CHAMPIONS LEAGUE EARNINGS EXPLAINED
Updated: Jan 25
This article was originally published on September 18th, 2019.
Within the soccer world, there is a new thought process entering the discussion about Europe's premier competition, the Champions League.
Many are considering that the Champions League is no longer as much of a financial and commercial boost to teams as it used to be, especially when compared to the financial riches offered by the Premier League.
The power of the Premier League has grown exponentially over the course of the past few years, mostly due to the English top-flight's broadcasting deals.
England's top twenty soccer clubs have been showered with fortunes with the recent broadcast deals growing from $6.5bn, in 2013, to $12 bn in 2019.
This windfall has been inflated by the increase in coverage of Premier League games in new markets across the world.
The ideology that Champions League participation is now less important than domestic leagues, appears to miss a number of key elements, which prove its value for top clubs.
The Champions League's own broadcasting deals is hardly chump change. UEFA sold the broadcasting rights for around $4.4bn, over three years. This deal means that each season, the 32 clubs that qualify, are competing for a share of $1.5bn.
The top clubs, especially in England and the other "top four" leagues, help themselves to a bigger slice of the money due to rules put in place in 2016, which rewards clubs in line with the scale of TV payments from broadcasters showing the competition in their own country.
Last season's winners Liverpool, racked up an eye-watering $120m from UEFA for their performance in the competition.
When Manchester City reached the semi-finals in which they lost 1-0 on aggregate to Real Madrid, collected $91.7m from UEFA.
Chelsea, who was knocked out in the Round of 16 in the same season 4-2 by Paris Saint-Germain, put $75.5m in their bank account. Furthermore, Manchester United, who failed to emerge from the group stage, went home with €38m.
UEFA is also projecting a dramatic increase of 49% more with its next deal in 2021 with teams sharing a pot of $2.21bn a season.
These figures are proving the importance of the Champions League to its participant's bottom lines. Liverpool's victory over Tottenham Hotspur to take the Champions League title helped the club become the first soccer team to bring in more than $274m in a season, from combined broadcasting income.
UEFA's second-tier competition, the Europa League, is also seeing its broadcasting deals increase. The 56 participating teams will share $552m per season an increase from $450m. The competition's winners can also bank $42m for making the journey to the end.
When Manchester City reached that semi-final, in which they lost 1-0 on aggregate to Real Madrid, they collected $91.7m while their vanquisher only collected $87.6m.
The fact that Manchester City collected more than Real Madrid can be found in how the Champions League broadcasting income is split proportionately based on the contributions of each competing league. England's contribution in the form of $327m from the broadcaster BT Sport is the highest of all the competing countries, therefore the competing English teams demand a greater cut from the Market Pool.
If we breakdown Manchester City's total earnings we will see that the club receives a $13.1m participation fee, just for taking part in the competition. They also received $7m for their final group position; $6m for reaching the Round of 16; $6.6m for reaching the quarter-finals and $7.7m for playing in the semi-finals. Finally, they would collect $50.4m from the Market Pool.
Real Madrid however, would collect the $13.1m participation fee, along with $9.3 for winning their group and the standard fees for the following three rounds, which were the same as Manchester City. They would also bank $16.4m for reaching the final and winning the competition. From the Market Pool they would only collect $28.5m, almost half of Manchester City's take.
Real Madrid's lesser take comes partially from the fact that the Spanish broadcasting deal is smaller than the BT deal, it also comes from the fact that Spanish teams performed better in the competition overall.
Each country's share of the Market Pool is split between their competing teams. Spain had five clubs competing between both European competitions, progressing into their respective knockout rounds. Sevilla would also win the Europa League that same year. This means that Spain's $97.4m of the Market Pool was shared between five teams. England's Market Pool was $156.5m and which Manchester City received a larger share from due to the fact that they were the only English club to progress past the first knockout round of the Champions League.
Moreover, it benefits a club if the other teams from their domestic league are eliminated from European competitions earlier. This can be seen in the case of Italian club Juventus who have received more broadcasting revenue than any club in Europe over the past few years. This is largely due to the Italian $131m Market Pool, and only two Italian teams often competing in the Champions League's later rounds.
As the Champions League evolves UEFA is altering the distribution of Market Pool payouts, choosing to increase the fees in relation to on-field success.
This decision might seem fairer, however, in reality, the competition will remain to be dominated by the "Big Five Leagues". Outwith the big five, Portugal is the next biggest in terms of Market Pool, which receives almost half of fifth-placed France's payouts.
As this domination continues traditional European mainstays in smaller markets will continue to fall into irrelevance, which is a shame for the heart of the sport.