Manchester United, Liverpool and JP Morgan plan European football breakaway league

Manchester United PLC (NYSE:MANU) and Liverpool FC, owned by Fenway Sports Group, are again stirring up the football establishment as plans for a breakaway European competition emerge. It comes just a week after separate plans from the ownership behind England’s top two soccer brands proposed ‘Project Big Picture’ which purported to rescue lower league football business but would also reduce the number of games and give elite clubs greater control of the English league system. Other English clubs including Arsenal, Chelsea, Manchester City and Tottenham are also being lined up to join the new European League, according to a Sky News report, alongside with other top teams from France, Germany, Italy and Spain. The report claims an eighteen team competition could start as soon as early 2022. Games would be played in mid-week fixture slots during the European football season, meaning it would be in direct clash with the existing Champions League. It is proposed to comprise a league format with an ‘NFL style’ playoff to crown a champion. According to Sky, the prize pot would be ‘hundreds of millions’ for the winner. This latest leak arrives on the eve of Manchester United’s financial results and investor call, which will reveal the impact of the COVID-19 pandemic upon ‘the world’s biggest club’. The outlook presented by United executive chair Ed Woodward will certainly be under scrutiny on Wednesday. Fans will look for explanations over what many regarded a chaotic transfer period. But, on the business front attention will be on COVID and United’s liquidity - especially given that United would typically generate around £5mln per home fixture, that its commercial activities are driven by consumer dependent brands and it continues to carry around £430mln of debt. A European breakaway would be a possible money-spinner for clubs like United and Liverpool, measured among the biggest brands in world football, by audience. JP Morgan is reportedly engaged to potentially provide a US$6bn debt financing package to fund the launch of the breakaway competition, with repayment tied to future broadcast revenues. It will remain to be seen quite how and by whom those broadcast revenues are generated. Sky Sports, which broke the news of the European Premier League plan, is one of the English Premier League two primary broadcasters. It was a key stakeholder as the top tier of English football separated from the Football League to create the Premier League back in the early 1990s. It previously lost the rights to European club football in the prior UEFA auction, with BT Group Plc (LON:BT.A) subsidiary BT Sports landing three-years of exclusive broadcast rights with a £900mln deal that came into effect in 2015. BT subsequently held onto the European rights and in November 2019 the latest TV deal saw BT commit £1.2bn to maintain exclusive coverage in the UK market until 2024. Amazon, meanwhile, remains on the periphery of football broadcast rights having recently taken the third-tier package of English Premier League fixtures for streaming on the Amazon Prime Video platform. The European Premier League plan is said to be backed by FIFA, the global football overseer, rather that Europe’s UEFA which operates the existing Champions League and Europa League tournaments. As Wednesday’s investor call with Ed Woodward kicks off its quite likely that both schemes for the future of football will be of keen interest – and, as the questions arrive perhaps they’ll come as welcome change of subject for the scrutinised United executive.