Europe's Super League and its Relationship with MLB
I’ll start off this post by saying, I don’t really watch European soccer. I’ve never really been interested in it and I don’t have much of an educated opinion on the ins-and-outs of the operation or the game. However, this past week, when 12 of the most powerful clubs in Europe decided to splinter from their domestic leagues only to face such significant backlash that they scrapped the plan within a few days of announcing it, my ears perked up.
Across the global sporting scene, there has largely been stability in the governing bodies of these sports. We’re past the point of NBA/ABA rivalries or the upstart Continental League threatening MLB’s two-league dominance in the 20th century. And so, the announcement of the Super League came as one of the biggest shocks to the sports architecture in decades.
And there are many reasons why the Super League failed in its nascent stages. For one, the rollout was horrible. Only 12 of the 20 teams slated for the League had been confirmed by the time of the announcement, leaving major air gaps in the viability of the league to begin with. The messaging had come from the clubs rather than from the star players that would be partaking in the league and could have been valuable spokesmen for the splinter. And quite importantly, the league bucked the European tradition of upstart teams from small neighborhoods having the opportunity to play against top-tier talent and take part in the promotion/relegation model. By moving to a more “American” model with franchises being locked into a position in the league, the Super League challenged one of the most dearly held pillars of European soccer.
And it’s here that the implications of the Super League for MLB become evident. No— something like this is highly unlikely to happen in baseball. For one, there just aren’t enough teams to make a splinter league viable. But further, American sports like baseball already exist in a franchise model. It would not make sense for the Yankees, Mets, Red Sox, Braves, Nationals, Cardinals, Cubs, White Sox, Angels, Dodgers, and Giants to break off and form a splinter league. The success of MLB depends on the Dodgers playing the Rockies 18 times a year… crazy, but true.
However, the grievances laid out by the major clubs that splintered into the Super League echo true in MLB as well: competitive balance and subsidization. Manchester United, Real Madrid, Milan and others all make up the lion’s share of revenue for their respective leagues. There is no La Liga without Real Madrid and Barcelona. Without these teams, the revenue model of the league would be unbalanced. Without the revenue that flows into the Premier League from Chelsea, Man U and Arsenal, Sheffield, West Brom, and Fulham would be non-existent. And so these major clubs— eager to pocket some additional revenue— would continue to play top-level talent and draw on major TV deals in a league of their own.
Similarly in MLB, many big market teams have continued to criticize the collective bargaining tax and revenue sharing. In MLB, 48% of a team’s local net revenue is shared into a collective pool that is then equally distributed amongst the 30 clubs, with each club receiving 3.33% of the combined pool. In big markets like New York however, the Yankees make up more than 3.33% of local revenue. And so, situations arise where the Yankees end up losing roughly $160M to revenue sharing. In 2020 12 clubs ended up losing money to the revenue sharing model: Yankees, Dodgers, Red Sox, Giants, Cubs, Astros, Cardinals, Angels, Braves, Phillies, Mets, and Nationals.
While all teams do not end up contributing $160M to the revenue sharing model like the Yankees the optics of the revenue sharing situation from the perspective of big market teams like the Yankees becomes evident when examining payrolls. The Yankees contribution to revenue sharing was higher than the payrolls of 20 teams for the 2021 season. In essence, the Yankees contributed more to paying other teams’ payrolls than some teams committed to their own.
This becomes even more stark when considering some of the lowest payrolls in baseball: Pittsburgh or Miami. Here, teams have essentially punted on fielding competitive rosters and have seen diminished local revenues due to diminished on field products, but continue to be buoyed up by the central revenue fund.
And so— the rationale for a splinter Super League of big market teams and no revenue sharing becomes very clear. Manchester United would be able to survive and bring in revenue without Burnley. If Manchester United player Real Madrid three times a year, fans would show up in droves to watch them play. Similarly, fans may show up to watch the Yankees and Dodgers slug it out more than the once-in-a-blue-moon showdowns between the former NY foes.
Yet— despite similarity in the cases between European soccer and MLB where big market teams subsidize smaller ones, the viability of a Super League in America vs Europe is far different. And here, this boils down to anti-trust and substitutability.
In an anti-trust perspective the question boils down to whether a league of 30 teams is one business or a collection of 30 competitors. And unlike other anti-trust, this one isn’t that easy. It’s not like Sprint and T-Mobile which are largely substitutable goods. Anyone anywhere can switch from AT&T to Verizon and call it a day. You can’t really switch from the the Rangers to the Twins— these products appeal to very different markets and groups.
And further, the question of baseball’s anti-trust implications boils down to the important question of consumer value. If MLB were a collection of 30 teams that operated independently, then arguably consumer value would diminish. Teams would play different slates and not opt for cross-country travel. Without the coordination that is imparted by the league, MLB would fall apart. In essence, MLB does operate as one entity with 30 coordinated units. And here, with the anti-trust exemption that the league was granted by Congress, MLB does not have to worry about upstart competitors that threaten its predominance as the nation’s baseball league. And so— a Super League in the United States is likely unviable. The Yankees need the Orioles to be the Yankees. Without the coordination and anti-trust protection offered by affiliation with MLB, each franchise would be a shell of itself as a standalone entity.
Applying this to Europe’s Super League however, the introduction of substitutability makes the question of the splinter league a little different. Given Europe’s deep transnational connections and the existence of the European UEFA championship already, one could argue that La Liga, Serie A, Ligue 1, Bundesliga and the Premier League are all substitutable goods. And, given the depth of the European soccer system with feeder leagues, promotions/relegations, and less coordination in terms of league mechanics, one could argue that each club does operate as its own economic business unit that is simply affiliated with the domestic league and governing system. Unlike the Yankees, Manchester United would probably be ok without the Premier League— they could just play other teams in Europe and be equally as strong.
And so, given the substitutability of the goods and precedent for a trans-European tournament, it’s not unheralded that a splinter league of top-market clubs would have economic legs to stand on. Europe is just a little bit different than America, and so those small differences can lead to very different outcomes when compounded together.
All in all, the saga of the Super League will likely go down as one of the biggest failures in European sports history. Teams ignored their fans sentiment and saw Euro signs in their eyes. Yet— this story will never really go away. Big market teams will continue to feel slighted by their subsidization of smaller teams, even if that subsidization is likely better for them in the long run.