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The failed billionaire takeover of European Football

REAL Madrid President Florentino Perez and the billionaire Agnelli family were united by a frustration with the economics of European soccer. Their attempt to overhaul Europe’s top football league appeared to be based on the principle that the top clubs should thrive commercially like the other businesses they oversee.

Both Perez’s and the Agnellis’ business acumen could only get them so far in football. Perez built up construction groups Actividades de Construccion y Servicios SA and Hochtief AG through cleverly structured acquisitions that made a little equity go a long way. In 2017, he was the underdog challenging Atlantia SpA’s plan to buy Spanish toll-road operator Abertis outright with the backing of the billionaire Benetton family. Perez later succeeded in forcing the Italian infrastructure group to bring him in as a partner to thwart an auction.

On Wednesday, Juventus chairman Andrea Agnelli said the European Super League project cannot proceed as Inter Milan and Atletico Madrid joined the six Premier League clubs in withdrawing.

Agnelli was one of the chief architects of the breakaway plans, which involved 12 clubs from England, Spain and Italy.

But with eight of the 12 teams pulling out, he accepts it cannot now go ahead.

“To be frank and honest no, evidently that is not the case,” said Agnelli, on whether the European Super League could still happen.

“I remain convinced of the beauty of that project, of the value that it would have developed to the pyramid, of the creation of the best competition in the world, but evidently no. I don’t think that project is now still up and running.”

Atletico Madrid and Inter Milan announced their withdrawal on Wednesday morning.

The Juventus chairman was described as a “snake and a liar” by Uefa president Aleksander Ceferin on Monday after the announcement of the breakaway plans on Sunday evening.

Agnelli resigned his position as chairman of the European Clubs’ Association on Sunday and refused to take calls from Ceferin.

The six Premier League clubs involved all withdrew within hours of each other on Tuesday following a furious backlash against the plans.

Manchester City were the first club to pull out after Chelsea had signalled their intent to do so by preparing documentation to withdraw.

The other four sides – Arsenal, Liverpool, Manchester United and Tottenham – then followed suit late on Tuesday evening.

In announcing their withdrawal on Wednesday, Atletico Madrid said “harmony is essential” between the club and the fans, and added that the first-team squad and coach Diego Simeone had backed their decision because “sporting merits must prevail over any other criteria”.

In their statement, Serie A side Inter Milan said they were “committed to giving fans the best football experience”, adding: “Our engagement with all stakeholders to improve the football industry will never change.”

The 12-team Super League, which also included Spanish sides Barcelona and Real Madrid and Italy’s AC Milan and Juventus was announced on Sunday to widespread condemnation.

The Agnellis are active managers of their assets and skilled M&A practitioners. Exor NV, their listed investment vehicle, has comfortably outperformed European stocks over the last decade.

But success in soccer depends heavily on brute financial muscle and outspending the competition. Spanish clubs like Real Madrid and FC Barcelona are owned by their supporters and can only take on so much debt to invest in players and facilities. Juventus Football Club SpA, 64% owned by the Agnellis and chaired by Andrea Agnelli, has already posted losses matching the 300 million euros ($362 million) it raised in a capital increase in 2019.

Given Barcelona’s status as one of the world’s top clubs, it seems strange it’s not more successful as a business, but its revenues are sucked up by its wage bill. Debt-laden FC Internazionale Milano SpA has been in talks with private equity to raise capital. Covid is clearly a factor in all this, but the tricky economics of football, where player costs elbow aside most other claims on resources, were already clear before the pandemic hit.

Perez’s European Super League was a blatant attempt to shift the economics back in favour of the top clubs, who draw the biggest audiences, and away not only from the smaller teams but also the players and their agents. The 15 perpetual members would be guaranteed to play each other, increasing the number of big-name contests that attract large audiences. Without the worry of relegation, the pressure was to pay up for star talent who might help secure qualification for next year’s competition might ease perhaps.

Clubs were to get a stable revenue stream and a higher valuation. It’s therefore hard to avoid the suspicion that some of the clubs with commercial owners may have an eye on exiting their investments at least in part.

The obvious response to this would be for UEFA, host of the current Champions League competition, to be more aggressive in curbing overspending on players and exploring other ways for the top clubs to face each other more regularly. So far it’s responded with threats to disqualify any participating players from national and international tournaments, and it’s mulling a revamp of the league with U.K.-based asset manager Centricus, Bloomberg News reported.

Business is about providing something that’s good value for the people who pay for it, offering fairly remunerated work and leaving the community better off. It shouldn’t be hard to run football clubs and competitions with a similar ethos. But while European fans might have well want to watch the top teams play each other more often, they may not wish for this to involve a closed-shop competition that harms other clubs.

Perez and the Agnellis may be right that competitions should have a “sustainable financial foundation” and that the current system needs to change to deliver that. But if they see supporters as customers and clubs as corporations, that means giving fans what they want and being responsible corporate citizens. – Bloomberg/