By: Alex D’Aloisio
Those with their ears to the professional soccer scene–“football” in Europe–have grown accustomed to hearing the phrase “game’s gone.” This succinct English colloquialism is impressively versatile, seeing use in a variety of situations where traditionalists accuse the “Beautiful Game” of losing its historic luster due to modernization. Has the controversial Video Assistant Referee (“VAR”) ruled out a 90th minute winner because the winger’s toenail was offside? Game’s gone. A red card for a tackle that would be applauded years ago? Game’s gone. And 100-million pounds for Jack Grealish considered the best Premier League signing of the summer? The game as it used to be, the argument goes, is gone.
In recent years, the favorite target of traditionalist disdain has been the economic state of soccer in Europe’s top leagues. To some degree, these changes can be chalked up to the growth of professional sports and technological evolutions allowing for previously unheard-of consumer access. After all, the value of the top 32 European soccer teams has increased by over fifty percent since just 2016. Among the factors driving valuations skyward are increased broadcasting, matchday, and commercial revenues, which are up sixty-five percent, twenty-two percent, and thirty-nine percent respectively over the same period. It is hardly surprising that as teams make more money, they spend more.
What may be surprising, however, is that of the approximately 1.2 billion pounds spent by English clubs during the 2021 summer transfer window, nearly half of this sum was spent by only five of the twenty Premier League teams. In the 2020-21 season, the top five clubs recorded a net spend of just over 471 million pounds. The bottom five during this same period? Only 6 million pounds. A 2018 table compiled by Transfer League shows the net spend over the previous five seasons for each team that was then competing in the top division of English soccer. The top spender was Manchester City, with a net spend of over 505 million pounds. In contrast, the bottom five teams combined for a net spend under 100 million.
The numbers tell a story of strong correlation between wealth and wins. Just as Manchester City have been the biggest net spenders, they have not-so-coincidentally won the league five times over the last ten seasons. Since the Premier League’s introduction in 1992, only seven teams have won league titles. In comparison, the United States’ professional soccer league, Major League Soccer (“MLS”), has seen thirteen different cities bring home a championship since 1996. Of the twenty-nine Premier League title, twenty-six were won by Manchester United, Manchester City, Chelsea, or Arsenal. Manchester City, Chelsea, and Arsenal boast the three richest owners in England. Manchester United’s multi-billionaire owners are slightly less wealthy than the other three, but the club generates more revenue than any other club in England and was ranked the richest club in the world for eleven of the last sixteen years by Forbes.
This seemingly causal relationship between money and success has led many to believe soccer has become a game of money; the rich teams compete amongst themselves for trophies, while teams with less financial backing vie for a spot as the next-best. And of course, winning means even more money. Qualifying for the Champions League–Europe’s premier soccer club competition, available to only the top placing clubs in each country–means an influx of sponsorships and television deals that are not available to those who don’t qualify. If you believe the game has gone, you will point to the European soccer financial model as a quintessential, “the rich get richer” scheme.
The controversial model is imposed by the Union of European Football Associations (“UEFA”). UEFA’s financial regulation system is called Financial Fair Play(“FPP”), and at its core lies the break-even requirement: clubs may not spend more than the income they generate. FFP regulations were established with the goal of reducing club’s financial losses, and according to UEFA, has been very successful. However, as discussed above, the economic inequality between top teams and their lesser-earning counterparts is severe. This culminates in the obvious issue of successful, higher-income clubs being legally entitled to spend more money than other teams.
UEFA’s model differs significantly from the system in place in the MLS, where there is a league salary cap of $4.9 million, and each team is allowed a maximum of three designated players whose salary will only count for $612,500 towards the cap, but can be paid more by the team’s owner. While there is still disparity in the salary of each team, the gap between the highest and lowest club’s average player salary in the MLS is under $500,000, whereas in the Premier League the difference is close to $8 million. Put another way, the highest English club’s annual salary was nearly nine times more than the lowest clubs, while in the MLS the highest came in at less than three times more than the lowest.
While many rue the inequality between teams as a result of UEFA’s FFP system, a suggested alternative was met with virtually unanimous backlash. In April of 2021, twelve of Europe’s top teams agreed to break away from their respective country’s competitions and form the “European Super League.” Underwritten by a nearly $4 billion investment by JP Morgan Chase, the Super League was largely based on the American model. The league would include a salary cap, as well as revenue-sharing agreements similar to those in place in major United States sports leagues. Fans were outraged at the lack of any promotion and relegation system as the Super League would allow fifteen teams to remain permanent members. This was seen as an affront to the competitive nature of the sport; however, from a financial perspective, Super League regulations were designed to be more equitable than FFP.
Possibly even more significant would be the handling of television broadcasting and licensing rights in the Super League. The intention was to give member clubs more control over their broadcasting rights, while major players in the streaming industry such as Disney and Netflix were considered potential platforms for the league. Clubs would likely see even greater income derived from television and digital broadcasting, while their spending in relation to other teams in the league would be regulated more heavily. Additionally, a new battlefield would open up regarding licensing rights for popular soccer video games. EA Sport currently owns the rights for the vast majority of top soccer teams, and as a result their “FIFA” franchise dominates the soccer simulation market. The formation of the Super League would see a new battle for licensing rights. For consumers, the competition for rights in the Super League would open the door to new streaming and gaming opportunities as companies innovate to gain their business.
For now, the Super League idea has been shelved due to outrage over its model. While the sporting merits of the league could certainly be questioned, the legal structure of the competition proposed a financial model that in theory promotes a more even competition between teams. Moreover, while no conclusion had yet been reached regarding which companies would be involved in the league, the fierce competition for involvement in such a potentially profitable venture would likely see consumers come out on top. Given the economic inequality resultant of the current FFP model, a new structure may take hold in the not-so-distant future.
Student Bio: Alex D’Aloisio is a second-year law student at Suffolk University Law School and serves as a Staff Member on the Journal of High Technology Law.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
