European club competitions – unusual times with usual faces

18.08.2020

Europe’s major club competitions enter their last phases in the coming days – both the UEFA Champions League and the Europa League will see their finals this weekend, almost three months later than the original, pre-Covid schedule. The coronavirus pandemic caused major turmoil, not only in the timeline of the top two club tournaments, but resulted in several technical and logistical modifications too, all rendered in order to be able to complete the competitions this summer, and allow a new football season to resume in the autumn in domestic leagues and in international competitions as well. On the other hand, by looking at the participants of the last stages of the two competitions, we are not seeing much change but rather the prevailing trend of the crystallization of power among the top clubs.

There are no English teams in the finals of the top two European club competitions, in contrast to last year, when, for the first time in football history, only one country, England sent all four teams to the finals.

The Champions League (UCL) continues with the semi-finals involving PSG vs RB Leipzig today and Olympique Lyon facing Bayern Munich tomorrow to decide who goes to the final on Sunday. With only French and German teams left standing, this has been the first time since 2013 that just two nations are being represented at the UCL semi-final stage. Also, for the first time since 1996, there are no English or Spanish sides in the last four.

The Europa League (UEL) concludes on Friday, when UEL-specialists Sevilla aim to take their sixth trophy against Inter Milan in the final.

In this article, KPMG’s Football Benchmark team provides an overview of the last stages of the two tournaments, the impacts of the pandemic and the overall polarization trends the two competitions appear to be confirming once again. 

By mid-March, all of sport had been suspended in many countries, including the top five European football leagues, together with the UEFA Champions League and Europa League, in the hopes that fixtures might resume in April. Both tournaments were in the middle of their round of 16 ties, with 17 and 23 matches on hold, respectively. However, the coronavirus pandemic proved to be more unpredictable than expected, and such an early return to action proved impossible.

It is also important to note that two former matches in early March – the first leg of the Atalanta-Valencia tie and second leg of the Atlético Madrid-Liverpool tie – were blamed retrospectively for contributing to massive spreading of the coronavirus. The Atalanta-Valencia tie was played in Milan, an epicentre of the virus in March, and as a consequence caused sharp increases in coronavirus-related cases and deaths primarily in Atalanta's home city of Bergamo, and, to a lesser extent, also in Valencia. Similarly, when Liverpool lost against Atlético Madrid on home ground and were thus eliminated, some 3,000 Spanish fans flew over from Madrid, a coronavirus hotspot accounting for almost half of Spain's cases at the time: unsurprisingly, their presence at the tie also contributed greatly to spread of the virus in North West England. Two days later, many competitions were suspended, including the Champions League and the Europa League as well.

In mid-June, with the pandemic easing up a bit, UEFA announced its timetable for UCL and UEL to resume. The biggest announced change was the condensed, 12-day mini tournament format for the last seven matches from the quarter-finals in Portugal capital Lisbon and in four German cities (Gelsenkirchen, Cologne, Dusseldorf, Duisburg), respectively. All ties were to be played in a single-leg format and behind closed doors.

The condensed, single-leg format to complete the tournament was also chosen for health and medical considerations to lessen the physical burden on players. Clubs are allowed to register a maximum of three new players provided they played in their respective league before February, and can now enter a total of 23 players on the match sheet instead of 18, something usually only permitted for the final. Teams are also able to make five substitutions at half-time or at three points in the normal playing time of a game, and one additional substitution during extra time.

In addition, UEFA approved a medical protocol and detailed guidelines to ensure that thorough sanitary measures be in place to protect all participants at UEFA matches.

The change of venue for both tournaments also means that the original venues for the finals—Istanbul for UCL and Gdansk for the EL—will host the respective final next year.

Player contracts were also impacted – as 30 June has been a traditional expiry date for player contracts and loan deals, several clubs have had to face the extra headache of securing their best possible squad for the completion of the respective tournament. As a response, FIFA approved an allowance to let clubs extend player contracts and also to move transfer windows so that seasons can be completed. FIFA was only able to make recommendations, saying that players preferably should remain with their current clubs and see out the season, thus clubs should extend expiring agreements and delay new agreements.

Life, however, presented some unusual situations. Timo Werner, for example, did not extend his contract with RB Leipzig but joined Chelsea, even though the Germans were in the quarterfinals of the Champions League; with that move he could not play for either team in the tournament. The swap deal involving Barcelona midfielder Arthur and Juventus’ Miralem Pjanic were designed to allow both players to see out the domestic and European seasons at their current clubs, but Arthur refused to return to Barca for the UCL knockout matches, while Pjanic cloud play for Juventus in their remaining match. Valencia’s 20-year-old Ferran Torres has not extended his contract at the Spanish side, as they were eliminated from the competition in the last 16 by Atalanta, and he has recently signed a 5-year contract with Manchester City.

When looking at this year’s participants, we saw only familiar contestants in the group stages, with Italy’s Atalanta being the only exception, making their debut appearance in the competition.  In contrast, Porto were a surprise absentee: it is the first time in eight years that the 2004 UCL winners have missed out on group stages. In addition, last season's semi-finalists Ajax almost missed out too – they could only secure their group stage presence through the playoffs.

A round of 16 involving solely big-five-league clubs is more unusual, as is the fact that both finalists of the previous season, Tottenham Hotspur and Liverpool, have now been eliminated early in the last 16, knocked out by RB Leipzig and Atlético Madrid, respectively. The early exits of Juventus and Real Madrid at the same stage were also a shock to many. The new one-legged quarter-final brought further surprises, including underdogs RB Leipzig and Lyon progressing to the semi-final at the expense of Atlético Madrid and Manchester City, respectively. Barcelona’s humiliating 8-2 defeat to Bayern Munich will go down in football history – it was not only the first time a team has ever scored eight goals in a UCL knockout match, but will most likely be remembered as the symbolic end of a highly successful era at the Catalan giants, too. 

The 2019/20 UCL season, however, has offered few surprises, if polarization trends are considered. Indeed, the UCL group stages have become rather predictable, mirroring the dominance of the big five leagues, which is often the supremacy of top clubs with the greatest economic power.

The big five leagues were represented by 19 clubs in the UCL’s group stage, in line with UEFA’s association ranking, which determines the number of teams a league can send to the group stage of a tournament, and 16 of them advanced to the knockout stage – Inter Milan, Bayer Leverkusen and Lille dropping out to EUL as they finished 3rd in their respective groups. Consequently, this season saw 13 teams from 11 non-big five leagues among the 32 clubs of the group stages, which is a 40% share – the same size of its representation as in the last season.

It is interesting to note, however, that at the group stage level, non-big five league clubs seem to perform better when compared to their showing among the top football clubs by enterprise value: according to KPMG Football Benchmark’s latest ranking, there are only five non-big five clubs (from three leagues) among the 32 most valuable clubs (only 16%).       

It is also telling that no club has managed to progress from their group ahead of a club with a more valuable squad. (Last season Ajax were the only exception, finishing 2nd in their group, ahead of Benfica.)

That 40% share of non-big five league clubs in the group stage this year, however, disappeared as the tournament advanced: in fact, there was not one club outside of the elite five leagues who managed to progress to the last 16. This season the English Premier League and the Spanish La Liga were represented by four teams each, three clubs came from both the German Bundesliga and the Italian Serie A, while the French Ligue 1 was represented by two clubs.

Looking back at the 10 past UCL seasons, this has been the first one in which the UCL last-16 contains only big five league clubs. There have always been at least two clubs outside the top five leagues at this stage of the competition: altogether they were able to record 33 appearances in that period by 16 clubs. Interestingly, almost a third of those appearances (9) came from Portuguese sides Porto and Benfica. All in all, this means that a fifth (21%) of the last-16 participants came from non-big five leagues in the past 10 years.

Polarization is even more visible when looking at the quarter-finals. Non-big five clubs can boast only nine appearances (11%) in the past 10 UCL seasons – the two Portuguese sides dominate here again with their combined five appearances.

In the semi-finals, non-big five representations in the past 10 years drop to 2.5% – Ajax having been the only club progressing to that stage with their remarkable campaign in the last season.

A non-big five team winning the tournament seems almost impossible today (although Ajax were hoped by many to make such history last year) - interestingly, the last teams from outside the elite five that could win the competition were Porto, who won the trophy in 2004 under Jose Mourinho and, before that, it was Ajax’s triumph in 1995, with Louis van Gaal.

Such a big five league dominance and crystallization in the UCL, consequently, give more chances for non-big five league clubs in the Europa League.

Indeed, while the big five leagues solely occupied the UCL from the last-16 stage this year, clubs outside the top leagues managed to progress further in the UEL: seven teams marched to the top 16 and three even to the top eight with Ukraine’s Shakhtar Donetsk, Switzerland’s Basel and Denmark’s Copenhagen also represented in the quarter-finals.

The proportion of non-big five league clubs in the last stages of the Europa League is also significantly higher if we look back in time. In the past 10 seasons, they sent almost half of the clubs to the last 16, and also to the quarter finals, while they had at least one club in the semi-finals in each season, with the exception of the 2009-10 and the 2019-20 seasons. Moreover, they made it to the finals six times (30% participation altogether), with Porto winning the all Portuguese final against Braga in the 2010-11 season. Nevertheless, teams from Spain and England dominate here too, having won the past eight Europa League finals – Atletico Madrid (2012, 2018), Chelsea (2013, 2019), Sevilla (2014, 2015, 2016) and Manchester United (2017).

Our chart shows the percentage of teams from the non-big five leagues participating in UCL and UEL in the past 10 seasons (from 2009-10 to 2018-19). 

European tournaments – glory and big money
All teams in Europe dream of playing in the Champions League, as it distributes around four times more money than the Europa League. Indeed, the money on offer in the continent’s top club competition is mind-blowing.

The chart below gives an indication of the difference in UEFA prize money in the two tournaments. Prize money is divided into fixed payments, based on participation and results, as well as variable amounts, which depend on the value of the clubs’ respective TV markets and their historical achievements. Here we showcase only the fixed amounts for maximum sporting performance.

Beyond the fame and glory, the promise of such huge fixed amounts of cash via the top European club tournaments becomes even more attractive amid the uncertainty of revenue generation caused by the current coronavirus pandemic. All key income sources (matchday, commercial and broadcasting) are certain to suffer in the near future and such a general downturn in returns will likely have knock-on effects industry-wide. In contrast, the fixed prize money structure for the current 3-year cycle (2019-21) in both top competitions has remained intact, offering a stable revenue potential for clubs for the next season, too – something that makes these tournaments even more important and attractive. It is yet to be seen, if and how the current pandemic may impact the financial conditions of the two competitions for the next, 2021-23 cycle – mainly dependent on the development of future broadcasting deals.

Although Manchester City have yet again failed to reach the Champions League semi-final, they can boast a significant win on a related, legal front. In mid-July, the club won their appeal against a 2-year ban from European football for “serious breaches” of UEFA’s FFP regulations. The striking reversal of the previous ruling by UEFA was definitely a landmark development in FFP history that provoked much criticism, too. Yet, it was a huge relief for City: had the 2-year ban been sustained, City could not have continued their UCL campaign this season, nor joined the competition in the next season, despite finishing second in the EPL and thus sealing an automatic entry. A lost appeal at CAS could have also cost them an estimated GBP 200 million in lost revenues. In addition, with no European football, the club’s appeal to attract new signings could have been damaged, while they could have even lost some key players – for example, Kevin De Bruyne’s manager had said before the ruling that the midfielder would have to consider his Man City future, if the FFP ban had been sustained.