The UEFA Champions League: Time for a New Formation the Need for Reform, Not Revolution
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The UEFA Champions League: Time for a new formation The need for reform, not revolution Oliver & Ohlbaum Associates August 2016 Executive The UEFA Champions League has Contents summary become one of the world’s most Executive summary 01 valuable sports properties. Much of its success has been attributable to Section 1 Introduction 02 its ability to respond to developments in the European football market and Section 2 the changing broadcast landscape The Champions League - 04 throughout its twenty-five year One of the world’s biggest sports properties existence. But pressure is building from Section 3 clubs and broadcasters for further and Pressure for change - 10 potentially more radical reform. Why the need for reform? There is a growing perception that as the Group stage matches would move to three Section 4 world’s premier club competition, it could mid-week slots. An enlarged Europa League Time to rethink - 18 Without reform, external be more appealing to fans and worth much would continue as a clear complement, with The impact of reform pressure for more radical more to broadcasters. Champions League no involvement from eliminated Champions change may be impossible broadcast fees have not grown as fast as League teams in the latter stages. to withstand – with negative other top sports properties over the last In the longer term, such a revitalised Why UEFA should act now 28 decade. UEFA faces the risk of a breakaway competition featuring multiple guaranteed consequences for the club competition which would not only fixtures between the largest and most European football system. break the current European football successful clubs would become a must- ecosystem but could also undermine the see complement to Europe’s leading integrity and value of domestic leagues national leagues across the globe. O&O such as the Premier League. analysis suggests that in ten years’ time, UEFA has a short term opportunity to the competition could be worth a minimum implement reforms that will address many of 30 to 40% more than a continuation of these concerns and avoid a breakaway. of the current format. Further increases A new round of broadcaster deals (for 2018 in value can be expected for UEFA and bn – 2021 seasons) is due for completion in club commercial revenues as the revised €3.2 2017. Without immediate reform, external structure would have more global sponsor Reforms to the Champions League pressure for more radical change may be appeal and would attract larger audiences. would increase the broadcast value by impossible to withstand – with negative However, it might take two more rights between 15%-20% above underlying consequences for the European football cycles to achieve this uplift, with a more market inflation. system. likely 15 to 20% short term increase in New O&O research has found clear Champions League and Europa League audience appetite for a Champions League annual value to €3.2 billion. with more fixtures involving the biggest Longer term, leading clubs’ guaranteed clubs – and that the current format features income from the Champions League could matches that have limited global appeal. increase by 40 to 50%, but the status and Having examined several tournament earning power of national leagues would be configurations, O&O believes moving to a preserved. The appeal and competitiveness 24-team format, with 20 of them coming of the Europa League could also be from the five largest leagues, the other four enhanced, with stronger clubs involved qualifying as the best of the other leagues and greater revenues as part of a combined – probably in three groups of eight – would rights sale with the Champions League. address many of these issues. It would The new competition would seal Europe’s mean: leading position in global football, ensuring the clubs remain the most recognised • Broadcasters would have more of the About Oliver & Ohlbaum brands in the world, attracting the best content they want Oliver & Ohlbaum is one of Europe’s leading independent policy and players and cementing football as part of • Audiences to these bigger fixtures would strategy advisors to the sports, media and entertainment industry, Europe’s shared cultural heritage. where we have unrivalled knowledge and expertise. be higher • The value that consumers place on these Established in 1995 and based in London, O&O has been an advisor to fixtures would also increase over 200 different clients on many of the major developments in the UK, • As a “must have” sports property, UEFA European and global television, radio, publishing, on-line and sports would be better placed to capitalise on markets. From supporting BT in their move into sport, to helping Discovery the battle between broadcasters, pay TV with their purchase of Olympic rights, we have been at the heart of the platforms and new market entrants. deals that have transformed sport over the last two decades. AN OLIVER & OHLBAUM REPORT / 1 Introduction This paper has been It has been supported by a detailed, two- produced in response to stage consumer survey conducted across the current debate on the seven international markets. This was designed to evaluate current perceptions future of the UEFA Champions of the Champions League, its position League. It considers the versus other sports, how consumers history and evolution of the perceive the current format and their competition, and how it reaction to potential reforms. can maintain and increase Online surveys were commissioned in the UK, Germany, Spain, Italy, Netherlands, its value in today’s ultra- USA and Singapore, with a nationally competitive sports market representative sample size of 1,000 We believe that some of the proposals respondents in each market. Respondents for “Super Leagues” that are currently were asked about their interest in the being aired would be detrimental to Champions League, their viewing habits European football. They would require and the influence it has over their choice of a large amount of fixtures and would TV and broadband providers. undermine the current calendar balancing Further surveys, including a choice- league, cup, European and international based conjoint exercise, were carried out football; any large gain in rights values in the UK, Germany, Italy and Spain to would require weekend fixtures, which provide additional, more granular insight would undermine the domestic leagues on the potential impact that changes to the and their existing (and highly successful) competition would have on viewing habits rights models. Importantly, it is not clear and willingness to subscribe. that there is significant fan demand Survey response data was used as for a league-type format which would an input to support Oliver & Ohlbaum’s undermine the importance of the domestic in-house rights valuation model, enabling leagues and cups. a robust forecast of the broadcast rights We believe that reform is possible value of the Champions League under within the current framework, and this various scenarios of potential reform. paper sets out the evidence to prove it. It is an update of O&O’s 1999 report Super Leagues and Super Clubs, which contributed to the debate and helped prevent an earlier breakaway. New O&O research 2 7 7,000 Introduction Stage survey process Markets surveyed Total respondents 2 / AN OLIVER & OHLBAUM REPORT AN OLIVER & OHLBAUM REPORT / 3 The UEFA European club football Despite several reforms over the last 20 has been at the core of years to increase the appeal and earning Champions League - the explosion of the global power of European club competitions, the Champions League and Europa League One of the world’s sports industry over the together account for less broadcast past twenty years revenue than the Premier League, only biggest sports 26% of the combined revenue of all five top European football associations, leagues, leagues and less than the sum of their non- clubs and players attract fans from across properties European media rights revenue. While the the world and are estimated to make Champions League has grown in popularity up 77% of football’s global media rights and value, it still only accounts for 5-20% value. European clubs dominate the global of the income of the average participant game – every one of Forbes’ top 20 most club. In the major leagues, this ranges from valuable clubs in 2016 is European. The 15% for an Italian club to just 7% for a top five major leagues (England, Germany, English club. Spain, Italy and France) are by far the most We have moved into a global, hyper- popular and valuable constituent parts connected age where consumer tastes of European club football, accounting for and habits are changing rapidly. Sports, 86% of the combined value of all European especially football, are billion dollar leagues’ media rights, and these five industries in their own right, and find leagues provided exactly half the players at themselves as key properties in a global the last world cup. Outside the NFL (itself battle for consumers. The Champions an overwhelmingly domestic property), League will need to continue to evolve if European football dominates the list of the it is to thrive. world’s most valuable sports properties [Figure 1]. Figure 1: 2016/17 Major sports broadcast rights fees (estimated) - €millions 6000 86 % 5567 The Premier League, Bundesliga, Serie A, 5000 La Liga and Ligue 1 account for 86% of all European leagues’ media value 4000 3044 The UEFA 3000 2374 Champions League - % 2245 66 2000 of UK football fans think the Champions one of the world’s League is the best football competition 1450 1404 in the world 1243 biggest sports properties 1159 1000 732 520 440 0 NFL MLB NBA FIFA SERIE A ONE PREMIER LEAGUE LEAGUE OLYMPICS FORMULA CHAMPIONS BUNDESLIGA SPANISH LIGA WORLD CUP SOURCE: SPORTCAL, OLIVER & OHLBAUM ANALYSIS 4 / AN OLIVER & OHLBAUM REPORT AN OLIVER & OHLBAUM REPORT / 5 The UEFA Starting in 1955, the European Cup The current Champions League match became Europe’s premier football club scheduling is optimised for European Champions League - competition – a knockout tournament audiences and has protected the value between the champions of each of the and integrity of the domestic leagues.