs with which the fans associate. A European Championship for clubs is inevitable.”
That is why the European Cup was rebranded the Champions League. The irony was that the European Cup was only open to teams that had won domestic titles the previous season, while clubs that finished as low as fourth in the table could qualify for the “Champions” League. Semantics was entirely beside the point. The important point was that the biggest clubs, like AC Milan, would qualify most seasons because they almost always expected to finish near the top of their domestic league’s tables.
The Champions League facilitated relatively stable revenue streams, which sounds reasonable and desirable — except for the fact that this allowed the biggest clubs to consolidate unprecedented power. From their point of view a virtuous cycle consisting of increased revenue, more trophies and better brand building. And their timing could not have been better. The internet and satellites were making it possible to build global brands, which generated still more revenue to win still more trophies.
Good times, if you are an elite club. Not so good if you are not. Consider how many different clubs won domestic titles in the major four European leagues each of the past six decades:
Power was not consolidated at the same pace in every league, and indeed Spain is just as unbalanced as it was 60 years ago. But the trend is overwhelming, and it has exploded the last decade. What’s more, since 2005 every winner of the Champions League has come from one of these four countries.
How is this good for soccer?
What’s really needed is a plan to expand the number of countries that have clubs with a realistic chance of winning the Champions League. One of the most myopic parts of the ESL proposal is that only six of the largest 15 cities on the continent were represented among the 15 founding clubs. One can be reasonably certain that the NFL would not exclude 60% of its biggest markets from any expansion plans.
Proponents of the European Super League (ESL) argue that fans want to see the best teams play the best soccer. And that matches between Manchester City and say Aston Villa or Burnley are a one-sided waste of time. But Burnley won the English title in 1960, as did Aston Villa in 1981, 11 seasons after they were relegated and one season before they beat Bayern Munich to win the European Cup. And the big clubs never acknowledge that these matches have become so predictable precisely because the financial disparities among clubs have become so vast.
Being a fan is ultimately about having hope. No matter how awful your team is faring, you are supposed to be able to say, “Wait till next season!”
In the United States, the line between being a Major League team and Minor League one is absolute. Without realizing it, most American fans sat back and accepted that reality long ago. There is no wait-till-next-year for fans of the Rochester Red Wings. You are a fan of a AAA Minor League baseball team, which is under the auspices of Major League one, and your team will always be Minor League. There is no chance of experiencing the dizzy glory of being promoted to the Majors or of suffering through the indignity of being dropped to AA.
Soccer fans of all clubs, big and small, recognize that eliminating relegation would cut the heart out of the experience of being a supporter
The irony of the ESL’s We-want-to-be-like-the-NFL ambitions is that the NFL has used its power to promote extraordinary competitive balance among its cartel members.
The draft, which all American sports use to allocate young talent to teams, is designed to maximize the chances that the worst performing teams acquire the rights to the most promising players. Their rigid salary cap forces the best teams to relinquish talented players. And television revenue is distributed evenly regardless of results or market size. The result is that every team in the NFL has a realistic chance to turn its fortunes around within two years and most seasons 10 or more teams have a realistic chance of winning the Super Bowl.
Owner Art Modell, who unilaterally decided to relocate the Cleveland Browns to Baltimore in 1996, best summed up the paradox at the heart of American sports, describing his fraternity of NFL owners as, “32 Republicans that vote Socialist.” He was all too willing to turn his back on the city that supported his team through many a lean season, but he and his fellow owners embraced working collectively because doing so was really profitable.
Another key part of the success of the NFL has been built on its ability to limit the availability of its product. Since the 1970 the number of games played during the regular season has only increased from 14 to 17 and the number in the playoffs rounds has only increased from three to four, which can in part be justified by the fact that the league has expanded from 26 to 32 franchises.
Right now, the Champions League finalists usually contest only 15 matches. The ESL’s format would have required clubs to play as many as 25. This would have disastrous consequences. Soccer is the only professional sport in the world where a significant percentage of quality players are used as substitutes or don’t even appear in matches. There are probably 10 players on the bench any given week at Manchester City who would start for half of the clubs in the Premier League. ESL clubs would have to fortify their squads with even more quality players in order to compete on multiple fronts. This, in turn, would further erode competitive balance.
We need to find ways to compel clubs to relinquish quality players, like American sports have, so that they can display their talents most every match, not incentivize clubs to hoard more of them.
Finally, it is also important to note that half of the 20 participating clubs would be eliminated after 18 matches (and many mathematically before then). Several of these clubs would finish near the bottom of the table. At that point, their only remaining matches would be in domestic competitions that they helped greatly devalue.
This proposal was the worst of all worlds. It incorporated the most distasteful features of American sports. It would consecrate the division between the haves and have-nots; all the other clubs in Europe would now forever be minor league. Other competitions, even the World Cup, would be devalued. And it would all but eliminate regulatory oversight and obligations to promote the best interests of soccer globally.
At the same time, it incorporates few if any of the best aspects of American sports, such as revenue sharing and promoting parity at the highest levels of competition.
Now that soccer’s governing bodies, governments more generally and fans have recognized what is at stake and the power they have, let’s come together and solve soccer’s biggest problems. Let’s figure out how to promote more competitive balance, within and among domestic leagues. Let’s build on Financial Fair Play and do our best to make sure no club can go insolvent. Let’s make sure that most of the best players are actually playing most of the time. And, most importantly, let’s make sure that the biggest clubs are compelled to make decisions that are in the best interest of soccer.
Dr Pendleton co-authored the Sports Playbook: Building Teams that Outperform, Year after Year and is the founder and CEO of Trading Players, which is launching a fantasy sports stock market game this June.