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Arsène Wenger drew a lot of flak and derision when he once suggested that finishing in fourth place was the equivalent of a trophy. Wenger stuck to his guns about the same issue six months later, when he told shareholders at Arsenal’s Annual General Meeting in 2012 that in his view, there were five trophies that teams were competing for every year:
“For me there are five trophies every season: Premier League, Champions League, the third is to qualify for the Champions League. The fourth is the FA Cup and then the League Cup.”
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These statements ended up becoming a stick to figuratively beat both him and the club with, particularly when looked at in the context of the trophy drought (at the time). In the past two seasons, Arsenal have finished fourth and third, along with winning and then defending the FA Cup. However, it’s unlikely that anyone is going to claim that they’ve won back-to-back doubles.
From a purely financial standpoint though, it’s difficult to argue against Wenger’s claims about Champions League qualification.
The competition distributes in excess of €1 billion in prize money every year. It’s the most prestigious club competition in the world, arguably the pinnacle of a club footballer’s career. In its modern format, no team has ever managed to defend it, making it rather unique in that aspect, adding a certain level of mystique to it.
Like all cup competitions, there’s definitely an element of luck in it as well, allowing for the giant-killing stories that add to its unique appeal. It’s not often that you’re going to see FC Barcelona lose to Rubin Kazan. The television audiences have been steadily growing as well, with an estimated total of 180 million live viewers for the final of the 2014/15 edition that was held in Berlin, where FC Barcelona beat Juventus FC 3-1 to lift their fourth trophy in the last decade.
The result of such a massive TV audience is that there is a gigantic prize pool on offer each year. For the 2014/15 season (and the 2014 Super Cup), the total prize pool was €1.34 billion.
Breakdown of Champions League revenue
According to UEFA, the gross amount available for distribution among the Champions League (CL) participants is €1.28 billion. Of this amount, around 75% is available for distribution to the clubs (up to an extent of €530m), with the remaining 25% being reserved for European football. That remainder is used by UEFA to cover administrative expenses, organisational costs and solidarity payments towards various associations, leagues and clubs.
Furthermore, 82% of any commercial revenue in excess of €530m will also be funnelled towards clubs, with the remaining 18% used for other costs as mentioned above. What this basically means is that the participating clubs are guaranteed a minimum prize pool of €397.5m (75% of €530m), with the understanding that there will be a minimum commercial income of €530m. Any further increase in commercial revenues will see 82% of that increased amount diverted to the clubs.
The UEFA Europa League (EL), so often seen as the proverbial poor relative, has that status further cemented by an allocation of €40m from the Champions League prize pool to bolster its own rather mediocre prize pool. An additional €3m is also taken to subsidize solidarity payments to sides eliminated in the qualifying phase of the two competitions (the CL and EL).
Amounts allocated for qualification, playoffs and the Super Cup
There is a fixed amount of €55m allocated for the playoffs. Of this, €2.1 million is given to the 20 clubs that participate in the playoffs. This amount is deducted from the previously mentioned €1.34 billion, and doesn’t affect the actual prize pool of €1.28 billion. It includes payments to every domestic champion club that misses out on qualification for the Champions League group stage, granting them around €200,000.
All clubs knocked out in the first qualifying round will receive €100,000, while those eliminated in the second qualifying round will receive €175,000 each. Clubs eliminated in the third qualifying round will earn €200,000 each.
The prize pool for the Super Cups is also drawn from the Champions League revenues. Last season’s winners Real Madrid earned €3 million while runners-up Sevilla earned €2.2m.
Distribution of prize money
It’s important to note here that the prize pool for the Champions League is divided into two categories: fixed payments and market pool. Fixed payments are those which are guaranteed to the clubs based on performances. This includes wins and qualification to the later stages of the competition.
The fixed payments can be broken down as follows:
| Participation in group stage | €8.6m |
| Group Stage performance bonuses | €1m for win; €500,000 for a draw |
| Round of 16 qualification | €3.5m |
| Quarter-final qualification | €3.9m |
| Semi-final qualification | €4.9m |
| Runners-up | €6.5m |
| Winners | €10.5m |
Note that these are the possible payments to just one team. Thus, the possible prize money from just the fixed payments for the winner (assuming they win just four group stage games) is nearly €42m. However, this is just one part of the prize pool.
Market pool
While the fixed payments system is rather straightforward, the market pool breakdown is slightly more complicated. The market pool is essentially the value of a domestic league’s TV rights and markets. Thus, some leagues have larger pools than others.
The Barclays Premier League has the largest TV rights deal in European football, and consequently it has the largest market pool of any domestic league in Europe, at around €73.2m, which is divided amongst the four clubs that qualify for the Champions League. This figure is set to rise further with BT Sport’s three-year £900m deal (€1.2bn) for Champions League rights that kicks in from the 2015/16 season.
The important thing to understand here is that the market pool itself is split into two equal amounts. England, therefore, has two pools of €36.6m each. 50% of the market pool is divided based on league position in the previous season.
So for example, in Spain, England, and Germany (which have the three domestic leagues that get four CL spots by virtue of their UEFA coefficients), the breakdown is as follows – the champions get 40%, second place gets 30%, third place gets 20% and the fourth place gets 10%.
Remember, this is for the first half of the pool. Thus, in the 2014/15 season, the breakdown of the numbers for English clubs worked out to something like this:
- Manchester City (Champions 2013/14) – 40% of €36.6m = €14.64m
- Liverpool (2nd place 2013/14) – 30% of €36.6m = €10.98m
- Chelsea (3rd place 2013/14) – 20% of €36.6m = €7.32m
- Arsenal (4th place 2013/14) – 10% of 36.6m = €3.66m
This is only the first half of the market pool, and is rather simple to understand. The second half of the market pool is comprised of a split between the four clubs, based on the number of matches they have played as a percentage of the total matches played by clubs from that country.
Seeing how English clubs did rather horribly this season, with Liverpool failing to make it out of the group stages and the other three crashing out in the round of 16, the calculation becomes slightly easier.
Liverpool played a total of six games, while the other three played eight games each in total (six group stage + two games in the round of 16). This makes it a total of 30 matches for English teams.
Arsenal, Chelsea and Manchester City would all make around 26.67% each of the remaining €36.6m, with Liverpool taking the rest. Thus, Liverpool would get another €7.32m, with the other three clubs taking home around €9.76m each.
The way that this works creates a situation where it is more beneficial for a club if the other teams from its country do not do as well in the competition. For example, beaten finalists Juventus FC benefitted immensely from being the only Italian club in the knockout stages of the competition, with their final income being more than eventual champions FC Barcelona.
An analysis of the total money earned by the two finalists is shown below:
| Stage | FC Barcelona | Juventus FC |
| Group stage | €8.6 m | €8.6 m |
| Group stage performance bonus | €5m (5W,1L) | €3.5m (3W,1D,2L) |
| Round of 16 | €3.5 m | €3.5 m |
| Quarter-finals | €3.9 m | €3.9 m |
| Semi-finals | €4.9 m | €4.9m |
| Finals | €10.5 m (winners) | €6.5 m |
| Market pool (2013/14 League performance + number of matches played by other domestic clubs) | €21.5 m (approx.) | €32.15 m (approx.) |
| Total | €57.9m (approx.) | €63m (approx.) |
Trophies or fourth place?
As has been shown, the Champions League is an incredible source of revenue for clubs. In addition to the tangible financial benefits, there is the added bonus of being able to sign the best players. Top players want to play in the Champions League, due to the immense prestige of the competition.
Historically-large clubs that do not have CL qualification find it difficult to attract proven players of quality, as elite players would want the added guarantee of playing in club football’s premier competition. Alexis Sanchez turned down a slightly more lucrative contract at Liverpool to play in the Champions League with Arsenal, and the same can be said of Oscar and Willian choosing Chelsea over Tottenham Hotspur after being extensively scouted by Spurs.
Getting back to Arsène Wenger’s original comment about CL qualification being a trophy in itself, it’s worth noting that Arsenal’s CL campaign this season (which ended in a round of 16 knockout) netted them around €30m in prize money (€8.6m group stages + performance bonus €4.5m (4W, 1D) + €3.5m R16 + €13.4m market pool). This is before adding extra figures such as match-day revenue and sales related to match-days.
The 2013/14 FA Cup success netted Arsenal about £4.2m (€5.9m) before match-day revenue is added on, TV and prize money included. The prize money has remained the same, but a new four-year TV deal that started in the 2014/15 season has increased the FA’s equivalent of the available market pool. However, it’s unlikely that the total prize money (TV rights included) for the 2014/15 FA Cup triumph would touch even £10m (€13m).
The massive disparity in financial recompense given out by the two competitions provides an insight into Wenger’s line of thinking. Any manager as financially aware as Wenger would no doubt pick Champions League qualification over a trophy like the FA Cup or the League Cup.
The supporters of clubs might think differently, but for the executives in club boardrooms, there’s only one logical choice.
