Champions League season has begun, and once again huge sums are at stake in the biggest tournament in European club football. Hamburg economics professor Henning Vöpel sheds light on who stands to profit.
Deutsche Welle: How much money does UEFA, the organization that runs European soccer, stand to make from the Champions League in the 2013/2014 season?
Henning Vöpel: UEFA's gross revenue is at just under 1.5 billion euros [$2 billion] per Champions League season. Most of that money comes from sponsorship deals, TV rights, and merchandising.
How does that compare to the other European tournament, the Europa League?
The Europa League is much smaller - it only generates about a third of that.
So what does UEFA do with the 1.5 billion euros?
UEFA distributes 80 percent of the total revenue from media rights and commercial contracts to the clubs. The remaining 20 percent they invest in management, marketing, and organizational costs as well as solidarity payments to associations, clubs, and leagues.
Most of the money for the clubs is allocated according to success in the tournament: Each of the 32 clubs in the group stage gets a basic fee of 8.6 million euros, then there are performance-related bonuses of one million for a win, and 500,000 for a draw. Each team in the second round will pick up 3.5 million, the quarter finalists 3.9 million, semi finalists 4.9 million. The winner gets 10.5 million and the runner up 6.5 million euros. So there is definitely a financial incentive for clubs to do well.
If we look at the clubs that benefit the most, it's always the big names who enjoy a huge budget anyway. So would you say that UEFA cements the status quo there?
You could say that, indeed. UEFA dishes out huge sums to the big, successful clubs, which then in turn use the money for buying players, attracting them with huge salaries, and the stars then help them strengthen their position.
UEFA has also implemented "Financial Fair Play" regulations which stipulate that a club may not spend more than it earns. That again benefits those clubs which get big sums from UEFA anyway, and basically makes it impossible for smaller clubs to take out a loan for one-off investments into new players. It also makes it more difficult for individuals to buy a club and invest to promote it to a certain level.
German club Schalke had to qualify for the Champions League group stage, which meant it played a tie in which it effectively stood to win or lose an estimated 20 million euros. What does that kind of pressure do to a club?
Indeed, there is a lot of pressure on the clubs to get a share of the Champions League cake. We can see that in the Bundesliga, where more and more clubs are eyeing the international tournaments. We have a lot more clubs with big ambitions than just the four (Bayern Munich, Dortmund, Leverkusen, and Schalke) currently filling the spots allocated to Germany. It is very tempting for clubs like Wolfsburg, Stuttgart, or Hamburg to invest heavily to try and qualify. But that doesn't always pay off.
A lot of fans see the Champions League as a big money-making machine, and some say it would be better to go back to a single European competition with a knock-out system all the way through. Is that just nostalgia, or is it a real possibility?
It definitely is an alternative. But the thing is UEFA can make a lot of money by expanding the group stages, even though they might be less attractive to the fans. UEFA has a monopoly on the Champions League and can afford to push through its interests and ideas and ignore the fans' preferences. And the clubs are all in favor of the lucrative group stage, which simply means more revenue from marketing media rights. So you could say UEFA has really commercialized football.
Last season's Champions League final was played in London, the year before it was in Munich and the next one will be in Lisbon. Who decides where the final is played?
The cities apply to UEFA, where a committee evaluates the applications; it checks the quality of the venue, whether there is an airport, good public transport, and enough hotels and restaurants to cope with the influx of fans.
Do the cities profit a lot from hosting the final?
Well, they profit from the media attention and from the tourists in the days before and after the match. But then UEFA - like other major sports associations such as the IOC or FIFA - makes sure that they license the sponsors and organize the marketing of that big event. So they also make the bulk of the profit.
Henning Vöpel has been professor for applied economics at the Hamburg School of Business Administration since 2010. He has also been senior economist for health and sports economics at the Hamburg Institute of International Economics since 2006.
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