Football’s finances won’t win with a European Super League – Laurie Pinto, Chairman of Blackstar Capital shares his thoughts

One pandemic, lots of American interest, and a man with nothing to lose. Laurie Pinto, Chairman of Blackstar Capital, discusses why the European Super League has reemerged and the potential impact on football’s finances.

In 2018, German Magazine Der Spiegel, published an email sent from the legal department at Bayern Munich to international law firm Cleary Gottlieb. The email contained some explosive legal requests. Could Bayern legally withdraw from the Bundesliga? Would doing so allow its players to still play for the national team?

The reasons for these questions are now well known: The creation of a private league of elite European teams that would lead to the greatest restructuring of football in its history. A European Super League that would bring an end to the supposedly boring dominance that the super giants like Bayern enjoy in their domestic leagues. Instead, a spectacle of football and competition never seen before would be created. The best only facing off against the best.

The idea was widely dismissed at the time as the entitlement of an elite few. Nothing more than an impossible dream. Last month, however, moments after Josep Maria Bartomeu resigned as FC Barcelona president, along with rest of board, he revealed the club had accepted a proposal to join a future European super league. The extraordinary statement was lost slightly behind the ongoing Lionel Messi saga, but it marked a significant moment: Bartomeu became the first senior club executive to ever publicly confirm the plans for the league.

The motivations for joining the league are, of course, financial. Frequent European Super league matches between teams will supposedly draw larger broadcasting and sponsorship incomes for clubs. The biggest clubs now have fan bases that extend well beyond the borders of Europe, despite the fact most European domestic leagues are not remotely competitive.

Bayern have just celebrated their seventh consecutive title and Juventus are looking to make it 10 straight league titles this season. Qatari-backed PSG look unlikely to relinquish control of Ligue 1 anytime soon. Despite their European roots, financially speaking these clubs are international brands and have more in common with each other than their local counterparts Matchday revenue is an afterthought compared to what can be made from broadcast. More competitive football should mean larger tv audiences. This can be capitalised into larger revenues.

The pandemic has again shifted the goal posts. Far from operating in the black, Barcelona have recently announced a coronavirus-induced shortfall of more than €200m, with a pre-tax loss of €100m. Covid-19 means that smaller clubs can no longer survive without money from the bigger ones. The bigger ones prefer spending it. Juventus Chairman Agnelli is another leading the calls to reform the existing continental competitions. As Chair of the European Club Association, he is a hugely influential figure.

And what of the Premier League and England’s deep football pyramid? It presents a huge obstacle. Many of the Premier League’s most exciting aspects are actually a deterrent to investors. Notably the R word. US lenders are eyeing opportunities all across Europe, but the Premier League’s superior broadcasting deals offer huge value. Add in the rising valuations of MLS clubs and other US Sport franchises, Europe continues to look cheaper and cheaper. If revenue streams can bounce back mid-long-term, the big clubs will offer a low long-term risk profile and stable income flows.

This new generation of institutional American investors may turn the tide further. The supposed structure of the Super League even follows the model of the NBA, and the introduction of player salary caps would further boost profitability by reining in spiraling wages and transfer fees. Most importantly, it will not have relegation, a concept that is not attractive to American investors in the Premier League. Ellis Short and Randy Lerner both discovered that the hard way.

Yet, Manchester United, Liverpool and Arsenal are all owned by US capital. There is previous too. Major League Baseball once squashed independent clubs in the United States, forcing them to be feeder teams to the big-league franchises. Would the domestic leagues not become the same? Feeder leagues to the immovable elite, rendering all other competitions completely meaningless.

Herein lies the issue. Few models estimating the inevitable riches this League would create for Europe’s elite, account for disengagement with domestic leagues. Would half as many fans worldwide watch the Premier League without Liverpool or Manchester United in it? What impact might that have on the sport in general? The chasm that would appear between rich and poor risks putting the entire fabric of football at risk.

As we speak, the €1.6bn deal for CVC and Advent International to take a 10% stake in Serie A’s broadcasting rights is being disrupted by talk around a rival super league. For Europe’s elite, breaking from tradition may cause more harm than they planned for.

Laurie Pinto is the Chairman of Blackstar Capital.

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