What's the Really Big Picture?
What just happened?
The European Breakaway Super League is the bogeyman of world football. It lurks in the imagination of the people who run the sport and who want to run the sport.
There are two aspects to it: The thing, and the threat of the thing. Both are important.
As Phil Carling notes in this week’s podcast (Pod #118):
“You can set your calendar by the breakaway story. It appears when there’s a crisis in football (eg Covid) and/or during a key moment in the rights cycle”.
Both of these criteria apply today.
The timeline is relevant. Matt Slater points out in The Athletic that the current version of the bogeyman appeared a day after the effect of Covid was becoming clear to the people running the big clubs. That doesn’t feel like coincidence.
The 1..2..3..
October 19th: UEFA wrote a letter to its 55 member associations. It was bad news. Covid had reduced 2019-20 income from Champions League and Europa League by £500 million. This equates to a 4 per cent cut over the next five seasons. (This story was by Martyn Ziegler in The Times)
October 20th: Barely a day later, Sky News’ City editor Mark Kleinman reported that JPMorgan were assembling “a $6 billion (£4.6 billion) funding package to assist the creation of what could become known as the European Premier League”. This competition would involve 16 or 18 teams, playing each other home and away during the regular season, and it would finish with play-offs to decide a winner. The league would be comprised of a dozen or so founding members.
October 27th: A week later Barcelona president Josep María Bartomeu resigned, choosing this moment to announce the club’s participation in above mentioned European Super League.
La Liga’s president put the boot in (perhaps he doth protest too much, revealing his own fears that the breakaway is real this time?).
To work out what this all means, we turned to Phil Carling, Octagon’s head of football, former FA commercial head and the first ever head of marketing for Arsenal (surely the hardest job in football #coys).
Click on the picture to listen direct or search ‘Unofficial Partner’ in your podcast app of choice.
So what’s the Really Big Picture?
Carling’s answer was simple enough.
$750billion.
The global advertising industry is worth $750billion a year. Of that, about half goes to major digital platforms, Google, Facebook etc.
So when JPMorgan are thinking about putting up 5, 6 or 7 billion dollars to create a competition, their eye is on that advertising prize, because that’s where the media model will move to.
Sooner or later, it will move to no segmentation by territory, free access to content and advertiser driven model. So if $750billion is the prize pot, it’s easy to see a bet on football is quite an easy decision to make.
This is the underlying thinking of the money men.
As Carling says, “Football sponsorship is a flea bite. We all know the big money is in the media rights”.
The marketing money that flows in to football clubs, leagues and tournament rights owners still mainly comes via traditional sponsorship inventory: title sponsors, shirt deals, stadia naming rights, secondary partnerships and - small but growing fast - digital inventory.
But for every pound Beiersdorf pays Liverpool for its Nivea partnership, the German conglomerate spends multiples of that fee on supporting media, traditional TV ad spots and digital, via Google and Facebook. That money goes to the media owners, not the clubs.
The legend of Hitachi
To illustrate this dynamic, Carling tells a story that goes back to the first shirt deal in the UK. Liverpool again.
The players were coming down the tunnel at Anfield, (ITV head of sport) John Bromley said he’d pull the plug on the coverage if they don’t pull the shirt. As far as he was concerned, Liverpool were using ITV to make money that should go to ITV. If Hitachi want to advertise they should buy an ad in the break.
This is the tension between content and media platforms.
We’re now in a position where the clubs are in a position to go to the media platform and seek a revenue share with the platform.
Where we’ll probably end up is that those two entities will find a way to divide the spoils, because 6the number will be so big.
There are 380 games, a lot of minutes in that inventory over ten months in front of 1.8billion cumulative audience globally. That’s a big number. A very big number.
This is why the UEFA Champions League was such a big moment in the history of sports marketing, and why it’s so universally admired: It’s a media buy that just looks like a sport sponsorship.
When we (Octagon) put a sponsor in to the UCL the number one priority by which we evaluate is the media value. That’s driven by the break bumpers and the LED perimeter boards. So, those are the big numbers, which primarily justifies the decision to buy a UCL partnership. That was a very clever move by UEFA and TEAM, and by the architects of the structure Lenz and Hempel.
From the media owners perspective, they keep all the revenue from the breaks and anything driven by subscription. They have to give up the break bumpers in the rights negotiation.
So, more of that $750billion going to the rights owner and ultimately the clubs.
More than that though, a road map is emerging, one that helps plot the journey of Real Madrid, Juventus and Man Utd from well paid suppliers to UEFA’s tournament to owners of the tournament. If I had a SPAC, it’s a map I’d pin on the wall.
Viewed through a thirty year lens, the breakaway threat is a three card trick:
1. An attempt to gain greater share of money
2. To get a seat at the table
3. To seize ultimate control
Number 3 is the fear button, the hammer in the pocket of the big club owners and the wannabe club owners. We’re not there just yet - the FAANGs are many things, but they’re not daft. They know they’re being used as leverage, the one entity that could sign a massive cheque for the whole thing. Yet, if Claire Enders is right (Pod #107) there’s not much evidence this is part of their current game plan.
So we’re still negotiating. Each chapter in the European Breakaway Super League Story moves the story forward; a broadening of the definition of ‘Champions’ here, a tweak to seeding rules and market coefficients that are favourable to the bigger clubs there.
Enter FIFA
FIFA’s initial attachment to the story has added a frisson to the above dynamic. The global governing body has long wanted in on the club game via it’s own event, the FIFA Club World Championship.
Aside: Phil Carling’s story about being in the FA office when they realised Man Utd were due in Brazil for the Club World Cup in 2000 is worth a listen. The FA were stuck between trying to please FIFA ahead of the 2006 World Cup bid and protecting the integrity of the FA Cup. The story ends with Ken Bates asking, do you want to be stabbed or do you want to be poisoned?
Fast forward to today: What will the latest version of the three card trick yield?
Some options from the menu:
An expanded Champions League
A FIFA Club World Championship twice every four years
A UEFA branded summer tournament every two years (an enhanced ICC)
Reduced ‘solidarity’ payments to smaller clubs and leagues
So short term, there’ll be more games, more broadcast inventory to fill the Covid hole.
Longer term, a chipping away at the notion of the UEFA Champions League as the home of the ‘best v best’ in world football.
A crowded calendar, a glut of mediocrity.
The solution? A breakaway super league.
It was obvious all along.