European Super League: Why more football is an imperfect solution to sport’s business model problem

Thsis article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Stefan Hall, Project Lead, Media, Entertainment and Culture, World Economic Forum

• The proposed European Super League – abruptly scrapped following an intense backlash – raises important questions about the structural challenges faced by many sports.
• In football, too few clubs and leagues have developed ways to monetize their global fan bases, leaving them dependent on broadcast revenue.
• Alternatives do exist – combining digital distribution of content with a bigger package of products and services such as merchandising and immersive experiences could provide clubs with the best of both worlds.
• Elite sport needs to do better at sharing economic gains with grassroots and local communities.

The adage that a week is a long time in politics and football has never been truer. This week’s announcement of a breakaway football competition in Europe – the Super League – sent shockwaves through European football, before the plan was abruptly scrapped in response to intense condemnation from supporters’ groups, politicians, former players and executives of football’s leading governing bodies.

The new league is not a new concept; its creation has been rumoured intermittently since the late 1990s. The Super League was initially backed by 12 globally recognised clubs including AC Milan, FC Barcelona, Liverpool, Manchester United and Real Madrid. Together these clubs planned a parallel competition to existing national and European tournaments, with between 15 and 20 clubs competing each year without risk of elimination or relegation.

This arrangement, more familiar to followers of some North American sports leagues, is anathema to the principles of European football, which is based on a pyramid arrangement where teams can rise and fall through leagues through some combination of merit, luck and wise investments. Critics of the Super League argued that its ‘closed shop’ structure is anti-competitive and would result in less money flowing back to national associations and smaller teams as a result.

Its proponents would counter that football is a global sport where 99% of fans are unlikely to ever attend a match in a stadium and that alternative incentives are needed to take the game to a new level worthy of its audience.

Although both arguments have some elements of truth, the Super League is an imperfect solution to the problem that the sports industry faces with its existing business model. The fact is most sports properties – whether leagues or clubs – have underpinned all their revenue generation strategies on an ever-growing television broadcasting market.

Value drivers in sports have created the wrong incentives for administrators

Most of the value in watching sports comes from a live, scheduled experience, leading sports administrators to ensure their “product” is as compelling as possible to watch. The objective is to grow the value of media rights by attracting perpetually larger audiences.

This model has been hard to change. Some media outlets have found ways to grow consumption by expanding leagues and competitions, extending seasons or simply increasing the amount and formats of non-live content, but there are obvious physical limits to how many games teams can play in a season.

Ultimately, revenue growth comes from expanding the audience – a feature also applicable to other income streams such as sponsorship and ticketing. There is no doubt the principle has worked for European football: UEFA has documented the growing income that clubs have generated, even if it is increasingly concentrated amongst the richest.

But with the bundle of entertainment channels that Pay-TV offers being challenged by digital alternatives, reductions in viewing hours and profit margins for operators have made it more difficult for broadcasters to afford the media rights to sports content. Indeed, the value of global sports rights has declined about 15% since 2018, and broadcasters have warned that the trend is set to continue.

For the creators of the Super League, the solution to this problem was simply for their clubs to play more games against each other. They believed that demand from their billions of collective fans is strong enough to sustain a new, more expensive broadcast deal, while continuing to play in and profit from their domestic competitions.

Super League the inevitable next step in football’s relentless globalisation

It’s easy to see the logic of this approach. These teams already undertake extensive pre-season tours in regions outside of their home markets – notably Asia and the US – to build connections with fans in other countries. If football is a globalised game with the vast majority of fans consuming it through a screen, does it make much difference if some of the big clubs group together to play a few extra matches each season?

Whether you agree is likely to depend on what you think the sport should represent. For the purists, clubs should form an integral part of local communities, where teams have a meaningful relationship with cities and towns and supporters attend games in person, no matter how well the team performs. For others, football is merely another form of casual entertainment competing for our attention; it should be accessible on-demand, with quality the only determining factor of whether to watch.

For better or for worse, the trend suggests that the latter philosophy is winning out. Over the past few decades, football has become as commodified as any other entertainment format. Across sports, this dynamic has produced massive inflation in athlete salaries and team valuations – a benefit that few complain about today. Unfortunately, as this has happened, too few clubs and leagues have developed serious ways to monetize their global fan bases, leaving them dependent on – addicted to, some have argued – income from broadcast revenue.

Sports as a service: a way to marry the local with the global?

This is not to say that alternatives do not exist. The concept of sports as a service – where sports properties combine digital distribution of their content with a bigger package of products and services such as merchandising and immersive experience – could provide clubs with the best of both worlds. On the one hand, they can continue to compete in their national leagues, keeping them tied to their historic locations and ensuring a link with local communities and fans. At the same time, digital tools allow them to expand relationships with fans regardless of location, ensuring that revenue is tied to depth of engagement, not just audience size.

In the end, it appears that the Super League won’t see the light of day; legal challenges and political pressure put an end to it before it has even begun. Some have argued this is merely a bargaining strategy for the big clubs to extract concessions from their national associations and governing bodies.

But even a compromise is unlikely to solve the structural challenges that all sports face. Namely, how elite clubs can achieve market value for their product by expanding and monetizing their audiences around the world, while ensuring that a fair share of the vast money they earn flows back to the grassroots and local communities that sustain the overall game. The debate on how best to achieve this may go into extra time, but it’s not yet time for football’s final whistle.