Commission to blow whistle on UEFA

Date: 27/05/1999

By Peter Chapman

FOR a few sublime moments when this week's UEFA Champions' League winners were parading their silverware in a lap of honour of the heaving Barcelona stadium, the football itself was the only thing on everyone's minds.

It was the culmination of a season of supreme effort for the players of the famous Manchester United and Bayern Munich teams and their faithful ranks of supporters.

But no sooner had the stadium staff began to sweep away the confetti, the ticket stubs and the discarded scarves of the losing team than the real work began.

The money men of the Champions' League were busy implementing a new plan to make the tournament even bigger and richer next year, amid fears that UEFA could be on the verge of losing its de facto monopoly over the élite European soccer championships.

Last autumn, Italian media marketing firm Media Partners offered the top clubs an alternative to the bureaucratic UEFA structure which would, they argued, give them a fairer reward for their massive commercial appeal.

Under the breakaway plan, the Milan-based firm would offer the 36 clubs involved in the 'Super League' a share of the estimated €1.13 billion to be generated by selling the television rights to the tournament on behalf of the clubs.

It would also guarantee that some of Europe's biggest clubs, such as Italy's AC Milan and England's Liverpool, would play in the competition even if they had not done well enough in a particular season to qualify. Instead, entry into the competition would, in part, be based on a team's historical performance.

UEFA's response was to propose replacing the existing Champions' League with a broader-based competition in which 32 teams - instead of the current 24 - would qualify for the later stages of the tournament. On offer would be total prize money totalling €375-500 million, with €37.5-50 million going to the winning team.

Much to UEFA's relief, the top clubs decided to stay with the tried and tested organisation instead of risking all by opting for the more lucrative Media Partners offer - for the time being at least.

But this was only after the new tournament structure had been devised to meet more of their financial demands, although cynics suggest UEFA's threat to exclude them from future competitions and their own domestic leagues was even more persuasive.

However, UEFA must still convince an increasingly sceptical European Commission that the rules governing its new tournament will not be anti-competitive; and Media Partners is also seeking regulatory approval for its breakaway league.

Joint selling arrangements are normally outlawed by the EU's tough anti-trust rule book because they allow the companies involved to extract more money from buyers than would otherwise be the case.

The sports world has, in the past, defended this practice on 'solidarity' grounds, insisting that it is necessary to ensure that less attractive clubs without the clout to secure much television cash on their own get a share of the spoils to help them survive.

This is important, the argument goes, because without the poorer clubs, soccer's leagues and tournaments would be far less attractive, and even matches between the bigger clubs would lose some of their appeal.

Acting Competition Commissioner Karel van Miert has, however, warned the football industry that such joint selling deals will in future be closely scrutinised if exclusive rights to screen matches are sold to one broadcaster for more than a year. He added that approval would only be granted if there were strong grounds for doing so.

UEFA claims it is entitled to market the television rights to its tournaments jointly on behalf of all the clubs involved since it was responsible for creating the 'brand identity' of the Champions' League. The organisation also says it will continue to ensure that matches are shown on channels available to the general public at no extra cost, enabling more fans to see them.

However, the linchpin of UEFA's argument for anti-trust clearance is the familiar solidarity principle. "In the seven years since the competition was devised, UEFA has not only paid considerable sums to the teams taking part but has also insisted on using a proportion of the income to support the whole of the footballing community," said the organisation in a recent statement. "This has been the cornerstone of UEFA's philosophy for the last seven years and it will continue to be so in the future."

But Commission officials close to Van Miert hint that this line of argument is beginning to wear thin.

They question the extent to which UEFA has actually succeeded in its stated goal of looking after poorer clubs and associations. "If you look at who has been playing in the Champions' League over the years, you will see that it does not exactly reflect equality among all or even most European sides," said one.

He added that DGIV officials were looking at the system in force in the US, where collective selling arrangements are only allowed if there are strict ceilings on players' salaries and rules giving lower-rung teams the first choice of transfer-listed players at the end of a season. "That does contribute to a level playing-field," he argued.

The final result of DGIV's clash with soccer's ruling body is difficult to predict, with the Commission still considering the reaction from rivals, television companies and football fans to UEFA's plans.

" We are in the opening minutes of the first half and there has been no Yorke-Cole blitz in the air yet," said one Van Miert aide, alluding to the Manchester United strike force which has terrified defenders across Europe this year.

It is unlikely that the Commission will call for an EU equivalent to the system operating in the US, as this would run into fierce opposition from clubs and players which do not have to apply such rules in their domestic leagues and cup competitions.

Media industry insiders say one solution might be for the Commission to require greater 'transparency' in the management and financing of the Champions' League, which critics describe as a "black hole".

They claim that officials are likely to take a dim view of the monopoly awarded by UEFA to a Swiss-based company Team Football Marketing AG on commercial activities including the sale of television rights.

Instead, the Commission could insist that other companies such as Media Partners be allowed to sell TV rights collectively for some of the clubs in the tournament, chipping away at the privileges accorded to Team Football Marketing.

If this approach is adopted, however, it would have to be accompanied by strict limits on the length of such deals and the money would have to be redistributed fairly to UEFA's 51 national member soccer associations and clubs.

The Commission is also likely to hammer home the message that UEFA cannot abuse its dominant position, blocking the formation of rival leagues by threatening clubs with sanctions.

Sources close to Media Partners claim these concessions might allow the company to put its plans for a rival league on hold indefinitely, as they would open the way for it to sell some of the rights to UEFA matches.

Amid the confusion, there is one near certainty: that there will be team changes at the helm of EU competition policy before the institution delivers its verdict on the European soccer league cases.

Commission investigations normally take several months and Karel van Miert is set to leave office in the autumn. As a result, any decision is unlikely to affect the 1999-2000 UEFA championships, which are due to get under way late this summer.

But the chances are that whoever succeeds Van Miert will follow his lead, and that means that UEFA's planners could be in for a tough season in 2001.

Carving up the cash

How UEFA distributes the Champions' League TV and commercial rights cash

Clubs qualifying for group matches 68.5%

UEFA's association members 7.25%*

Clubs 9.0%*

General budgetary and administrative purposes 5.25%*

Football related financial measures, eg youth football, players' training and education 10.0%

*Approximate share-out of 21.5% of funds

Source: EU Official Journal