The Impact of Champions League on European Clubs: Big Money Talks - Small is Not Beautiful

Has the Champions League become the European superleague that the G14 group of top clubs is pressurising UEFA for? 

The popular perception is that the same clubs from each country compete every year as cash from the Champions League fuels greater domination of domestic European competitions by a handful of clubs.

Yet research shows this is not the case in Switzerland, Sweden, France or even Germany, where a variety of different clubs regularly enter and are competitive in the Champions League.

The study ranks nations in terms of domestic variety with a rating produced by dividing a country’s total amount of Champions League appearances by the number of clubs to appear.

Participation in Champions League does not equal national domination
The tournament has changed dramatically in the last decade as the European Cup became the Champions League and the number of competing nations exploded with the break-up of the Soviet Union and Yugoslavia. In 1994/95, UEFA changed the format and forced league winners from smaller nations such as Iceland to play in the UEFA Cup and in 1996/97 admitted teams other than league champions for the first time. The study runs from 1997/98, when UEFA re-admitted smaller nations, to the current season.

The country with the least variety in its domestic competition is Latvia, where Skonto Riga’s domination of the local Virsliga means the club has been the country’s sole Champions League representative for the last eight seasons.

Yet cash from this sort of success does not always mean domestic dominance. Sweden is second in the study, with only Halmstad qualifying for the Champions League more than once in the last eight years. This variety has been achieved despite Gothenberg making £9.9m from four Champions League appearances between 1992/93 and 1997/98.

In neighbouring Finland, one club has ever qualified for the Champions League group stages and HJK Helsinki’s success in 1998/99 produced earnings of £2m yet the club did not did win its domestic title again until 2002/03.

Only five countries have won the European Cup and/or the Champions League more than four times. England, Holland, Italy and Spain are in the top 12 least diverse, though the other European superpower, Germany, is mid-table.

Bayern Munich has appeared in all eight Champions League seasons over the last seasons and made more cash from the competition in its first ten seasons than any other European club.  Yet nine other German clubs appeared in the Champions League in the last eight seasons and three different sides, Bayern, Borussia Dortmund and Bayer Leverkusen, have all made the final.

Phil Carling, head of football at sports marketing agency Octagon, explains: “The German and French leagues have always had more competition and strength in depth, but Italy and other leagues outside of the big four are more dependant on cash from the Champions league.”

Champions League leads to hegemony
Carling argues that, outside of England, where top clubs have more domestic TV and commercial revenue, Champions League cash will lead to greater hegemony. “A couple of seasons ago money from the Champions League was 20 per cent of all income at Juventus and 32 per cent at Real Madrid. The Champions League is having a major impact on the revenues of all the teams that compete.”

Ukrainian giants Dynamo Kiev made £28.8m from the first group stages of the Champions League up to 2003/04 according to UEFA’s own figures. Kiev’s repeated qualification for the group stages led to the Ukraine being awarded a second spot in 2000/01. That first slot was filled by Shaktar Donetsk, which made £2.9m in their inaugural season in the competition, and have been the only Ukrainian side to appear in the Champions League apart from Dynamo Kiev in the last five seasons.

In Norway, one club is also dominant and Rosenberg’s successes have earned the side £29.4m from qualification for the group stages up to 2002/03. This makes Rosenberg the Champions League’s 18th highest earner - ahead of former European Cup winners like Liverpool and Feyenoord. This income has undoubtedly help the club dominate at home and also remain competitive in the Champions League.

This success in Europe also led to Norway securing an extra Champions League spot in three seasons, when the places were taken by three different clubs, Molde, Brann and Lillestroem. Rosenberg have nonetheless dominated Norway’s domestic Eliteserien league for a decade.

Carling adds: “If you look at the commercial models of a lot of European clubs, not very many are doing that well from domestic television revenue. You can get £20m for qualifying for the Champions League and there’s no cost of sale so that money goes straight to the bottom line as pure profit. That is a massive amount to clubs outside the big nations. If those clubs can identify, retain and capture all their top talent, then they will dominate their domestic leagues.”

Despite losing in the semi-finals of the 2003/04 Champions League, Chelsea received the biggest share of the £275m shared by UEFA between the 32 clubs in the group stages. Chelsea pocketed £20m ahead of Arsenal on £19.7m and Manchester United on £19.3m, with the eventual winners, FC Porto, only netting £13.6m due to the greater income from English TV rights.

Small share of Champion Leagues cash can mean a lot to smaller clubs
UEFA distribute between 75 per cent and 82 per cent of its Champions League income to clubs in the group stages, with the remainder allocated to clubs from other nations as solidarity payments. Many of these clubs are semi-professional and invariably eliminated in the first qualifying round, but cash from the Champions League can still provide a major financial fillip.

In Luxembourg, where Jeunesse d’Esch and F91 Dudelange have taken seven of the Grand Duchy’s Champions League slots in the last eight seasons, top flight clubs operate on an annual budget of between £335,000 and £400,000. No Luxembourg side has won a two-legged Champions League preliminary tie, yet the Grand Duchy’s representatives will still get £100,000 from UEFA with the country’s representative in the UEFA cup pocketing £37,000. This may be a tiny sum compared to the riches earned by the elite, but clubs in Luxembourg can earn more as a percentage of their total income from the Champions League than those who go on to win the competition.

In Wales, where there was no national league until the formation of the Champions League in 1992/93, Barry Town won seven out of the last eight league titles. Until last season, cash from the tournament enabled the club to run a full-time squad in a semi-professional league.

Like the Welsh, no Icelandic club has ever qualified for the money-spinning Champions League group stages. Ómar Smárason, head of public relations at the Iceland Football Association, is in no doubt about what would happen if the winners of his country’s league ever did. He explains: “Should a team from Iceland qualify for the Champions League group stages, we would without a shed (sic) of doubt see total monopolization of the domestic league by that team [like] Rosenborg in Norway.”

There may still be some variation in the Champions League but as UEFA carries on increasing the rewards at every level, the number of clubs competing looks likely to continue diminishing.

Table: Champions League: How cash distorts domestic football

Only includes countries entering Champions League from 1997/98 to 2004/05 inclusive.

Note: Countries ranked by % rating, then lowest number of appearances.