Does England no longer boast Europe s Premier League?

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1 Does England no longer boast Europe s Premier League? Not so long ago The English Premier League could undisputedly boast to being the world s best league without much argument from even its harshest critics. By most objective measures the competition was streets ahead of the rest of Europe. Jump forward to the present day and there is genuine debate as to which league should be heralded as Europe s (and by proxy the World s) Best. The failing of Manchester City and Chelsea in the UEFA Champions League, the selection of the 2012 FIFPro World XI and Bayern Munich s coup in seemingly pinching Pep Guardiola from under the noses of England s wealthiest Clubs have all intensified the debate over the past three months. This hot topic of debate can be neatly summed up by the question; has The Premier League been toppled from its lofty perch? This article seeks to assess the comparative strengths and weaknesses of Europe s top leagues on an objective basis, looking beyond recent on pitch performances to also consider the commercial performance and administration of The Premier League, La Liga and The Bundesliga, the three leagues that have formed the narrative for the on-going debate. Making the case... The Premier League is now the most watched and supported football league in the world and what people see is great football played in fantastic stadia packed full of vibrant, passionate fans. Richard Scudamore, Chief Executive, Premier League "I'd still say England is the strongest, because in England if they want a player they get him, still. As long as that happens you will be the most powerful in Europe...England is best, because there's something more here. It is not only linked with what you see on the pitch but how you experience football. That's what I believe deeply. And when I speak to the players they say exactly the same," Arsene Wenger, Arsenal Manager It (La Liga) must be the best league in the world...and when you see the starting XI of the Spanish national team, all of them play their football in Spain. The Spanish league also has the highest number of local players." Sepp Blatter, FIFA President "I believe that La Liga is the best league worldwide, although I spent six years in the UK. Both championships are completely different to one another on technical levels...la Liga relies more on personal and technical skills." Cristiano Ronaldo, Real Madrid striker We have the most competitive and the most attractive league in Europe with the best stadiums. Jurgen Klopp, Borussia Dortmund Manager "In terms of strength across the board, I'd even say it's (The Bundesliga) the best at the moment. The top teams are all performing strongly in Europe." Mario Gomez, Bayern Munich striker A more objective comparison... Factor One - Domestic Competitiveness and Quality While it is true that The Premier League can justifiably carry the unpredictability tag in terms of throwing up unexpected results on a fairly frequent basis, the title race is has remained consistent

2 over the past 5 years with 3 different sides winning the title (Manchester United x3, Chelsea and Manchester City). It doesn t seem that any other side will be able to make a meaningful impact on the title race any time soon, in fact, if anything the title race is in danger of becoming a straight fight between the two Manchester Clubs for a second successive season, mirroring the landscape in Spain where the title race in La Liga is dominated by the monoliths, Real Madrid and Barcelona. No other side has won the title since 2004 with the disparity between the top two and the rest in terms of resources so vast that unless this is actively redressed it is hard to imagine the title race opening up in the near future. In spite of the predictable nature of domestic football in Spain, La Liga can boast the biggest and most compelling rivalry in European Club Football. The El Clasico ties compel the footballing world like no other derby. There were more than 1.7 million tweets mentioning El Clasico between Real Madrid and Barcelona on April 21, 2012 compared with just under 500,000 for the Manchester derby a week later. The Bundesliga can justifiably claim to host the healthiest domestic competition with three different teams winning the Championship in the past four seasons a clear sign of rude health. European powerhouses Bayern Munich do not rule German football as they did formally, with just two titles in the last six years, their dominance being broken by Borussia Dortmund, Vfl Wolfsburg and Vfb Stuttgart. The presence of several other strong sides such as Schalke 04 and Bayer Leverkusen is yet further evidence of a fiercely competitive domestic league. In terms of quality, La Liga is commonly recognised as the most technically advanced league in Europe and is home to the both the best Club side in the world, FC Barcelona and the undoubted best two players in the world Lionel Messi and Cristiano Ronaldo whose own personal rivalry in trying to outdo each other adds a unique aspect to the competition in Spain. The results of the FIFA Balon D Or provide more evidence of La Liga s pedigree. Since 2009 all Balon D Or finalists (top 3) have played in La Liga, with this year no different with Lionel Messi, Cristiano Ronaldo and Andres Iniesta the contenders. The Premier League hasn t had a Balon D Or winner since 2008 (Cristiano Ronaldo) while the Bundesliga hasn t been represented in the top 3 since 2002 (Oliver Kahn). Perhaps the greatest indicator of the technical excellence of La Liga is the result of FIFPro s most recent ballot. Each year FIFPro invites all professional footballers in the world to compose their best team of the year. With Spanish clubs having supplied all 11 members of the FIFPro World XI for 2012, La Liga s claim to be considered the world s best league appears stronger than ever. The UEFA equivalent, a fan voted team of the year, also strongly suggests La Liga is the most technically advanced league in the world, with 8 Spain based professionals nominated in the 2012 side.

3 Chart A : Source: FIFA/UEFA Number of players selected in FIFPro World XI/UEFA Team of The Year by League NB Solid line represents FIFPro World XI data, broken line represents UEFA Team of the Year data While the standard of football in Spain is as high as ever, the same cannot be said for The Premier League. While there is no doubting that the Premier League is still full of top quality international footballers there is certainly a strong argument that the quality has fallen below standards of not long ago. In the not too distant past The Premier League has been home to some of the World s best players; the likes of Thierry Henry, Cristiano Ronaldo, Didier Drogba and so on. Although the Premier League is still full of talent, it seems as if the very top level players are now playing elsewhere. However with the seemingly limitless resources of teams such as Manchester City and Chelsea this situation could change sooner rather than later. Another cause of concern for the English game would be the comparative dearth of young home grown talent in the league. The Bundesliga, meanwhile, has a fantastic reputation for nurturing young talent, with some of the most exciting prospects in European football playing their Club football in Germany (Gotze, Reus, Kroos). The Bundesliga also punches its weight in attracting and retaining top talent from other European Leagues the recent transfer of the seemingly Barcelona or Madrid bound Spanish international Javi Martinez to Bayern Munich is good evidence of this, as is the continued presence of players such as Arjen Robben and Frank Ribery in the Bundesliga. The Bundesliga is therefore most certainly the league on the up in terms of quality. The impending arrival of iconic coach Pep Guardiola at Bayern Munich will certainly drive interest in the Bundesliga. Whether his presence will bring a migration of some of La Liga s best talent to Germany remains to

4 be seen; it could certainly be an influencing factor in developing the technical standard of The Bundesliga. Verdict: The Bundesliga has the most competitive league, while the quality of La Liga is unrivalled. This isn t particularly a criticism of the state of the English Premier League, which can still rightfully claim to be the most overall exciting and compelling proposition for fans, rather an acknowledgement of areas the two rival leagues perform well. Factor 2 - Recent UEFA Champions League Performance Lest we forget that in Chelsea the Premier League can boast the current European Champions. However, English Clubs, in general, are not dominating European competition as they did previously. Whereas not so long ago English sides were storming through the group stages and regularly representing at least half of the last 4 in the Champions League, this is no longer the case with Manchester United and Manchester City both exiting in the group stages last year, and poor performances from English sides repeated again this season with Chelsea and Manchester City again eliminated in the group stages. However, the supremacy of English Clubs, providing finalists in four of the last five years, has not been replaced by the ascendancy of one League in particular with no one country replicating this performance. Barcelona have thrilled Europe with their performances in Europe s Premier competition in recent time, but 2 titles in the past 4 seasons is probably the least you would expect from a side that many claim to be the best to ever play in Club football competition. Real Madrid, Europe s most decorated club in European competition, have underperformed in recent years with a semi-final appearance last season their best performance since their last triumph ten years ago. The strength of Jose Mourinho s squad does however make them justifiably most people s second favourites for European triumph behind Barcelona. Beyond the two giants no other Spanish Club has made a big impact in The Champions League over the past few seasons. For all the talk of the strength of The Bundesliga the fact remains that Germany s last triumph in the UEFA Champions League was over a decade ago. That being said, German performances in European competition have certainly been the most improved and sides other than the historically strong Bayern Munich have become consistent performers at the top level of European Club football. This season, current German Champions Borussia Dortmund have most impressively flown the flag for the Bundesliga. Paired with the respective Champions of England, Spain and The Netherlands, Dortmund comfortably won the group, beating all three sides at home and remaining undefeated away from home. This, coupled with Schalke 04 easily topping a group containing Arsenal are clear signs that top Bundesliga Clubs are much more competitive than they have been in the previously against their Spanish and English rivals.

5 Chart B : Number of teams in UEFA Champions League Semi Final ( ) Verdict: No League can make a strong enough claim that they consistently outperform the rest in the UEFA Champions League over the last few years, although it is true that the dominance of English Clubs in the competition has waned recently, perhaps due to a slight weakening of quality vis a vis their rivals. Spain s successes in The UEFA Champions League have become exclusively those of Barcelona and Real Madrid, while although Bundesliga Clubs are performing extremely well at the moment, until a German side lifts the famous trophy we should not over exaggerate their achievements. Factor 3 - Commercial Success and Administration This remains an area where no other League can compete at anywhere near the level of The Premier League. Before going into this in detail, it is worthwhile to point out the comparative strengths and weaknesses of The Bundesliga and La Liga. The infrastructure of German football, boosted by the country s successful hosting of the 2006 FIFA World Cup, coupled with the lowest average ticket prices out of the major European Leagues has seen The Bundesliga outperform the competition in terms of attendances, averaging 45,116 spectators per match in 2011/12 (compared to 34,599 in the Premier League and 28,676 in La Liga)

6 and 92.65% of all tickets sold (compared to 92.33% in the Premier League and 74.26% in La Liga). German sides also have the highest combined operating profit and lowest levels of debt out of the compared Leagues, due to a long standing commitment to sustainable operations by administrators that cannot be rivalled by the other Leagues. The argument is often put forward that German Clubs will benefit the most from the application of UEFA s Financial Fair Play regulations due to this. There is some merit to this argument but this is mitigated to some extent by the larger revenues earned by the largest English and Spanish Clubs in comparison to their German counterparts. The one area that The Bundesliga cannot match up to The Premier League is in terms of TV rights. The recent record domestic TV rights deal (a 628 million 4 year deal) is around three times smaller than the respective new English Premier League deal, and there has been limited appetite from broadcasters internationally for Bundesliga TV rights (total international TV rights total less than 100m). This landscape has limited the earning potential of the top German Clubs vis-a- vis their English and Spanish rivals. It is hard to find a clear positive on the financial state of La Liga. On a positive note, in Barcelona and Real Madrid, La Liga has the two highest earning teams in world football with combined revenue closing in on 1bn. Last season both teams returned big pre-tax profits (Barcelona s 49m represented a Club record while Real Madrid reported 32m) which has allowed them to reduce their respective debts to more manageable levels. Both Clubs also have huge stadiums and lucrative long term sponsorship deals that will allow them to consistently generate huge revenues. However, on the whole the League is struggling heavily financially, compounded by the fact that the global economic recession has hit the Spanish economy much harder than the rival markets of the UK and Germany. After FC Barcelona and Real Madrid, the next Spanish Club to appear on the European money list is Valencia, in 19 th position, with revenues more than four times smaller than Real Madrid. Spanish Clubs have unpaid tax bills totalling more than 750m which the Spanish government is starting to enforce repayment of. The estimated combined debts of Spanish football Clubs stands at over 3bn. Consequences of this miss-management are starting to be felt; Malaga recently became the first European Club to face the full force of the implementation of UEFA s Financial Fair Play regulations due to their inability to pay debts to a number of creditors including rival Clubs. Pending appeal they will be barred from playing in any UEFA European Club Competition next season. For a side who have excelled in their debut season in the UEFA Champions League and are on course to qualify for the competition again next season due to their domestic form this is a huge blow (both in footballing and economic terms). Commentators have used this sanction as evidence that UEFA are committed to robustly implementing their FFP regulations. It certainly shows that the financial state of La Liga needs to be addressed as a matter of priority to ensure teams outside of the top two can remain as competitive as possible. So what is the root of these problems? The economic situation in Spain hasn t helped matters, being a key factor in falling match day attendances and commercial revenues for the majority of Clubs (almost half of Spanish Clubs started the current season without a main sponsor). However the problem is far more deeply rooted and goes to the core of how the league is administrated. In Spain TV revenues are not sold on a collective basis like most European Leagues, rather Spanish clubs uniquely market their domestic broadcast rights on an individual basis. Madrid and Barcelona each received 140 million in 2011/12, which was three times as much as the nearest competitors,

7 Valencia 48 million and Atletico Madrid 46 million, and more than 11 times more than the Club that received the least, Racing Santander. Over time this has created a huge disparity between the top 2 and the rest in Spain. So while this situation swells the coffers of Real Madrid and Barcelona it gives the rest of the league very little room to invest anywhere near a similar amount their playing squads, with those who have mismanaged and overspent (including huge clubs such as Atletico Madrid and Valencia) in serious financial difficulties and regularly forced to sell their best talent to one of the big two or abroad. The administrators of La Liga effectively relinquished control to the big 2 to the detriment of the whole league The total value of Spanish domestic TV rights has now fallen behind the levels of The Bundesliga and Serie A. The resentment towards the big 2 has been growing for some time amongst Spanish Clubs who are becoming more outspoken on the matter. Nothing can change until Madrid and Barcelona s current television deals expire in 2015, and it will take a monumental shift to convince them of the merits of a more equitable, collective method of selling their TV rights. La Liga is also underperforming in fully exploiting its global appeal through media rights sales. Again the lack of a collective sales process has hindered the competition but the league has also not effectively marketed itself in the key markets in the Far East. The traditional late evening kick off times have not helped and the league is making a renewed push to broaden its global appeal including scheduling matches for lunch-time kick off to catch the prime time audience in Asia. So, to the undisputed commercial heavyweight, The English Premier League... As a governing body, The Premier League has consistently been ahead of the game in terms of ensuring the success of the league and its member Clubs. The English Premier League remains a commercial phenomenon, defying the global economic climate and continuing to grow revenue at a rate that surpasses all other domestic leagues. The record breaking 3.018bn paid by SKY and BT for domestic live Premier League TV rights between represented a staggering increase of 1.25bn from the previous deal. What is more, international interest in the Premier League has seemingly not neared its peak and The Premier League is well on its way to beating the 1bn raised from the previous round of international TV right deals having completed around a quarter of its new overseas deals. Recent deals in two of the most important markets for the Premier League provide good evidence of the league s growing international commercial success. A 6 year extension with Chinese partner Super Sport gives the League and its 20 clubs access to 21 different TV stations across the world's most populous nation. Of more significance is the Premier League s new agreement with NBC Universal. While Asia has long been the bedrock of the league s international success (due in part to afternoon Kick Off times which translates to late evening prime time slots in Asia), the USA has been a harder market to make meaningful inroads into due to the strength of domestic sport in the country. The deal with NBC sees the Premier League tie up with one of the nation s largest broadcasters for the first time and as well as bringing a threefold increase in revenue (to $250m) compared to the last deal will, more importantly, bring the Premier League into over 80 million homes in the world s largest sports market where the growth potential is huge. A final example of the Premier League s comparative success can be demonstrated by the newly signed TV rights deal in Thailand which at $300m (an incredible increase on the $60m former deal) is around three times larger than total international TV rights fees commanded by The Bundesliga!

8 Chart C : Total Value of most recent TV Rights deal ( ms) Bundesliga & La Liga datasource : Swiss Ramble The Premier League s great success has been its model of sharing revenues between the 20 member Clubs which is the most equitable distribution of the major European leagues with the smallest difference between the champions and the bottom club in terms of the split of TV money (1.6 ratio). With the new TV deals coming into place, Premier League clubs are on course to collectively achieve an uplift of more than 500m a year. In terms of general administration, The Premier League have also shown they are capable of innovation to tackle issues facing the domestic game. The Under 21 Premier League is a long overdue positive step in tackling the issue of youth development and sustainability policy of Premier League Clubs. The mooted 39 th game proposal, although far from being universally popular, is yet further proof that The Premier League will proactively search out new opportunities to maintain and extend its competitive advantage. The last challenge for The Premier League will be its adaptation of UEFA s FFP rules to its own governance and regulation in a meaningful way to ensure the long term health of the League. This may not be an easy process but it is a challenge that you would back the regulators to effectively meet. Verdict: The Premier League is streets ahead of the competition commercially and the ever increasing global appeal of the game is helping extend this advantage further. The new TV deals will greatly help England s largest Clubs continue to invest in their playing squads despite the onset of Financial Fair Play regulations. For German Clubs to gain a competitive advantage through stringent financial management the Bundesliga will need to continue to grow revenues, specifically from

9 foreign media rights sales. La Liga faces the biggest challenge as resentment towards the dominance of the top two grows. The smaller Spanish Clubs watched in envy as Serie A adopted collective selling on television rights two years ago and are now pushing for similar treatment in Spain. This wouldn t be such a massive issue if the administrators of the league had maximized the potential of their product, but the relative lack of appetite globally for La Liga football makes the issue more complicated as Barcelona and Real Madrid look to protect their earnings. Conclusion While the relative success of Premier League clubs and the standard of football may have dropped slightly in England over the past couple of years it is extremely premature to panic about future prospects. While La Liga may boast the best Clubs and players in the world and The Bundesliga has made dramatic striders forwards in recent years from which the English game can take learnings from, both leagues must still look at the Premier League with considerable envy at the way the brand has been monetized. The way that the money continues to flow to the Premier League at record levels gives English Clubs a long-term the competitive advantage that should see the top talent continue to flock to our shores. What we must remember is that football, by its very nature goes in cycles. Over the past twenty years there have been periods when teams from Italy, Spain, Germany and England have looked stronger than their rivals. While, on the pitch, it may not be the Premier League s finest hour at the moment, that time will come around again, and you would bet on it being sooner rather than later.