The world of European football is being rocked with the controversy surrounding a potentially new European Super League. There is a consensus among pundits, players, and fans that this is a revenue play for the big clubs. The natural comparison is to the top American sports leagues such as the NFL, NBA, MLS, and MLP.
These leagues are closed leagues. Closed-league systems have a fixed number of teams playing the same amount of games during a regular season. There is no promotion or relegation mechanism in place. Players are contracted to one team until their contract expires and the owners make the rules and the lion’s share of profit.
The European soccer leagues, on the other hand, are open leagues. Open leagues provide all teams a theoretical opportunity of reaching the top division and playing with the best teams. ‘Open’ leagues have a promotion/relegation system. The worst teams in a league at the end of a season are ‘relegated’ to a lower division. w, with the proposed European Super League mitigating that financial risk — and bringing even bigger gains — for the biggest clubs, will the Americanization of football accelerate?
So why are US Investors so Interested in a Super League-Style European Soccer League?
The simple answer is less risk. An investor looking at a Super League team has less risk of the club collapsing financially because:
- Sporting results have less impact on team finances because clubs cannot be relegated.
- The salary cap ensures unexpected wage cost inflation will be minimal.
- As an owner, you are a shareholder of the league so you hold the power to protect your market from new entrants.
- Therefore the risk of investing is low and the value of the franchise will be higher.
European and US owners would like the same thing in European Soccer – higher returns with less risk.
Let me know what you think.