6 Lessons from the European Super League debacle.

56 hours. That's all it took.

So, what happened?

A grand plan by some of the biggest clubs in European (and therefore World) Football was announced and pronounced dead within 56 hours.

Why did they do it in the first place?

For more details, here's a good resource:

Why Super League plan makes financial sense for top clubs

Real Madrid president Florentino Perez had claimed it would "save football", at a time when young people are "no longer interested" because of "a lot of poor quality games".

He adds that clubs are on the “edge of ruin”, adding that “by 2024 we’re dead”.

According to the statement released on Sunday, "founding clubs will receive an amount of €3.5 billion ($4.3 billion)". The sum works out to $400 million per club, which amounts to four times the amount Bayern Munich took home when it won the Champions League last season.

Why would such big names be on the "edge of ruin" and be "feared dead" by 2024? Debt?

But debt is not a problem if you have the reserves and/or the confidence to service it. So, did these clubs lose their confidence in the future?

Drop in profits due to Covid? These numbers show that the debts have been incurred before Covid. Not because of Covid losses/drop in profits. Please note that Chelsea made a profit of 44 Mn GBP.

But these are big "successful" clubs! They must have been making lots of money before Covid and have substantial reserves to tide over such crises. Did they?

While data on their reserves doesn't seem to be easily available, companies all over the world are dealing with revenue drops between 100% to 50% due to Covi - by finding new revenue sources, reducing costs, using their reserves or having existing shareholders invest additional capital to tide over the crisis. No reason why the same would not be applicable to the biggest clubs in the world.

So, if it's not about Covid related losses, then why did this move get triggered?

My take: European Super League was an attempt to move European football to the American Sports Model

The American Sports model is actually more socialist, centrally controlled and less exposed to performance risk than you expect. Here's how (afaik!):

1. Closed Leagues. Fixed number of teams. No relegation. Exactly the main point fans across Europe protested against.
2. Dedicated TV seasons. The year's TV calendar has been divided amongst the big leagues in the US. As a sports lover, at a given point of time, there is only 1 big league available to follow. Therefore, no fragmentation of viewership and spends by fans on merchandise, tickets etc.
3. Drafts and Salary caps for players. Unlike European football, players have a salary cap and the draft system gets the lower performing clubs to get access to top talent without having to raise a ton of money.

Therefore, the rich don't get richer. Clubs win based on their performance and not their ability to throw money and buy players at any price is not a parameter (unlike European football).

And most importantly, the Clubs cannot be relegated if they perform poorly! The financial pain of relegation is that the Club's revenue streams just got severely reduced while the cost levels might remain at a similar level - unless there is sale of high profile players to fund the gap. This then starts the vicious cycle to the bottom - with struggling clubs unable to cope up unless they find a rich investor to bail them out. This seems to be happening in European football clubs.

No relegation ensures that the revenues are fairly stable, fan base is not divided and therefore the valuations of the clubs is better (as against European clubs that have unpredictable revenues & costs and also the risk of being relegated).

This is the same model used in the Indian Premier League. No relegation.

Why did the European Super League not go ahead? Why did the Clubs pull out within 56 hours?

Because of the Fans.

And players, ex-players, managers, former managers ...

And what were they upset about?

No Relegation.

Pep Guardiola: “it is not sport if you cannot lose.”

Players wore jerseys during training saying a Champions League spot has to be earned. Not bought.

What did the Clubs do?

Liverpool, Arsenal, Manchester United and Tottenham issued statements saying they are pulling out. Arsenal went the furthest, writing:

“We made a mistake, and we apologise for it. We know it will take time to restore your faith in what we are trying to achieve here at Arsenal.”

These are Big Clubs with lots of Money. Big Investors trying to change things. Lots of Fans and Supporters coming out in opposition. Lots happened!

So, Notes to Self from all this:

1. People are watching. All your actions - big and small - are being watched and noted. People are making conclusions about you based on your actions. Not your words. All those small acts will come to help you sometime in the future. Or hurt you. Depends on what you did!
2. Arrogance of Money. Those with money, very often, surround themselves with yes-men, lose touch with ground reality and don't really engage in honest, open-minded debates. Whenever I am in a position to leverage Money (and not my Time), I should remind myself to have a Small Ego and High Maturity to stay in touch with reality. Because Money, finally, is a Commodity. What makes Money work is the People who put it to good use in the Real World. In the ESL case, the mistrust between the Owners and Fans is a real issue to be resolved before any progress is made on this front, IMO.
3. WHY matters! If people understand why you are proposing something, they might be willing to listen and support. And even if they disagree with your strategy, they don't mistrust your intentions because they understand your real goals (The WHY)
4. Inertia is a very powerful force in human systems. The US sports model was started as a closed system with no relegation, controlled TV broadcast etc. Just like the IPL in India. European football started with clubs in every city/lane/by-lane. And the notion of competition, performance and relegation as the core "spirit" of European football. No fan in India or US complains about No Relegation. Changing something that has already started is very very difficult. Remember that next time you start something in a particular direction or have trouble changing an existing direction!
5. Don't take your supporters for granted! Those who support you with all their love and time will also turn against you - or support someone else or start something new - if they feel your actions are wrong or don't understand the "WHY". Communicate. Communicate. Even if you disagree and the decision-making cycle gives you the prerogative to take the final call, find a way to do it gracefully and not by flexing your rights and powers. ESL probably needed an extensive outreach with fans, players, ex-players, managers etc to talk about how this move would "save football" and the extent of financial risk that the clubs are under. UEFA also has to address the real concerns of the Clubs despite ESL's failure (as of now).
6. Play the Game right. Money will follow. Money is the outcome of giving the World what it wants. You did not earn Money because you decided to earn Money. Play the Game right. Stop listening to the World and you will stop having Money. Supporters can sense Arrogance very quickly and will stop supporting at the first available opportunity. Play it right and they will reward you with their support. Money will follow.

What do you think?