What is the European Super League? (Full Transcript)

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Ronen Ainbinder 0:28

What is up everybody? Welcome to the Halftime Snacks podcast. Today's snack is going to be a little bit different. For this episode, I invited Robert Gevertz to snack with us about a timely topic that I thought we could explore more deeply. The famous European Super League. Robert is a sports consultant from the UK who's a former guest of the show; he used to work with Manchester City, Sky Sports, and other relevant brands in the industry. Robert, welcome back to the Halftime Snacks, man.

Robert Gevertz 0:56

Thanks very much. Good to be back. Good to see you again.

Ronen Ainbinder 0:58

Okay, so let's talk about Super League, which by now we're recording on Thursday, the 22nd. It's, as you said, already dead. It lasted a couple of days. But let's just start from the beginning; what is the Super League? How did we get here, let's just go from the beginning

Robert Gevertz 1:19

So look, it's a very interesting time in European football, where the global pandemic has led potentially to the powers that be some of the major clubs looking for new financial opportunities. I would guess that they were probably already looking for them anyway. But this has maybe accelerated some of that process somewhat. And so obviously, as part of their ongoing conversations with you wafer around the reform of the Champions League, the teams at the very top want some more financial security, some more stability, some more control commercially over where that competition was going. And maybe they felt they weren't getting what they wanted necessarily from that. And so, a few of the clubs at the very top decided to try and step out on their own. Most of secure the potential financing was starting to have some conversations with broadcasters around a breakaway competition, which in itself, on the surface, is not hugely surprising. Many people may argue that this was probably just a leverage bluff somewhat to try and make sure that they could get what they wanted out of the wafer. And on the surface, again, it is no different to maybe what certain teams in the Premier League did 2530 years ago when they stepped away from the Football Association to create the Premier League in creating a new model away from the status quo. The one major difference around this at the moment, which maybe was the stumbling point, and I'm sure we'll go into talking about what went wrong, was the nature of creating somewhat closed competition. Ensuring that the founding clubs 15 founding clubs out of 20 would never be relegated or removed from the competition. So always have that level of security, and removing the competition and the meritocracy aspect, from the proposition that struck a chord with football fans, particularly in the UK. So that was what seemed to be the downfall in the short term of the proposition.

Ronen Ainbinder 3:31

Besides COVID, on missing out on an opportunity, the opportunity cost of missing out on bringing fans to the stands and having people in the stadiums and selling and merchandising and everything else. What were some of the other events that you think that triggered such an idea? I saw a graph probably saw it as well that most of the teams all of the teams, but Chelsea had just huge steps, right? How do they get into such massive debts? Why they like they are just disclosing those debts. Right, right now, why? Why now?

Robert Gevertz 4:09

The player salaries continue to rise exponentially. And the big change was that obviously removing the matchday revenues and ticket sales and that kind of thing. But the broadcast rights, the traditional broadcast rights, particularly in local markets, are not rising at the rate that these teams would hope for, if anything, that is static or falling. And there's a conversation to be had around the general viewing habits of consumers nowadays across TV and other digital platforms. And the best ways for rights holders, governing bodies, and teams to reach consumers. Not that we want to call you to want to be fans, but the reality is that consumers nowadays and the old model doesn't necessarily work anymore. Because younger people don't watch TV that traditionally people consumed TV a few years ago. And so the challenge is always How do you reach those younger demographics. And these teams, particularly lead, it seems, by Senor Perez around Madrid, felt like they needed to do something different to reach a younger fan base. Now, I would argue that partnering directly with a digital streaming service is not necessarily going to be how you engage and interact with a very young demographic. But in principle, the idea was to try and rip up the rulebook and start again, to try and make sure you're engaging with those audiences. Now, you could argue that a better way to engage with younger people is to reduce ticket prices and get younger people to come into the state in the first place. But again, that's a different conversation.

Ronen Ainbinder 5:59

Like what you mentioned, just before that, this could be potential leverage to push changes, either in Champions League, Europa League, or in the way they distribute money in the way big clubs financially support smaller clubs. One of the things that are ringing in my head is like, this is something that takes time to plan. This is something that it's not just like a zoom call between your parents and the Glazier brothers out there in Manchester. Probably Abramowicz, as well it's it doesn't take like a zoom call to be like, hey, let's just create this, right, it takes probably months of conversations of discussions of like, things that are happening also inside teams. So I wonder, like how long it took them to figure out what this was like, what they needed to do, what they needed to do, at least because now it's not even going to be done. But, like, in your mind, how long does it take to plan such a project? And why do you also think about that planning? Everyone was like, Okay, yeah, this, this is a good idea. Let's do it let's, let's go for the money. Let's ask why they've been thinking about what's going to go wrong before? What like, what are your thoughts around that?

Robert Gevertz 7:22

There's a lot of potential factors that have gone into what happened and how it happened. So from one point of view, you look at the fact that out of the 12 teams, four teams are owned by American owners, three of which I think, as a minimum, have also invested in American sports teams. And I'm much more familiar with the American sports model of business, where it is a closed competition. There is a floor-level for revenues, secured, revenue sharing, and competition rules to ensure parity amongst all teams. And one could argue that the opportunity for these American owners has always been to try and move European football and, by default, their investment into that space. First of all, I'm not saying that's what happened. But that is a school of thought that you could join dots around. The next thing, I think, to understand is when you take a look at where the time that it takes to do these kinds of things. I think that helped this process is the pandemic, in the sense that this never got out because no one was seen meeting with someone else. No one the Glazers weren't seen leaving the Madrid offices or a hotel, and wherever having chatted with this person, everything could be done virtually digitally, and therefore kind of untraceable in that sense. So it could have been the kind of thing that was pulled together relatively quickly. Also, I don't think they necessarily had the complete buy-in of all the teams. At the same point to the same level, several teams were worried about missing the opportunity and jumped on board as a last resort, rather than driving through the proposition. And again, you can probably see, if you read between the lines, the teams that jumped away from this quickly, we're probably the ones that never wanted to do it in the first place but felt like they had to because they didn't want to get left behind in whatever the outcome would have been. So I think there are several factors, but also there must have been initial conversations with broadcasters. But the fact they didn't go to the market saying we have a deal with someone shows that those conversations hadn't been made in any great detail. And even though It's a hugely difficult landscape to navigate, there are so many incumbent broadcasters with deals with UEFA. And with FIFA, that this new proposition would completely undermine their investment there. So whether it is Sky Sports in the UK, or DAZN, or Amazon even, I wasn't have Premier League rights here in the UK, would they want to kind of undermine that investment by potentially investing in something else that would then take, arguably the six biggest names from the Premier League away from that competition? So I think it was just the actual announcement process that was probably rushed out and pushed out. And you could see that by the lack of depth in what was put out, and therefore how quickly the U-turn appeared.

Ronen Ainbinder 10:51

I also think what you mentioned about the US American leagues, the NBA, the NFL, they have systems in which they bring players from college were the worst team in the in in the season has the first big next season makes it a little bit more competitive it brings in balance, such a system does not exist in European football, I think that the way that the money is distributed, the access to capital being Real Madrid and coming to JPMorgan or even another bank and saying I want X amount of loan probably is easier to get it than a smaller club like Apoel, or Zenit, or just any other team in Europe. There's a lot of micro issues that we can see in the current system and how it works. But I want to know, from your perspective, mostly because you worked at Man City, and you kind of like, you have some insight insider insight, what is happening behind the scenes, like what are the conversations between the employees that God said, let's say, like Chelsea or men CD or, or Tottenham, like the employees that are working there? Like, what are they talking about? What? Like, are they taking sides? Are they saying like, like, how, how they feel or like, or, like, what's happening there? Do you have any sort of insight or something?

Robert Gevertz 12:18

I wish I did. But I think the reality is if you look at and read what's going on, at the moment, no one knew, like, no one was involved in this, these conversations were held at the highest level. And that's kind of what's so surprising was that there are some very smart people working in the industry, working at these clubs, in roles that are there are more and more departments that are created nowadays around operational strategy, that are that would be employed to investigate this kind of scenario and figure out what's the best way to do this? And what factors do you need to mitigate? And what challenges would there be? And what would be the benefits? And how do we need to explain this to our stakeholders, our fans, our sponsors, our players? And it seems obvious that they weren't consulted at all, which is why this has ended up how it was from what I hear what you read and see various senior-level directors at various clubs weren't involved in this prep work, have come out and said they weren't involved, whether it's Paolo Maldini, Milan, whether it is the coaches and the management teams at the various clubs it just seems like this was a few guys, a few rich guys thinking, Oh, we've done investment deals before, I've got this great idea. Let's let's make this a huge investment and secure our long-term financial viability in the space.

Ronen Ainbinder 13:51

But this takes away their credibility, doesn't it?

Robert Gevertz 13:54

Yeah, I mean, I don't think it makes a huge dent like it's a risk for some of these guys. Like they thought it would work out. Still, they got loads of money in investments. And the worst-case what happens if so obviously, at the moment, several teams are now the clubs, and the fans, in particular, are trying to push back against the ownership. So what happens is they say, Okay, I don't want the aggravation of people hating me anymore. I'm going to sell and make money on my initial investment. there's still enough rich people out there who want to buy into professional football, which could still be a decent investment for funds or rich guys. So they don't lose in this situation. It's just they don't win as much as maybe they thought they would in the first place.

Ronen Ainbinder 14:45

Yeah, now that you mentioned it, I caught myself thinking how many of the fans follow a team because of management, and that's probably as close to zero. Still, I wonder that's because I feel like, at least for me, I've Feel like a team is eventually Kant's kind of becomes part of your identity, you kind of feel like, you're identify yourself as someone that would do the same things that your team would know. So I wonder how many, how many get angry at routines or even stop, stop being a fan of other teams because of these actions by, as you mentioned, the top hierarchical level managers or owners, and, and not even consult the Strategy Team in their, in their own like, group of employees that are devoted to, as you mentioned, do things like this properly. So, it's an interesting discussion.

Robert Gevertz 15:46

I guess it goes back to the initial kind of creation of these teams that they work community places they were a team of guys that worked in the same factory, or they were the team for the local town. And it's all about the part of being part of a community having shared beliefs, shared ideals, and values. And so that's kind of what still remains in the eyes of the fans of the true fans. And again, part of the mistakes maybe that's been made is that these owners were not necessarily interested in the true fans; they will they were more interested in the, in the global follower, in those that kind of extended number that every team quotes, whether it's a man in it, claiming they've got 2 billion fans around the world or whatever. And even though that, their hardcore group is maybe more like 200,000 300,000, whatever the number is, even half a million going to be their highest spenders. But, the growth opportunity is in the other one and a half billion. And that's kind of what they're looking at. But what has shown us that the power of that hardcore has been enough to make these guys think again, because the fear is that that combined with the outside interference from broadcasters in again, the cynic in me says, well, as soon as the broadcast is poor pulled back, which they probably did. The sponsors pulled back, that, the financial projections they put to JP Morgan, now around what the investment would be, maybe doesn't stack up quite as well, if, Amazon going to come to the table and Disney are going to come to the table the big deal, because it's a bit too dirty for them to get around. And brand sponsors aren't going to be associated with that kind of thing because they don't want to reflect their own brand values. And realistically, the cynic in me says that that's probably what happened more than the fan backlash. Yeah. Because like we said, Please, guys, they don't care. They go home and cry to their bank balance; they don't mind being unlike time. It doesn't matter.

Ronen Ainbinder 18:00

I also guess that our office's fans, we want to believe that the story that we were the ones that prevented this from happening, we were the ones that stood outside the stadiums and raised some signs saying we're against, that's the story we want to, but at the end of the day, it's also about story sports, it's about the story sports is about who did what, and, and I guess that for the fans feeling that they were the ones that push this and created that this some sort of pressure, if it's not for them for the sponsors, that they were the catalyst that prevented this from happening, then I guess that it makes sense at the end of the day?

Robert Gevertz 18:40

Absolutely. Like, Don't get me wrong, right. It's a great story that the fans did this. Right. And Twitter has been amazing. For the last two days of football, Twitter has been the place to be in. Looking and seeing the response is absolutely gold.

Ronen Ainbinder 18:55

Hey, what if the one is true in the first place? What if teams were like, you need to push some fan momentum, we need to bring fans together again, what if we create this that makes? Does it make them unite against us? But in terms, they become more? Passionate about it? What if but what if this was the plan? We don't know?

Robert Gevertz 19:18

Well, there's only so much the fans can do. I mean I've seen many fan demonstrations or owners previously, and most of them fall on deaf ears. It doesn't happen. I think the one difference is this has been a totally unified situation, particularly here in the UK, with fans from all six English teams and broadcasters and former players. And everyone has been in this from the same viewpoint of this is wrong. We need to do something, we've done a walk, but we need to do something. And that has. Now whether or not that led to the U-turn is kind of irrelevant because One thing happened. And then another thing happened, that is a good thing. And so, let's let's take this as a big win for people, even if the reality is probably that the money and the numbers didn't stack up at the end of the day, which is why some of these guys turned around and said,,, maybe not. But it's, it's good that they still do want to keep their stakeholders happy as much as possible through but certain teams have had a track record of behaving in a way that doesn't necessarily fit with what the fans want, and they've carried on anyway, and they keep apologizing, oh, we'll never do it again. And they do it again. And they do it again, and they do it again. So I'm not gonna be people who can look for examples in the recent past. I'm not gonna say any, any particular team, but there's plenty of examples there, where they haven't listened to the fans, or they've, you turned for various reasons, and said, oh, we're sorry, we won't do it again. And then, six months later, they do something else.

Ronen Ainbinder 21:00

Let's steal what the problems are. And just to like, recap a little bit of what we talked about. Now, the thing is that rich clubs are basically financially supporting smaller teams. They have tons of debt. They are looking for a solution that will bring them a lot of money. We understand that this is not viable. And this is not something that can happen because of the fans, because of all the things we talked about. But what are some of the solutions? Robert, in your mind, you're a digital consultant; you are a commercial consultant. So what would you advise those teams or leagues? We also talked about the problems behind the distribution of money, access to capital, the whole problem of competitiveness. So what would you advise? What is in your mind? What are some of the solutions that could solve these problems?

Robert Gevertz 22:03

One of the interesting aspects for me is, and again, this links into the Current Conversations with UEFA. The teams also are that one of the sticking points is that the teams want more control over the commercial sales process. With the UAE, for UAE for sales, marketing rights, the Champions League, as a group on mass if you like, they have five or six partners. And that's it. And they own all of the inventory around the Champions League. And certain teams, particularly at the top end, feel like they're getting kind of shortchanged that they have the skills and the resources and the relationship to get better commercial deals for themselves, then their slice of the overall wafer pot. I feel like there are some great guys out there, great teams, and great opportunities. So I think that that is probably a fair assumption for a number of those teams. But it does then create the gap between the haves and the have nots, that if every team were were reliant on creating their own commercial revenue, yes, those top 12, 15, 20 teams may get an increase on their money that UAE for providing them, but everyone below that is going to get nowhere near and so the challenges around a quote from UAE for whoever is the governing body. Is that a challenge that you can push back on? Because ultimately, the clubs do still hold on to a whole load of power, in that there is no Champions League, and there are no big broadcast deals without some of those big-name teams. And so it's finding a solution that is still fair, but fair for the bigger teams may be fairer than is fair for the smaller teams.

Ronen Ainbinder 23:57

Yeah, cuz I feel like comparing it. I saw this meme online. I thought it was it was absolutely brilliant, was that it's, it's like if, in the stock exchange, you take Google, Amazon, Facebook, Apple, and Microsoft, which are the big five companies that basically move the s&p 500 for instance, if it's like if you would take all those five companies in that if you would open a new exchange just for them. And so that is that that doesn't make any sense, but that's what happens. Like that's what it's happening in, in football in European football, big clubs are exponentially bigger than the smaller clubs. You have a that this difference is in power that reflects in the capital with them reflecting in, in soccer quality or how they play. So I guess that I had just this idea having this conversation with someone else I was saying, Yeah, but in The NBA or the NFL, at least they have a salary cap at least they are capping the amount of money they can spend, or they can pay players it's it's important like it's it's just mental to think that PSG can buy in Japan Neymar. And it's like, all the same summer just pushing out, like, hundreds and millions of euros to buy in a team, like super teams, and then the only sanction that they get is that, oh, they can't hire anyone for another year or something. And that makes no sense because you're just allowing them to be unfair sometimes, and then just keep their unfairness in their teams by the amount of money they spend or the players they bring. So that could potentially be another area of solution just limiting teams to what they can do and what they can't. And the same goes for smaller teams trying to be more balanced in what they have and what they can have access to. I feel like it's a coin of two, two sides.

Robert Gevertz 26:08

The salary cap issue will always be difficult in the UK and in Europe because of the kind of laws and competition rights. Stuff means I don't think that they were ever going to be in a position to put an artificial ceiling on what someone can earn; their people can earn whatever someone feels is their value. You mentioned the NBA. And obviously, the reason why the NBA has a salary cap, yes, is part of the kind of parity rules of trying to make it fair for everyone. But it's basically because the owners were able to negotiate that as part of the CBA to ensure that costs were kept to a certain level. The closest comparison is baseball and MLB. Like, don't have a salary cap. But they still have a closed network of teams, that there's no promotion-relegation, there's no incentive to be good or bad, necessarily only the competition of winning. And even then, there's only ever one winner at the end of the year. They don't have a salary cap. But they still have a decent turnover of success for teams year after year. It isn't always the Yankees and the Red Sox and the Dodgers playing in the World Series every year. And some teams, depending on their ownership, that the amount they spend goes up and down quite drastically depending on the caliber of talent they have. And whether or not they decide there is the right time to push the button and go for it or not. And I think that's a more realistic model moving forward. But the heritage and history and tradition of European football has to have the element of competition whereby you are rewarded for your success. And you can start off small and grow bigger and bigger and bigger through on-field success, to the point that you can compete at the very top; they can never have this close shot nature. And that's where I mean that was always interesting about the MLS. And I know that there was a big conversation a while ago over there when relevant sports got involved and offered an obscene amount of money for the broadcast rights on the proviso that promotion and relegation will happen with the USL and the wider football pyramid, which the MLS declined that offer. And so it's something culturally that America just isn't comfortable with, for whatever reason, but the rest of the world is. And so I think there's gonna be American owners at the moment that will always want that feeling of security. And there will always be this tension until either side kind of breaks either. And a major American sports model changes or the Americans are no longer owners within the European sports model.

Ronen Ainbinder 29:00

Yeah, man, I love that. I love that inside. And man, it's Thursday, the episodes coming out on Tuesday. And there's so many things that can happen between today and then.

Robert Gevertz 29:12

we could be a very different place in the world by then. But yeah, at the moment, from where we can see this, the Spanish teams. Again, let's be frank and honest here. Real Madrid and Barcelona are in a huge amount of debt. And they were looking to try and leverage the power and success of the Premier League to try and drag themselves back up financially. So they are clinging on to anything they can to try and keep these conversations going. It's not to say that they won't be successful in finding a way, whether it is through a new proposition, whether it's through the newer version of the Champions League in whatever format that may be, they are in desperate need and will continue to do so but also, they know that their brand and their credibility is such that they are still needed as part of the European soccer elite. So it's, it's something that we have to watch the space and see what happens. Senor Perez is carving quite a niche for himself at the moment in the kind of media space around some of the comments that he's got out there. And we wait to see kind of what the weekend brings. And who knows where this way it may turn?

Ronen Ainbinder 30:22

Yeah, I think they can also take a few years of losses. They've been very lucrative for just those dozens of years. And a few years of the slowdown of economic recession internally. I don't think it's so bad for them. It also kind of like maybe balances out what's happening in the leagues and the money they move. But who knows. Who knows, Robert? Thank you so much for coming today to the halftime snack to have this fun discussion around European Super League men. I think we've got a lot of key insights with you today. I appreciate it. And I can't wait to have another discussion like this with you in the future. Robert, thank you.