Thursday, 22 April 2021

Thoughts on ESL (2): consequences and why we shouldn't

Perhaps it's not a bad idea to adopt a new business model of football after all, so the question is, why is ESL bad for football? My answer has been partially covered in the first part, that it breaks down the pyramid model and shrinks the industry scale massively, but let us go into the details.

First of all we need to make clear of what games they will be playing with ESL. Currently top division leagues are playing 38 games a season. In England the two cups would be another 2 to 12 games, and European cups would be 6 to 15 more games (most will get 8 in extra). That means top teams are currently playing up to 65 games a year. That is a tremendous amount and people are complaining about injury problems with frequent and intensive games. What if we take ESL into consideration?

According to the news, the 20 teams are divided into two group with round-robin inside the group then some extra play-offs. That would be 20 games in minimum which is damn lot! If they are playing domestic leagues and cups as well then they must play at least 70 games, about 10 more than average. Considering how condensed the fixtures are in the second half of a season, fitting 70 games means they are already playing 2 games per week since early season. That is absolutely impractical and excessive injuries will consume the top players fast.

While the rest of the teams are certainly opposing EPL all together with the attitude of the FA, the fans, the coaches and the government, it is unlikely that the big teams will still play in their original leagues. Assuming that the big teams will now play the ESL and perhaps some domestic cups, what do we expect from here?

It is clear that the top domestic leagues take the greatest impact since the big teams are the icon of the leagues. The commercial value could drop vastly without them. On the other hand the leagues may have to promote extra teams from the lower divisions and that may temporally lower the match quality.

A slight unexpected drop in TV revenue could cause great trouble to some teams in the top flight, especially in La Liga (Spain) and Serie A (Italy). They are struggling financially in general even before 2019 to the point of having difficulty of paying the salary weekly on time. In 2020 they took another heavy hit and some of them had to negotiate with the players for plans to cut the salary so that the club wouldn't go bankrupt straightaway. It is foreseeable that these clubs with even less revenue received will not be as competitive as of now. They may cut cost, sell their profitable players and reduce investment on the youths. That is detrimental to the whole industry. The worst case scenario would be simultaneous financial problems from multiple teams in the league to the point that games cannot be held properly. The league will be severely dragged at the point as huge compensation may need to be made. Imagine what happens with Leeds and many other teams with financial troubles -- to dive into third divisions or lower -- happening on multiple top division teams? That's would be the middle layer of the pyramid crumbling.

And what happens to the bottom of the pyramid? With top flight clubs now restricted to 12, 15 or 20 clubs only it will be much harder to become a "top flight player" as opposed to nearly 100 teams in the top 5 domestic leagues in Europe. It will be much less profitable to play in the domestic leagues even if you play for the new top teams in those leagues. As a result the industry receives less new blood in general lowering the quality of players in the long term. 

The ESL clubs are also cutting their connection with their local fans, and that ruins the local football culture. Sometimes it's even hard to find a substitute. 
Doing that in London is easy: Crystal Palace, West Ham, Fulham or even QPR (not for Chelsea fans) are some alternatives, but what about fans in Manchester? Which team are they going to support other than the Manchester duos? Like FC United? For people that enjoyed football and share the history with their club for 20, 40 years or multiple generations, clubs joining ESL would be the heartbreaking moment for them and they will never come back again, so as their children. 10 or 20 years later, where are you going to obtain good players like now? Smaller clubs certainly won't become minor clubs because they have their own history and local fans. Not way that they can get enough funding like the NCAA model. That is the bottom of the pyramid turning into sand. By the time when we raise our eyes and look at the top, ESL is no more than a castle in the sky, if not already sunk.

I am also skeptical about the expected sales of ESL. Remember the four American leagues are making so much money not only because they are commercially successful, but also because they are from America, one of the wealthiest countries that invests so heavily on entertainment. The 12 clubs are promised 3.5 billion euros "welcome bonus" from the ESL, when distributed could be as much as what they can earn by winning CL. That is however not free money -- this is by pawning the broadcasting rights. The sales revenue will be in theory promising but one never knows. How much can you sell it for when people are opposing the idea so much? For example if you look at the EPL, a big portion of EPL revenue comes from local broadcasting and not overseas: the ridiculous pricing from Skysports or iTV has been complained years over years but that was withstood by the people because it is their local teams. Overseas permits over America and Asia worth less comparing to Europe and the same phenomenon holds for CL. Whoever broadcasts the games are also under the pressure from the people -- in fact, DANZ and Amazon, declined the rumor/deal very early on. What happens if you failed to create enough revenue to pay back the "welcome bonus"? Well, good luck dealing with American capitals.

Some people say that the financial situation of the big clubs (Barca and the Italian trio) are bad enough and they urgently need a source of funds right now, so they had no choice but joined ESL. In theory the welcome bonus could have helped them to survive this pandemic crisis and after that they can rely on the great success of ESL, but is it worth to bet on something that may not return well but will absolutely ruin the industry in long term? Having financial problems is not the end of the club -- at the worst case they will take a dive, but they are backed by the fans who will support them till they return into glory.

When the ESL teams cut off their association with domestic leagues, their connection with domestic cups are also much weaker. Cups play an important role in the football ecosystem and it is bad to have teams that plays even more negatively on the cup matches. Cup matches is magical in the world of football because it is so unpredictable. It is the stage of smaller teams doing their best to knock out the giants. The unpredictability comes from the fact that these matchups are rare and tactical prediction works less often. If Chelsea plays against Luton town 3 times in a row, I can tell for sure starting from the fourth time and so on Chelsea will beat the shit out of Luton Town every single time (no offence to Luton Town). But the first encounter? Luton Town has a small but realistic chance to pull something out there. 

I always say that the CL semi-final is the most entertaining games in the world, and that is again due to rare encounter but also this is the highest stage before the final with only the strong teams around. It would be boring to see Bayern vs PSG many times in the League, but having that in a quarter-final knockout is another level of thriller. Strategies for knockout ties are completely different from league encounters as they bare a greater consequence. Without CL this may not happen again.

Domestic cup games is an important part of the ecosystem. For the FA Cup, TV revenues and ticket sales are split between the two teams in every leg. Whenever a small team gets to play against a giant team (in an away game) then they get to sell thousands of tickets in a big stadium. The extra one million or so  may not help the top teams a lot, but it could be more than the yearly income of some third division teams. The extra money could be used to acquire better players and improve the infrastructures. Despite the dream of playing against the big names, money is also a big motivation for smaller teams to play the best in cup games. It would be a disgrace if the ESL teams still decide to participate these cups but to play even more negatively with more benched players starting the game (and still win), what is then the point for smaller teams to do their best? They may just surrender right away since they have already pocketed the money and they will lose anyway. The lost in competitiveness is the last thing we want to see in football.

As of now ESL is basically dead, but its impact is far from over. The potential punishments from the leagues and UEFA are still pending, and the ESL does indeed signal an alert about the football industry. In the last part I want to talk about some possible aftermath as well as all sorts of random observations.

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