The Legal and Commercial impact of the European Super League

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Last week the footballing world was turned upside down with news breaking of the formation of the European Super League (ESL), supposedly being made up of Europe’s so-called biggest clubs. Twelve clubs announced the disruptive breakaway, leaving fans, managers and players stunned. In a matter of days the ESL disintegrated, with the six Premier League Clubs making a significant U-turn after a series of fan, punditry and player protest. The consequent legal and commercial ramifications of the ESL remain profoundly interesting and important considerations.

IMPACT ON CLUBS

The premise behind the ESL was money, with it being reported that one board member of the six Premier League clubs stated “the wider good of the game is a secondary concern” and that their main job was to “maximise revenues”. This is clear when you assess the fact that the twelve participating teams have a combined debt totalling somewhere between £3.5 and £7.5 billion, and consequently the ESL would have provided a secured income of roughly £300 million a season for each of the 12 members. Leaving outright complaints and criticisms of the ESL to one side, the effects it would have had on sponsorship and commercial partnership which make up a significant portion of the breakaway clubs’ revenues cannot be understated.

Sponsorship deals and partnerships are underpinned by the ability to exploit the clubs image rights which for clubs as big as the twelve involved in the ESL will be incredibly far reaching with sponsorship and endorsement opportunities occurring through participation in established and popular competitions such as the Premier League and UEFA Champions League. The sponsorship or partnership enables a brand to get across their narrative and connect to a club’s following, history and passion. Prior to the ESL announcement Dulux became Tottenham Hotspur’s first ever official paint supplier, this led to a series of viral exchanges on twitter and ultimately enabled the paint brand to interact with Tottenham fans but also other football supporters in general. The ESL would have created a situation for brands where they would have to question whether the clubs leaving the well-established and understood current leagues and competitions for the unknown world of the ESL diminishes the value of the commercial rights attached to sponsorship deals or perhaps it would enhance the value? Either way sponsors would be faced with a tough judgment call.

Moreover, there have been various calls and threats reported of the participating clubs receiving fines and point deductions to warn them off plotting a similar breakaway in the future. Whilst this is yet to have been decided upon, if as an example the Premier League clubs received point reductions or as rather drastically suggested were kicked from the leagues, the commercial impact to the clubs could be catastrophic. It seems inconceivable that this sort of backlash was not considered a potential outcome when the owners of the clubs were discussing the ESL.

IMPACT ON PLAYERS

The impact of the ESL from a player’s point of view, commercially, would have been huge. Current Premier League employment contracts state the club must comply with the rules and regulations of FIFA, UEFA, the FA and the Premier League. Further it also states that the club cannot do anything that prevents a player from playing for his national team. This is particularly poignant given the threats that, had the ESL gone ahead, the players from participating clubs would be held ineligible to play at international competitions such as the World Cup and European Championships because the players would be said to have breached their obligations in their contract. This creates a number of dilemmas for player and their agents contractually. It is common for players to have performance related bonuses written in to both their contracts with their club and endorsement/sponsorship contracts with brands. For example, a player may receive a bonus for scoring a certain amount of goals in the Premier League, reaching a certain round in the UEFA Champions League, or for representing their country, thus creating further legal complications for players with their clubs. For a player, obtaining further endorsement deals and maximising their exploitation of their image rights could have been greatly affected.

COULD THERE STILL BE RAMIFICATIONS?

Despite the money driven ESL being seemingly short-lived, the clubs that participated may still encounter legal ramifications. The reputational impact to the clubs as a brand could be hugely damaging. A significant selling point for clubs when they enter into sponsorship deals is the size of their fan base and their engagement with fans. The value of such sponsorship deals become less to a brand if the fan base is disengaged. Despite the 6 Premier League participants of the ESL withdrawing, supporters of Arsenal and Tottenham remain disgruntled with their club’s owners. The constant prioritising of revenue and profits and leaving fans second best is driving this. This translates into the club’s commercial engagements, by keeping fans valued and engaged, sponsors and partners of the club are also better engaged. Liverpool FC lost a major sponsorship deal with luxury watchmakers TRIBUS in the wake of the ESL announcement, with the brand not holding back on their opposition to the new league being created. This offers the question whether new potential partners or other existing partners will be affected.

Although the ESL was stopped in its tracks, it remains to be seen whether the landscape of football as we know will change in the future, as long as billionaires and big corporations are owners of football clubs it is hard to see ideas like that of the ESL going away. However things do change, the legal and commercial impact is sure to be significant.

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