Premier League Giants Vie for Financial Boost of Champions League
In about 10 weeks, the Premier League will crown a champion for the 2023 season. While fans will focus on winning the title, club owners have their eyes on a different prize: finishing in the top four and securing a spot in the UEFA Champions League, which promises millions of dollars in prize money and broadcast revenues.
“The Premier League’s distribution model for media rights is the most equitable in Europe,” Kieron O’Connor, a soccer finance expert, said. (O’Connor boasts more than 244,000 followers on Twitter, where he posts long threads about the business of soccer under the handle @SwissRamble.)
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“The real revenue differentiator for leading clubs is in European qualification,” he said, “especially the highly lucrative Champions League.”
Qualifying for UEFA’s tournaments is more varied and complex than American audiences might be used to. In normal circumstances, the top four teams in the Premier League qualify for the Champions League, the most prestigious competition in Europe, which pits title-holders from national leagues across the continent against each other and includes other high-placing teams from the biggest leagues, primarily England, Spain, Italy and Germany.
The Champions League winner receives prize money that approaches $100 million.
Meanwhile, England’s FA Cup and Carabao Cup winners, and the fifth team in the Premier League, qualify for the UEFA Europa League—a rung down from the Champions League. It’s still an important competition, as the Europa League winner gets a spot in the following year’s Champions League competition, as well as over $20 million in prize money.
Here’s where it gets complicated. If the FA Cup winner finishes in the top five of the Premier League, its Europa League place will go to the next-highest-ranked team not qualified for UEFA competitions, according to EPL rules. And if a Premier League club wins the UEFA Champions League, it will automatically qualify for the next season’s competition regardless of its league finishing position.
Once in the Champions League, the four Premier League teams join 28 other teams from Europe’s 55 national soccer associations. They split into eight groups of four teams, and the winners and eight runners-up proceed to the knockout phase that leads to the final. The number of teams each association enters in the league is based upon the UEFA coefficients, generated by the results of clubs representing each association during the previous five CL and UEFA Europa league tournaments.
Regardless of the details, there are multiple potential paths to the Champions League, and if a team can get there, significant financial benefits await. In addition to prize money for advancing in the tournament, there are payouts for a team’s UEFA coefficient and a share of the pooled TV money.
Last year’s champions, Real Madrid FC, brought home $90 million and an additional $5 million for winning the UEFA Super Cup in August. Los Blancos have won the Champions League trophy 14 times, more than any other team in the history of the tournament, but their UEFA coefficient is still lower than Liverpool F.C., Manchester City F.C. and Chelsea F.C.
“On top of that, a club would generate additional income from ticket sales and performance-related uplifts in sponsorships,” O’Connor said. “In short, it’s a game-changer.”
In comparison, winning UEFA’s Europa League brings in $24.6 million (€23 million) in prize money. According to O’Connor’s calculations, Premier League teams that competed in the Champions League last year brought in $104 million on average, compared with $30 million for EPL clubs in the Europa League.
Qualifying for the Champions League means bonuses from sponsors, but not qualifying might mean losing existing sponsorship dollars. Manchester United, Premier League’s most valuable team according to Sportico’s latest valuations, has a clause in its contract with Adidas that allows the sponsor to reduce its annual payment by 30% if the team does not qualify for two or more consecutive seasons. If the team does not qualify again this year, it could lose $26 million (£22.5 million) next year (one-third of its $90 million contract). Manchester United has won the Champions League title three times in the past but did not qualify for the tournament last year.
Sponsorship dollars are not the only revenue at risk. “It’s worth noting that some of the financial pain of not qualifying would be mitigated by lower costs, as players’ wages include significant performance-related bonuses,” O’Connor said. “This is one of the reasons Liverpool’s wage bill was so high last season, as they won two trophies and finished as runners-up in the other two competitions.”
In response to the failed Super League project, the Champions League format will change in 2024, with the number of teams competing in the tournament expanding from 32 to 36. UEFA will award four additional spots to the countries whose clubs have performed best in European competition the previous season. Two places are reserved for the two countries with the highest coefficient score in the current season. “Therefore, there’s a reasonable chance that the Premier League will have five spots, albeit not guaranteed,” O’Connor said.
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