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Champions League Financial Rewards – A breakdown of the allocation of funds

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A Study of Champions League Rewards

by Professor Kieran Maguire, University of Liverpool

The £111m Financial Reward of Liverpool’s Champions League Success

As the red half of Liverpool recovers from watching their team win Europe’s, premier cup competition, back at Anfield the bean counters will be adding up the financial benefits of the club lifting the big eared trophy, and it is likely to be a record sum for an English club in Europe.

Football clubs earn their money from three main sources, broadcasting, matchday and commercial, and all three of these will have been substantially boosted from Liverpool’s Champions League achievements in 2018/19.

UEFA allocate 80% of their distributions to Champions League participants and the balance to the Europa League, which meant that Arsenal losing to Chelsea last Wednesday was a significant financial hit for the Gooners.

Broadcasting

UEFA split their total prize money for the Champions League, estimated at just over €2 billion is up 45% from the previous season, into a series of pots, which are then allocated using formulae, some simple, some complex, to individual clubs.

Here we’re indebted to the peerless Swiss Ramble on Twitter for some of the detail. The pots are distributed as follows:

(a) Participation Fee (25%):

A quarter of the total prize pot is allocated evenly between every club who qualified for the 32 places in the group stages. This means a guaranteed sum of €15 million for any qualifier, even is they lose every group stage match. Every English club automatically received this sum.

(b) Performance bonuses (30%).

To incentivise clubs to avoid putting out reserve teams in dead rubbers after qualifying for the knock-out phase, clubs earn €2.7 million for a win and €900,000 for a draw. Liverpool’s relatively modest record here of three wins and three defeats generated €8.1 million, compared to Spurs (two wins, two draws, two defeats) €7.2 million.

Manchester City were the main beneficiaries here with four wins and a draw, bringing home €11.7 million and Manchester United €9 million.

To make things fiendishly complicated, any leftover money from drawn games in the group stages (and there were 24 of these in 2018/19) is then allocated to clubs on the basis of the number of wins during that phase too.

Great fun for spreadsheet nerd, but simply put this was an extra €900,000 for Liverpool, €600,000 for Spurs and Manchester United, and €300,000 for Manchester City.

The prize money for the knockout rounds, as one would expect, increased as clubs made progress.

Liverpool then earned a further €51 million for winning the knock-out rounds including the final, which itself generated a relatively modest €4million.

Spurs earned €47 million as runners up from the knockout phase, and the two Manchester Clubs €20 million each for reaching the quarter final. Winning the Champions League means Liverpool will face Chelsea in the European Super Cup in Istanbul and earn a further €3.5 million (plus €1 million for the
winner).

(c) Market (TV) Pool (15%)​

UEFA allocate €292 million to clubs based on the relative amount of money their domestic broadcaster pays for the rights for the Champions and Europa
Leagues.

Because BT Sport pay more money to UEFA than any other broadcaster, British clubs take more money out too. This is split into two elements; half of the reward is based on the club’s position the previous season when qualifying for the competition.

Manchester City took 40% for finishing first, Manchester United 30% for second, Spurs 20% for third and Liverpool just 10% for 4 th place.

The other half is based on how many fixtures each club played in the Champions League in the present season. Liverpool and Spurs both played 13 and the two Manchester clubs ten.

Plugging these numbers into our big Champions League calculator reveals that Liverpool earned a relatively modest €12.7 million from the market pool, Spurs picked up more (€16.1 million) as they finished above the Reds last season.

(d) UEFA Coefficient (30%)

One of UEFA’s biggest fears is the formation of a breakaway competition by the ‘big’ clubs.

Therefore, at the start of the 2018/19 the ‘UEFA Coefficient’ was introduced.

Here points are awarded based on an individual club’s performance in UEFA competitions over the last ten years.

The coefficient awards more points to Champions League participants than those in the Europa League.

This will result in less money being distributed to the likes of Burnley, whose appearance in the Europa Cup this season was their first in this competition and ensures that if ‘Big’ clubs fail to qualify they will still get a financial reward from UEFA.

The aim of introducing the UEFA coefficient was to appease the big clubs by effectively guaranteeing them income even if they have a poor year domestically.

Whether this will prevent them from setting up their own competition at some point in the future is still uncertain.

Manchester United, despite last appearing in a Champions League final in 2011 were the best ranked English club in 2018/19 and this earned them €31 million, compared to Manchester City €24.4 million, Liverpool €23.3 million and Spurs €15.5 million.

This is because Manchester United have appeared in UEFA competitions in nine years out of the last ten, eight of those in the Champions League, winning one cup during that period.

Spurs, by contrast, have only had four appearances in the Champions League and the remainder in the Europa League, winning nothing.

Putting this all together gives the following totals for English clubs in the Champions League.

Liverpool’s €111 million is approximately £99 million and to this can be added the guaranteed Super Cup revenue of a further £3 million.

Matchday Revenue

Hosting European matches can be lucrative for clubs, especially give that all of the Champions League qualifying teams for 2018/19 play in stadia
that have a capacity of at least 54,000.

This means that conservatively there’s matchday revenues of £2.5 million, once taking into consideration the premium prices paid by hospitality customers.

Each English club realistically can have hoped to have generated £15-20 million from the six or seven home games that they hosted.

Income from Commercial Revenue

Liverpool will have had bonuses built into their commercial contracts for winning trophies and the biggest one will be in respect of the Champions League trophy.

Sponsors love to have their photographs taken with managers and players but being able to offer UEFA’s main prize too will make it easier to sign
new deals with interested parties.

These bonuses could add up to about £8 million, with Standard Chartered, Western Union and New Balance in particular likely to be sending seven figure sums to Anfield.

It’s always best to negotiate from a position of strength, and here Liverpool could hit the jackpot in relation to their shirt manufacturing contract.

The present deal with New Balance expires at the end of 2019/20.

The present deal is worth an estimated £45 million a season, but Anfield sources suggest this could rise to about £80 million on the back of the club’s recent upsurge under Jurgen Klopp and a huge global fanbase.

Adding in a sixth Champions League victory is going to make the potential suitors, Nike, adidas and New Balance itself, very willing to break the bank to tie Liverpool to a long-term lucrative deal.

Total​ Income

Adding together the three income sources means that Liverpool have earned a minimum of £130 million from this year’s adventure, split UEFA (£102 million)
Matchday (£20m) and commercial (£8m).

To put this in context, when Liverpool played their first season in the Premier League in 1992/93, the club had total revenue of £17 million.

I am a lecturer in football finance at the University of Liverpool.

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