A Dramatic Introduction and Swift Collapse
Last week, the world of football experienced the dramatic birth and collapse of the European Super League (ESL). Living in Atlanta, the defeat reminded me of the Falcon’s 2017 Superbowl and Greg Norman’s 1986 Masters. On Sunday evening, the formation of the ESL was announced, consisting of 12 “founding clubs” from England, Spain, and Italy. Three other unnamed clubs were soon to join, along with another five teams that would qualify annually for the 20-team competition. However, within 48 hours, the ESL was dead.
Financial Motivations and American Influences
The ESL was introduced with a promise to “deliver excitement and drama never seen before in football,” and it surely delivered, albeit not in the way they had intended. The main motivation behind the formation of the ESL was money. The fifteen founding clubs were guaranteed a place every year, bypassing the need for qualification and relegation and enabling them to secure a larger share of revenues with less risk. Broadcasting rights were expected to generate €4bn annually, nearly double the €2.4bn brought in by the Champions League in the 2018-19 season.
The American sports industry is known for its effective money-producing cartels. Professional sports leagues in the United States act as monopoly-like structures that distribute wealth evenly among a self-selected group. These leagues ensure that teams remain in the league regardless of their performance, challenging the American ideal of meritocracy. The European model, on the other hand, is more capitalistic, with club owners taking risks and investing in the potential for rewards. The ESL sought to impose an American-style cartel on European football to reduce risk and transfer more money to the club owners, similar to the recent restructuring of Formula 1 under Liberty Media’s ownership. As Martin Baumann put it, “We can sell just about anything to the Europeans. Why not our hyper-capitalistic cartel-based pro sports system?”
Hubris, Value Creation, and Fan Backlash
The collapse of the ESL can be attributed to hubris. The founders neglected the sport’s business model and Ben Horowitz’s sage advice, “Take care of the People, the Products, and the Profits— IN THAT ORDER.” Their arrogance led them to believe that they could easily impose the American sports system on European clubs without considering the cultural differences and deep-rooted traditions. This hubris resulted in the creation of a league that generated widespread contempt, proving that the incompetence of a few powerful individuals should never be underestimated.
The league’s criteria were not based on being the best in Europe but rather on the wealth of the owners, leading to a lack of value creation. The ESL claimed to be an exhibition of elite football, but without the need for qualification, teams would not have had to try very hard, reducing the value of the competition. Furthermore, the selection of clubs based on their owners’ wealth undermined the very essence of what it means to be the best in Europe. For example, Arsenal, a once-powerful club, is currently struggling in the Premier League and would not have been considered one of Europe’s top teams based on their on-field performance. The ESL destroyed any pretense of value creation by focusing on wealth instead of merit.
The European model places emphasis on the fans, the players, and the managers, with club success being the primary focus. The ESL completely disregarded this fundamental aspect of European football, leading to fierce backlash from fans who felt betrayed by their clubs. Protests erupted at stadiums and training grounds, with fans burning effigies of club owners and demanding change. Fans were also united in their disdain for the ESL, with a YouGov poll finding that 79% of British football fans opposed the league, and 68% of them “strongly.” This overwhelming response from fans made it clear that any league that does not prioritize the interests of its supporters is destined for failure.
Its founding members’ swift abandonment of the ESL left the American owners no choice but to follow suit.
The Aftermath and Potential Regulation
The outcome of the ESL debacle led to apologies from club owners and even JP Morgan, who underwrote the league’s formation. However, the real threat now lies in regulation. The British government has launched a review into how football is run, and there is pressure for British clubs to adopt the German community-ownership model, where fans own 51 percent of the club.
As the dust settles, it is clear that football is anything but boring.
Copyright (c) 2021 Marc A. Borrelli
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Great analysis of a bold attempt to remake European soccer to the detriment of the game and every stakeholder except, of course, the owners.
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