The 12 football clubs that have signed up to a European Super League breakaway competition have each been promised a €200m-€300m “welcome bonus” by JP Morgan Chase, the US investment bank financing the controversial project.
The Wall Street giant said on Monday it has committed €3.25bn to getting the new league off the ground and that it would be shared between the clubs when the new competition begins.
The founding clubs of the new league are Milan, Arsenal, Atlético Madrid, Chelsea, Barcelona, Internazionale, Juventus, Liverpool, Manchester City, Manchester United, Real Madrid and Tottenham Hotspur. Three more permanent members are expected to be announced in the next few weeks. Bayern Munich, Borussia Dortmund and Paris Saint-Germain are all said to have been approached.
A further five teams will join the competition via a qualifying tournament, according to the Financial Times, which reported details of the “welcome” payment on Monday.
The funding provided by JP Morgan is secured against expected multibillions in TV broadcasting rights. A spokesman for JP Morgan declined to comment on the deal beyond stating: “I can confirm that we are financing the deal but have no further comment at the moment.”
The member clubs who have launched the breakaway league are hoping to increase their share of the billions of pounds that broadcasters pay for the TV rights to European football. In the UK, BT paid £1.2bn for the exclusive right to air Champions League and Europa League football from 2021 to 2024.
One media expert said the breakaway league could be a gambit by big clubs to increase their Champions League income.
“What the breakaway clubs really want is to take control of the Champions League,” said François Godard, a sports media analyst at Enders Analysis. “It is a very aggressive attempt to get Uefa to sign up to a revamp of the Champions League that gives them more power and commercial returns. The two events can’t co-exist. If the Super League were to launch, the Champions League will just collapse.”
BT, which also has £975m of Premier League football TV rights, joined the chorus of criticism of the new league, saying it could have a “damaging effect” on football in the UK.
“BT recognises the concerns raised by many of football’s easing voices and fans, and believes the formation of a European Super League could have a damaging effect to the long-term health of football in this country,” said a spokesman for BT Sport. “We strongly believe that football makes a significant positive contribution to people’s lives at every level, and this needs to be protected.”
If a new European football league launches, BT remains the most likely home for most, if not all, matches. Sky, which stopped competing for Champions League TV rights after losing to BT in 2013, has been pulling back on sports rights spending under its new US owner, Comcast. Amazon, which broadcasts a limited number of Premier League and Champions League matches in markets including the UK and Italy, is not viewed as likely to look to pay billions for full exclusivity.
Sky News reported on Monday that Gavin Patterson, a former boss of BT, has been involved in discussions about becoming chief executive of the European Super League.
“I do not think a European Super League will have much impact on the configuration of the UK broadcasting market,” Godard said. “Sky would, of course, have a look, but they have taken a step back and are increasingly focusing on being an aggregator of content, so I don’t see a bidding war for exclusivity. There is no sign of a new entrant and Amazon show no sign of buying more than just limited amounts of sports rights. I would expect the US owners of some of these clubs would like to replicate some of the US sports rights market and try to seek more than one broadcast partner.”
The plans have been condemned by world leaders, the Premier League, football stars and legions of fans.
Boris Johnson said the proposals would be “very damaging for football”. The former Manchester United and England defender Gary Neville said the creation of the new league revealed the “pure greed” of the billionaire owners of English clubs.
Manchester United’s billionaire co-chairman Joel Glazer said the new league would open up a new chapter for the biggest football clubs. “By bringing together the world’s greatest clubs and players to play each other throughout the season, the super league will open a new chapter for European football, ensuring world-class competition and facilities, and increased financial support for the wider football pyramid,” he said.
Glazer will become a vice-chairman of the new league. Manchester United’s executive vice-chairman, Ed Woodward, was a JP Morgan banker before taking the top job at the club. In his role as mergers and acquisitions banker with JP Morgan, Woodward advised the Glazer family on their 2005 takeover of the club.
The new league is likely to resemble US sports leagues, where there is no promotion or relegation and owners can predict steady yearly profits.
Sign up to the daily Business Today email
Shares in Manchester United jumped by more than 9% in morning trading in New York. Juventus, another “founding member” of the European Super League, surged by 18% on the Milan exchange on Monday.
Joshua Mahony, a senior market analyst at the City firm IG, said that Manchester United could be a major benefactor if the ESL goes ahead as planned, as “money is rather predictably the primary driving force behind these proposals”.
JP Morgan was also the financial backer of previous proposals for a new Super League competition for elite European clubs. The bank’s chief executive, Jamie Dimon, has recently called on politicians to do more to combat widening inequality.
Dimon, who was paid $31.5m last year, said the US needed a “Marshall plan”, referring to the initiative to help western Europe rebuild after the second world war. Such a plan would mean more spending on infrastructure, education, affordable childcare and job training, and “may very well mean higher taxes for the wealthy”.
Dimon said in his annual letter to shareholders: “Should that happen, the wealthy should keep in mind that if tax monies improve our society and our economy, those same individuals will be, in effect, among the main beneficiaries.”