This week talk of a European Super League (ESL) resurfaced again, heralding the first formal move on the part of twelve signatory football clubs (including six of the most well-established football clubs in the UK) towards starting a new elite football competition.
The new ESL threatened to usher in the end of the Champions League, the most popular cup competition in world football. It was also widely believed that the ESL would adversely affect the UK and other European domestic football competitions; as the focus on domestic clubs would be taken away from their domestic leagues and would, instead, firmly focus gaze at the huge sums of money which would be at stake because of the incarnation of the ESL.
The UEFA Championship League is the closest thing to a European Super League at the present time. When it was rebranded in 1992 from the original European Cup it was, ironically, felt that the new competition created would signify the end of the domestic football league as we knew it.
The trepidation over the Champions League starting was unfounded though and that may be seen in some quarters as a vindication.
The attractiveness though of the ESL to stakeholders in large football clubs and, in particular, shareholders and directors of various holding entities and of would-be participating clubs themselves was loud though during the initial silence. The average football fan was incensed by what was perceived as the extreme greed of some already very rich business people.
What is the European Super League?
In 2018, Germany’s Der Spiegel reported on the ESL after the leaking of documents outlining the proposition.
The concept was the breakaway of clubs from the regulation of UEFA and the start of a new competition in 2021.
This sent shockwaves through football clubs. Some of which were fearful of not being able to participate, those who found the concept abhorrent to the principles that anti-competitive practices were unlawful, and to the purist football fans who generally believe strongly that the ownership of the “beautiful game” belongs to the fans.
What was being proposed was the format of a competition which would favour some of the biggest and most successful clubs in European football. Of the 16 teams which were proposed as contesting the competition, eleven of those would be labeled as “core founding” clubs.
Those clubs would be guaranteed places in the ESL for 20 years and would be completely immune from relegation. That concept by itself is the antithesis of fair competition. The relationship between the funding of those clubs as entities – regardless of the business model – and the fans who pay to watch, the risks taken by those invested in those businesses in various ways (including the players), and the relationship with reward and the principle that with success in competition results financial reward is full of conflict when looking at the ESL model.
What is in it for the clubs?
There is the commonality of opinion that the biggest clubs in Europe do not see all the gradients on the landscape. The premise is: that if those participating in the ESL can play each other multiple times, then that will create increased revenue between them and an effective monopoly over finance in the football world. There is a big question mark over whether consumers want to see that at all though if the consequences for losing in the competition are removed.
Television money is a key ingredient in the ESL recipe. Building a competition with the best clubs in Europe would carry the effect of removing a key facet upon which the Champions League is based; the unpredictability of the group stages, which leaves fans fixated and on tenterhooks over which clubs will progress.
The clubs say that the formation of an ESL comes at a time when the global pandemic has accelerated the instability in the existing European football economic model. Clearly, there are clubs which are being run as sustainable businesses that have had to endure the effects of the economic crisis which the pandemic has created. However, the development of a strategic vision and a sustainable commercial approach has, at some point, blurred the lines between enhancing value and support for the benefit of the entire European football pyramid.
Were it allowed to proceed, the effect on smaller clubs, some of whom are at the bottom of the pyramid, would be catastrophic. Picture sustainable businesses which are being run at the bottom end of the English Football League (EFL), whose dreams and fortunes are dictated to them by the natural windfalls which are realised when they secure promotions or win big cup competitions, and which have to take it as read that the risks and rewards of natural competition have to come hand in hand with the risks which are inherent when they are demoted or when they lose.
What about the fans who have fallen in love with the principle that with competition there is a risk of disaster or the prospect of great fortunes? This is why they watch is it not? The unscripted soap opera can play out in real-time and all bets are on!
Many of the clubs which were, until 21st April 2021, willing to join the ESL were founded by the “people” and, in particular, those who had great societal responsibility. For example, did you know that Manchester United was formed in 1878 as Newton Heath LYR Football Club by the carriage and wagon department of the Lancashire and Yorkshire Railway depot at Newton Heath? When it is considered that in 1902, that club had debts of £2,670 – said to be equivalent to £290,000 in 2021 – and the club was served with a winding-up order and had to be bought out by four local businessmen who each invested to keep the business alive, it is a stark reminder of just how far a club like that has come.
The message is that in addition to the legal principles which protect anti-competitive practices, there is also a moral duty on those gatekeepers to protect ordinary people who watch sporting competitions, who indirectly, pay the income of those who work at and invest in these clubs.
Is the ESL happening?
Manchester City were the first of the British clubs to pull out of the ESL proposal. They were followed by Chelsea, which signalled its intention to do so by preparing documentation earlier to withdraw but later served that. The other four sides – Arsenal, Liverpool, Manchester United, and Tottenham have all now followed suit.
Inter Milan are also set to withdraw as they no longer wish to be involved with the project, citing reasons that it was simply unsustainable without the other teams being involved.
This all came after both the Premier League and the British Government took hard lines against the proposals and the specter loomed large that the legislature would enact counteracting law.
Litigation certainly seemed certain for a while and both sides, potentially, had arguments over whether the other was in breach of competition law by being either in favour of or in opposition of the ESL proposal.
For the clubs, it was foreseen that there could have been a legal argument that they would have been the sufferers of abuse of a dominant position; a form of anti-competitive conduct in itself. It is foreseeable that a legal argument could have been had over the regulators preventing clubs from playing in both the ESL and domestic competitions. Their compulsory withdrawal from domestic competitions was of course discussed, as a potential sanction for participating in the ESL.
Football authorities are of the view that rebel clubs were creating a cartel.
Asking the national courts in the UK, Spain, or Italy – all nation-states where the clubs involved were based – to issue a declaration that the rules of UEFA, the Premier League, and other bodies preventing breakaway, was also a prospect. Other deterrents came in the form of FIFA and UEFA warning players that participation could mean the end of players’ participating in international football in the future. That should be a wholly unattractive proposition for many who play elite football.
That could have meant that next year’s 2022 World Cup in Qatar may have had to take place without some of the best players in the world participating in that competition.
How would the ESL affect the players’ contracts?
The ramifications of the ESL being formed for player contracts could have been profound.
If FIFA and UEFA succeeded in banning footballers from the ESL then, foreseeably, players’ contracts would, arguably, be terminable on the basis of legal principles such as frustration or mistake.
Of course, players would not want to be implicated in them not being able to perform, which is directly affective of their income, touches and concerns their image rights, sponsorships, and other contractual deals and incentives.
There could have been massive implications for the relationship between the Premier League and the clubs themselves which, doubtless, would have brought about a wave of satellite litigation which, it can be foreseen, would be spread over so many branches of the law.
Rules and Sanctions
The Premier Rules are vast and, it is noted, carry much scope for interpretation.
The Disciplinary and Dispute Resolution Section in the Rules does provide for broad and permissive powers for the Board to enquire into “suspected or alleged” breaches of the rules too.
Sanctions for breach under the Rules range from the issuing of reprimands and imposition of fixed penalties to referral to the Commission or FA for determinations.
The Premier League Handbook (at rule L.9) prohibits entry by its member clubs into the ESL or any other non-listed competitions except with the prior written approval of the board of directors of the Premier League.
At rule L.11. the Handbook also provides:
“Qualification for UEFA Club Competitions shall be on sporting merit through domestic competitions controlled or sanctioned by The Football Association”.
Whilst the actions of the six Premier League clubs to enter the ESL appear to be in breach of the Premier League Handbook, there is a sense that much of the dispute will centre on the legality of the move from a competition law aspect.
UK and EU competition law also renders unlawful:
- agreements, arrangements and concerted practices which may affect trade within the UK or the EU respectively and have as their object or effect the prevention, restriction or distortion of competition; and
- the abuse of a dominant market position which has or is capable of having an effect on trade within the UK or the EU respectively.
I believe that fines and other deterrent sanctions could be held to be lawful but, ironically, I suspect that there would be good competition arguments to come back from the clubs themselves.
Relationship with US sports model
There appears to be a perennial side competition going on between sports business owners in the US and across Europe. Almost like a “my pockets are bigger than yours” competition.
A dichotomy exists in the US franchise model; which incorporates franchises having territorial rights, usually exclusive territories, which are large enough to cover major metropolitan areas, having no local rivals, and the leagues operating in a closed-system whereby they do not have promotion and relegation to worry about.
Member teams are corporate entities, which are separate from their leagues and operate only under a legal auspice. This provides more financial security for them. However, football in England has developed a very different system; which features the existence of an elected governing body to which clubs at that level belong, the promotion of well-performing teams to higher-level leagues or divisions, and there are matches played both inside and outside of those leagues which creates huge competition.
In short, achieving the financial safety of a club is, potentially, a far more uncertain prospect outside of an ESL because, amongst other things, fan bases, television income, and gate receipts can fluctuate quite dramatically depending on whether the globalisation of the clubs in question is optimum and that comes from success in the competition where the safety of the place is not guaranteed.
There is, therefore, a clear conflict between competing interests between those who own English clubs depending on what their principles are when it comes to whether or not the primary objective is to earn as much money out of the clubs as possible or prepare them for sale to outside investors, versus keeping the clubs as cherished national assets, the beneficiaries of which are the football fans and communities across the country.
Labour leader Keir Starmer said of the proposals recently: “This must be a watershed moment, where we change our game to put the fans first again”, while Liberal Democrats leader Ed Davey tweeted: “This must be the start of a fans-led football revolution”.
In the face of fan protests across the country this week, it does look like the ESL must now be scrapped, or at least be parked. Some of the signatory clubs remain defiant but it is thought that they will go out with a whimper.
Expect a wave of policy-related and legislative changes though to follow in the future. These will be designed to mitigate against the prospect of it being possible for individual clubs to come together and initiate such profound revolutionary change.
For now, most of the signatory clubs from the UK have made groveling apologies to their fans and to the Premier League, but the trust in them may well have eroded to such a great extent that their conduct is so reprehensible so as to be sanctionable. Today, it emerged that some of the representatives of clubs have already been removed from major committees on which they sit as acting custodians of the sport with the Premier League.
Let us hope that the legal framework continues to evolve to protect the legitimate expectations of fans – to keep sports accessible to ordinary people and to prevent anti-competitive practices creeping in through the back door.
One thing is certain: and that is the regulation of sport is about to become more complex overnight.
Should you require to take advice on any aspect of contracts, competition, or sports law, then do not hesitate to contact one of our friendly lawyers today, call 01206 700113, or by email at [email protected].