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What are the business implications of the disastrous attempt by six English football clubs, and a few others from Spain and Italy, to break away from their national leagues and set up a European “Super League”?
The Big Six of the Premier League were forced to ditch their plans earlier this week after outrage at what was seen as brazen greed on their part.
In return for one-off payments of between £300 million and £200 million each, the six would have joined the new competition, which was calculated to be a much bigger earner in terms of broadcasting rights revenue than the existing European competitions.
JP Morgan, the giant American investment bank, underwrote the scheme and came up with the revenue projections that made it so attractive for the clubs.
From a business perspective, they were probably right to explore all options to maximize revenue, especially in the wake of the pandemic, which has cut huge holes in football’s finances since grounds were forced to close this time last year and TV rights deals renegotiated.
But — and this was the crucial factor that led to the collapse of the Super League concept after a mere 48 hours — they did not anticipate the reaction from the rest of the football industry to a deal that would have emasculated the game in England.
Everybody outside the Big Six thought that the deal was terrible, from the prime minister’s office down to football managers, players and fans.The Super League proposal arguably united the UK more than at any time since the 2016 Brexit referendum.
Most damaging was the charge that they were creating a cartel contrary to the very essence of sport, in which there was no difference between winning and losing because the founders could not fall out of the competition, no matter how dismal their performance.
None of the six comes out of it with any credit, not least the US-owned clubs Liverpool and Manchester United who were the instigators.
Arsenal, also US owned, and (full disclosure) my club Tottenham Hotspur looked especially bad because they were both counted rather lucky to be included in the grouping, given recent poor on-pitch performances.
Ironically, it was left to Russian-owned Chelsea and UAE-backed Manchester City to emerge with some small shred of dignity for being the first to quit the Super League when the strength of opinion against it became apparent, and for fulsome apologies.
Newcastle United — harboring ambitions to be counted among the big boys of English football and whose potential has been recognized by Saudi Arabia’s Public Investment Fund — would have been severely impacted if the English Premier League had been effectively wrecked by the Big Six walk-out.
Frank Kane
JP Morgan took a fair bashing for putting money before the game, and for displaying all the faults of a globalized approach which is at odds with the highly populist mindset of most football fans. What makes sense in the US National Football League does not sit comfortably with the English game.
The UK government is promising to take a root-and-branch look at the game, and even force clubs to hand over some say in how they run their affairs to the fans, along the lines of the German model.
Personally, I don’t think this will come to pass. The legal challenges such a scheme would face from owners who are effectively being appropriated would last for years. The current ownership structure — wealthy owners and profit-oriented financial backers — will probably endure.
One club, however, is more grateful than the others that the Super League plot has fallen apart. Newcastle United — harboring ambitions to be counted among the big boys of English football and whose potential has been recognized by Saudi Arabia’s Public Investment Fund — would have been severely impacted if the English Premier League had been effectively wrecked by the Big Six walk-out.
It is hard to see how the £300 million valuation put on Newcastle by the PIF could have been maintained in that scenario.
Now that the Super League is no more, the Newcastle lawyers can get back to their efforts to force the Premier League to come clean on why they dragged their feet for so long on the planned PIF takeover.
People close to the takeover — which was formally withdrawn by PIF and its allies but which remains informally on the table and wanted more than ever by Newcastle owner Mike Ashley — say the English arbitration court judging the dispute will reach a decision in the summer.
They also expect it to go Ashley’s way, and for Newcastle to be majority owned by the PIF before the start of next season.
- Frank Kane is an award-winning business journalist based in Dubai. Twitter: @frankkanedubai