Why are leagues dominated by one team?
How Financial Fair Play has trapped Europe in a cycle of dominance
Since the Premier League began in 1992, there have only been seven different winners in 30 years: Manchester United, Arsenal, Chelsea, Manchester City, Blackburn Rovers, Leicester City and Liverpool. Man Utd has had the most success with 13 titles in the 28 seasons so far.
Think about that… only one team has won almost half of the available trophies in the league. The story is the same everywhere you look. In Germany, Bayern Munich or Dortmund have won every single league title since 1998 except for three seasons. In Italy, AC Milan, Internazionale, and Juventus have won the last 22 seasons. PSG in France has won 8 of the last ten, Barcelona, Real Madrid, and Atletico the last 19.
So on and so on it goes all across the European continent. Small leagues are as likely to be dominated by a few teams as big leagues. Germany, the country with the largest population and the greatest wealth in our sample, looks rather like the tiny Luxembourg or the Faroe Islands.
Dominance is often associated with the absence of competition, but not when it comes to football. There are, for example, twenty-seven professional football teams within a fifty-mile radius of Manchester United. If fans didn’t like United, there are plenty of alternatives. Often, rivals play in the same stadium (Bayern and TSV 1860, Inter Milan and AC Milan are the two most notable examples). And if Spanish fans are looking for variety, there are four other professional football clubs in Madrid to choose from.
Dominance through monopoly, the absence of competition, usually occurs because the scale of the investment required is so great that competition just isn’t feasible. But dominance also occurs in markets where competition is perfectly feasible. The beverage market is a good example. Any child can set up a lemonade stand on the street and sell to passersby – this is not a business in which entry is difficult or particularly expensive. And yet Coke and Pepsi dominate the space.
Why are leagues completely dominated by one or a handful teams with nobody else standing any chance?
Since the inception of financial fair play in 2011 the issues have only deepened. A rule that is supposed to keep teams solvent and working within their means is now working to strengthen the iron fist the wealthiest clubs have in their leagues.
The current state of soccer needs a foundation… We need to get a sense of what happened to the historically relevant clubs that have since fallen completely off the race for a league title. Did you know Marseille, Porto, Celtic, Feyenoord, Nottingham Forest, Hamburg and Staeu Bucarest are all Champions League winners?
Nottingham Forest seems as good a place as any to start. A deeply ingrained and locally supported club who have just won their place back in the Premier League. Forest has won one League title, two FA Cups, four League Cups, one FA Charity Shield, two European Cups, and one UEFA Super Cup. They’re also the only club to win the Champions League and play in their country’s third division.
A consistent theme we’ll find in these clubs is an overextension of funds to try and claw their way back into the top division, which eventually leads them to a spiraling cycle of spending and debt.
After Nottingham Forest tried to quickly claw their way back to the top division and failing, they were faced with huge debts, which reduced Forest's ability to sign new players. By December 2001, Forest were reported as losing over £100,000 every week, and their financial outlook was worsened by the collapse of ITV Digital, which left Forest and many other Football League clubs in severe financial difficulties.
The stories are similar everywhere… Hamburger SV had a golden era from 1980-1986 and are now toiling in 2. Bundesliga, Marseille’s history is rife with bribery and scandal, and it would be hard to see a team from Scotland or Romania finding success against the European giants in the 21st century. The unluckiest or least diligent of these clubs have locked their destinies to the negative cycle of spending. This cycle creates an unsustainable environment that provides space for billionaire investors and Saudi investment funds to further their control on the future of club ownership.
It needs to be said that there is a widening gap of clubs at the top of the money chain vs clubs with “support”. Even though Celtic can spend 50x more than their competition in Scotland, Man City can outspend Celtic by 50x internationally.
In 2009 UEFA agreed to new regulations called Financial Fair Play which were installed at the beginning of the 2011 season to reduce overspending and “doping” from outside sources to smaller clubs.
On announcing the new legislation, former UEFA President Michel Platini said,
“Fifty per cent of clubs are losing money and this is an increasing trend. We needed to stop this downward spiral. They have spent more than they have earned in the past and haven't paid their debts. We don't want to kill or hurt the clubs; on the contrary, we want to help them in the market. The teams who play in our tournaments have unanimously agreed to our principles…living within your means is the basis of accounting but it hasn't been the basis of football for years now. The owners are asking for rules because they can't implement them themselves – many of them have had it with shovelling money into clubs and the more money you put into clubs, the harder it is to sell at a profit.”
The intention seemed to be in the right place. Make soccer clubs more sustainable and place a priority on balancing debts effectively making it more difficult for teams to spend way more than others in their leagues… or so they thought.
Based on the name you may think financial fair play is about creating an equitable landscape for teams to compete in the transfer and contract market, but that’s not the case. Financial fair play are regulations that are supposed to help clubs not overspend based on their revenues. An unintended consequence of these rules allow for wider gaps in teams with much higher revenues.
A competitive advantage already held by the best generational teams that had large fan bases like Manchester United or Real Madrid, also provided opportunities for teams with wealthy benefactors like Manchester City, PSG, and now Newcastle United to stake their claim.
Despite its flaws, financial fair play was able to mostly curtail the cold practice of a leveraged-buyout. Leveraged buyouts or (LBOs) happen when a new owner buys a club with borrowed funds and then loads those borrowed funds onto the club, then slowly pays off their debts with dividends made from owning the club. The Glazers at United along with Liverpool, Portsmouth, Hull City, and Derby County are all victims of leveraged buyouts. These types of club purchases were removing "emotional stakeholders", in which the club and owners is not a "normal business" but rather an intrinsic part of their lives and often of great social and cultural importance to the local community. The soccer world has seen less and less of these types of buyouts specifically because of the FFP regulations.
One practice FFP has not been able to curtail is that of wealthy benefactors. A number of clubs across Europe were historically in a position to spend substantially more than they earned as a result of the benevolence of their owners who made substantial financial gifts to the club, either by paying off existing debt, providing direct injections of cash, issuing extra shares or giving loans which are later written off. Such a practice adversely affects the market by creating wage and transfer inflation as well as encouraging other clubs to spend more than they can afford in an effort to remain competitive.
In Ligue 1, Paris Saint-Germain became the richest club in France and one of the richest clubs in the world after Qatar Investment Authority became the majority shareholder of PSG by purchasing 70% of the shares in 2011, the same year FFP was instituted, and effectively purchasing the club altogether in a deal worth €50 million. The purchase covered an estimated €15–20 million in debt and losses of €19 million from the 2010–11 season. PSG then turned around with their new wealthy owners and splashed a French record €108 million to be the biggest spenders in the world for the 2011–12 season.
Since then PSG generated the two most expensive transfers ever, Neymar for $240m and Mbappe for $200m. Each transfer window for PSG is all you need to see to know wealthy benefactors have inflated the market and made it more difficult for even medium-large sized clubs to compete for the world’s best players.
Is there any hope for smaller clubs? Lille recently won Ligue 1 in the 21/22 season and quickly fell back to mid-table. Leicester City famously won the Premier League in 2016 and have now solidified their place as a top half squad in England. But those stories are few and far between, and becoming rarer by the day.
One of the major criticisms of FFP is the possibility of solidifying the so-called big clubs which generate largest revenue and profits, and can consequently spend more money on transfers.
Qualification and participation in the Champions League is regarded as a lucrative affair and can earn clubs up to $80 million in prize money and television rights a season if a club makes it to the final. A club only has to play 13 matches from the group stages to reach the final. In comparison, finishing bottom of the Premier League is now worth $200 million, but is won over 38 matches.
Those figures are still only a sliver of money clubs can use to validate their spending. Real Madrid charges $80m a season for their shirt sponsor, and Spotify have just signed a comprehensive $77m a year deal with Barcelona for naming rights to Camp Nou and to be Barca’s shirt sponsor.
Bayern have won the last 10 iterations of the German Bundesliga but still can’t seem to crack the code to beat the giants of the Champions League. There are layers and layers even to the wealthiest of clubs. Bayern don’t look like they’ll be giving up their dominance in Germany any time soon, but you’d be hard pressed to say they’re favorites in Europe when you look around and see the likes of Erling Haaland joining Man City, or Darwin Nunez joining Liverpool.
The era continues. Investment brings success which brings more fans which brings more sponsors which gives clubs more money to invest in their squad. This effectively creates a “lockout” of any club not already at elite status.
Leagues are dominated by one or a few teams. It’s a vicious cycle that perpetually keeps big clubs expanding and smaller clubs getting smaller. Strap in for another decade of domination to be fought by the Goliaths of the world devoid of any Davids to stop them.
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