Does the uefa champions league - Financial fair play?

International Football/Football World Wide - General Discussion

Postby Reg » Tue Sep 14, 2010 4:22 pm

Does the UEFA Champions League Practice Financial Fair Play?
September 14, 2010

Figures released on Monday demonstrate more clearly than ever the financial incentives on offer from UEFA to clubs who consistently perform well in the Champions League.

The following table shows the top-10 prize money earners in the Champions League over the last seven years:

1 (2) Manchester Utd (7) 216.6

2 (1) Chelsea (7) 215.8

3 (3) Arsenal (7) 189.2

4 (8) Inter Milan (7) 174.5

5 (4) Lyon (7) 167.9

6 (7) Barcelona (6) 167.7

7 (9) Bayern Munich (6) 165.8

8 (5) Liverpool* (6) 159.6

9 (6) AC Milan (6) 154.1

10 (11) Real Madrid (7) 138.2

* the first figure in brackets is last year's position in the table. The second figure in brackets is the number of times the team has appeared in the Champions League during this period and the total earnings are given in terms of millions of Euros *

From a sporting point of view, the only criteria which a club will be judged upon is actual silverware, but from a financial point of view, the difference between finishing second and first is a little more marginal.

Clubs are better off making the semifinals of the competition consistently than securing a historic win before sinking into Champions League obscurity.

Liverpool are a good example: Despite having actually won the competition in 2004/05 and then reaching the final again in 2006/07, they still find themselves trailing teams like Chelsea, Arsenal, Lyon, and Bayern Munich in the prize money stakes. None of these four sides have won the Champions League in the last seven years, but they have all managed to consistently reach the latter rounds of the competition.

FC Porto, who won the Champions League seven years ago, do not even make the top ten. Their solitary success has been financially offset by six seasons of Champions League mediocrity, in which they have only once reached the quarterfinals.

In the 2009/10 competition, performance related bonuses were awarded as follows:

€3.8 million for qualifying for the group stages in addition to:
€550,000 per group game played €800,000 for every win
€400,000 for every draw
(in the group stages)

€3 million for reaching the round of 16
€3.3 million for reaching the quarterfinals
€4 million for reaching the semi finals
€5.2 million for the losing side in the final (Bayern Munich)
€9 million for the winners (Inter Milan)

These figures are not cumulative, so Inter Milan would have received €29.2 million in prize money for their Champions League-winning campaign, and beaten finalists Bayern Munich €25.4 million.

Performance related payments are only one slice of the Champions League pie; approximately half of the Champions League's total pool of €746.4 million prize money is distributed amongst the 32 teams on the basis of television market share.

The following table demonstrates what a dramatic effect the allocation of TV money had on the total prize money received by the top earning clubs in the 2009/10 Champions League:

Club                                        TV pool                         Total earnings       Position

1 Inter Milan                          19,559,000                   48,759,000             Winner

2 Manchester United          28,811,000                   45,811,000             Quarterfinals

3 Bayern Munich                  19,462,000                   44,862,000             Runners Up

4 Barcelona                          18,461,000                   39,061,000             Semifinals

5 Arsenal                               16,359,000                  33,359,000              Quarterfinals

6  Chelsea                            18,067,000                   32,167,000              Round of 16

7 Bordeaux                            11,940,000                  29,740,000              Quarterfinals


8 Lyon                                     8,060,000                    29,060,000              Semifinals

9  Liverpool                            19,777,000                 28,877,000              Group Stage

10 Olympiakos                     14,794,000                  27,694,000              Round of 16

* all figures in Euros *

As these figures show, the Champions League is by no means a financial meritocracy. Despite failing to qualify from the group stages, Liverpool still made substantially more money than CSKA Moscow, who managed to reach the quarter finals but were awarded less than €5 million from the pool of TV money.

The fact that 50 percent of the money is allocated to clubs based on the television market means that there is not always a direct correlation between actual performance on the pitch and financial renumeration.

It is easy to understand why clubs are prepared to invest heavily in the hope of qualifying for Europe's most prestigious club competition: Supporters might be more interested in what is happening on the pitch than in scrutinizing their favourite team's accounts, but unless a club is fortunate enough to be bank rolled by a billionaire, financial success and footballing success are inexorably linked.

As the financial fair play rules come into effect over the course of the next few years, the Champions League prize money could become even more significant—it will no longer be possible for clubs like Manchester City to spend their way into the Champions League.

While these rules are supposed to create a fair financial environment within which clubs can operate, they could also end up preserving football's existing status quo.

The Euro Cup can provide some financial respite for teams on the periphery of the Champions League but there is a huge disparity between the financial rewards on offer in the two European club competitions.

Last season's Euro Cup winners, Atletico Madrid, qualified courtesy of a third place finish in their Champions League group. They made just over €6 million from the Euro Cup itself, a fraction of the €15 million they earned from their unsuccessful Champions League campaign.

Beaten finalists Fulham, who entered the Euro Cup in the group stage, made just over €10 million. By contrast, Liverpool earned almost €30 million despite finishing bottom of their Champions League group.

In this financial environment, how can a team which is not already consistently qualifying for the competition ever hope to find the financial resources to compete with the established Champion's League teams?

The current system of Champions League payouts restricts the opportunities which smaller teams have for advancement. Even if a side from outside the established elite does manage to qualify for the competition, they are still going to earn less than the so called 'big clubs' because of the way the TV money is allocated.

Champions League dynasties built over a period of years are difficult to break but it can be done and Tottenham Hotspur are currently taking up the Champions League place, which has historically belonged to Liverpool.

Getting in the Champions League was the easy bit, though.

The difficulty for Tottenham will be putting together a squad with sufficient depth and quality to cope with the additional European fixture demands and still finish in the top four in their domestic league.

This is compounded by the fact that, because Tottenham do not have as high a profile as Liverpool, they will probably receive a significantly smaller share of Champions League TV money with which to reinvest in their squad.

The only hope a club outside of the established elite has of becoming part of the top tier of European football is to embark upon exorbitant investment but soon the financial fair play regulations will close this loophole once and for all.

In the NFL, the worst placed teams get the first pick of college players in the draft. This means struggling teams are given precedence over successful teams when it comes to the recruitment of new players.

In European football, the biggest teams are given the greatest financial resources with which to recruit the best players, while ambitious or aspiring sides get nothing.
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