How the UEFA Champions League Changed World Football

The UEFA Champions League is the world's biggest annual sporting event and, last year, drew a remarkable average viewing figure of 167 million for its final. Many more, though, will have watched at least some of the match via their television screens. (AP)

It is big money business, with sponsors and broadcasters willing to pay big money to be connected with UEFA's crown jewel project. Revenues have increased beyond recognition since the tournament was introduced.

The Champions League came to fruition in 1993, with UEFA hoping to avert the threat of a breakaway movement by the continent's elite sides.

The introduction of a group stage and multiple competitors from the same nation increased match numbers, as well as the number of renowned clubs involved. The end result was financially rewarding, with more high-level clashes increasing interest and earnings across the planet.

Unsurprisingly, given the reasoning for the introduction of the competition, it is the clubs involved who have benefited more than anybody from the financial rewards. Last year's winners Chelsea, for example, claimed around €60 million in total prize money from UEFA for the achievements.

It is a figure that comes close to matching the £54 million the club earned from domestic distribution of broadcast rights from the Premier League, with the combined income well ahead of most domestic rivals.

The table below shows the impact of Champions League revenue on a club's potential income.

Even Manchester United, eliminated in the first round last campaign, still claimed €35 million for their troubles. Dinamo Zagreb, meanwhile, would receive just eight million for their first-round elimination—an indication of the importance of the "Market Pool" to the distribution of wealth. (UEFA)

They are figures that can change the fortunes of a club forever and, also, figures that have changed the landscape of European football. Such are the sums of money on offer that the competition can, at times, become a closed shop—it can be the dividing line between the haves and have nots.

As noted by professor Simon Chadwick, director of the Centre for the International Business of Sport (CIBS), the Champions League has grown with a speed that no other sporting event can rival:

Over the past two decades the Champions League has grown into a remarkable sporting phenomenon. The Champions League is a major success story on and off the field and it's fascinating to witness its huge growth commercially over a comparatively short period of time.

It is a situation of wealth and prosperity that is only set to become more pronounced from this current campaign onwards, with a total of £910.1 million, rather than £754.1 million, set to be distributed under the terms of the latest 2012-15 TV rights packages negotiated by UEFA.  (Express)

Across all the major European leagues, a polarisation of financial wealth has therefore occurred and has only been further aggravated by the landmark Bosman ruling in 1995 that allowed players to leave a club without the need for a transfer fee at the end of their contract.

As John Vrooman explains here in his thesis entitled "Theory of the Beautiful Game," published in the Scottish Journal of Political Economy in 2007, the formation of the Champions League and its extension to include up to four sides from the top nations has seriously unbalanced domestic football competitions.

In fact, Vrooman argues that the dynamics of European football are already at a point where "new theory must introduce revenue convexity into once simple models". His proposal is that a European Super League is the eventual outcome of the Champions League caused imbalance.

It is an imbalance that has manifested itself in multiple ways, with regular Champions League qualifiers comfortably out-earning other teams from their divisions, and teams from Europe's Big Five countries earning substantially more than their rivals from smaller nations.

Stefan Szymanski notes as part of his "The future of football in Europe" paper written in 2007 that, in the three decades between 1967 and 1996, 43 percent of semifinal places in the top European club competition were taken by teams from the Big Five countries (England, France, Germany, Italy and Spain).

A quick count will show that from 2002-12, that figure drops to just five percent (two of 40), with the last such side being PSV Eindhoven in 2005.

There are many reasons for the drop in semifinal participants from smaller nations, but it cannot be ignored that allowing bigger nations a far greater share of the prize money, as well as more participants, is an artificially weighted system.

It is a system that has been created to favour those countries who bring the biggest TV rights revenues to the table and, thus, temper the threat of a breakaway that has arisen frequently over the past 20 years.

It is a situation only set to get worse. As mentioned earlier, the prize money divided among competitors is set to increase dramatically this season as UEFA count upon increased revenues from its latest sale of broadcast rights.

The previous three-year cycle had gathered the European governing body approximately €1.1 billion in television money. That figure has now risen to around €1.5 million, and a large percentage of the increased prize money will head to those from Europe's bigger leagues. (AP)

The product remains unharmed and, with money being ploughed into the likes of Anzhi Makhachkala, Zenit St. Petersburg and PSG by outside investors, it is a situation that may be resolved in a previously unexpected manner.

The introduction of Financial Fair Play rules, though, are designed to greatly limit that possibility.

UEFA are continuing to tap into new markets in Asia, Africa and the Americas, meaning that, for as long as they can offer the best sides on earth, the money should continue to flow into the Champions League pot.