A little more than a year ago, in December 2019, FIFA President Gianni Infantino told his audience in Lubumbashi that he plans to be part of an effort to start an African top tier league that may generate an annual revenue of at least $200 million.
This may not be staggering by global standards given that the top football leagues attract over a billion USD annually (see Table 1) but it is certainly by far more than any current league in Africa generates. In a two-part series, I write first about the argument that supports such a league and in a second part I write about the possible format for such a league.
Selected League Revenue (Euros)
|English Premier League
Spanish La Liga
Data from different sources in last 3 years
As is the case with such ventures that are revolutionary, there are certainly going to be problems. However, if the benefits outweigh the drawbacks then a venture should be undertaken and that is what this one seems. Nevertheless, it is important to mention the drawbacks that are either perceived or may be real.
It is apparent that there are drawbacks to this proposed venture. These are cost of entry for participating teams, travel distances, and concerns about geographical representation. There are more but those three appear to be the most significant ones that are often put forward by naysayers. They each require close examination.
Presently $20 million is put forward as the cost of entry and some consider the figure to be exorbitant. However, for one to claim a figure to be exorbitant it requires but the cost is measured against probable revenue. If one can generate a revenue of $40 million, suddenly $20 million no long appears exorbitant.
Here, one assumes that the $20 million is part of the cost for running the business. In my view and if the math is correct, the problem would not be finding participants but picking from a large number of prof seekers. Of course, the math here is simplistic given that so much of this proposal is currently shrouded in mystery.
Nevertheless, there is also a question of huge travel distances. Africa is a huge continent, far larger than Europe for example and travel even by air can be challenging. There is no doubt that this is a problem. However, given that there are still continental competitions in Africa in spite of these travel challenges, one has to resume that having a continent-wide league is a possibility if scheduling accounts for the distance.
Note for instance, that nationwide leagues still take place in the United States, a country that has a relatively similar long-distance travel challenge. In the USA, it is even tough to think that in the National Basketball Association (NBA), teams play 3-4 games each week given such distances. Be rest assured that an African wide football league would not be expected to schedule 3-4 games a week as is the case in the NBA.
A third challenge is the issue of representation. There are already charges of unfairness if all 54 CAF members do not compete. However, I consider this not to be a compelling call given that, both sporting and economic considerations should account for such representation. Currently, in Africa, only the best teams get to the money-rounds of the existing continental competitions.
The proposed league can be considered the new money round. Moreover, the rest of the clubs would still compete in both the Champions League and the Confederation Cup. Additionally, the new league should not foreclose future expansion as long as economics remains a consideration.
What are the benefits? There are several and they include a truly-professional league with economic trappings, attraction of better talents not only from African countries but also from outside Africa, and opportunity to keep young talents in the continent.
In Africa, truly professional leagues do not exist in the most part. At best, leagues have private professional clubs in competition with state-owned clubs. This type of arrangement has stifled development of truly professional leagues in the continent dampening business growth.
This proposal should take care of that by allowing only private entities to compete in the proposed African league and slam the gate on state-owned clubs. That would mean, one hopes, the likes of FC 105 of Gabon, APR Rwanda, and most the top Nigerian clubs cannot play in this new league.
The question though is how about clubs owned by corporations that are not fully invested in football but see it as recreational? In my view, those should not be allowed entry as well. Only those willing to be fully invested in the game should be allowed entry.
Obviously, such a league with a viable business plan will attract quality players from all over the world. No one expects such an African league to compete with the Big Five of Europe – Premier league, Bundesliga, Calcio, La Liga, and Ligue One – but surely it can compete with the rest which means having the ability to attract talent from all over.
This means, also, developing viable revenue sources from direct talent transfers to the Big Five leagues. Moreover, loan agreements can be reached with clubs in the Big Five leagues that can lead to exchange of players.
A viable African league would surely stem the talent drain to second and third tier leagues in Europe and Asia. For instance, there are numerous African youngsters moving to Asia, and to European countries such as in the Scandinavia, Cyprus, Russia, Switzerland, Scotland, among others.
This African league would surely be able to compare with those leagues for not just African talents but talents from elsewhere. Clearly, the current estimated revenue from an African league assumes competition with those European leagues.
The Issue of Revenue
Revenue is the elephant in the room. It is the dark horse. Estimated revenue by FIFA’s President Infantino has created more questions than answers. What is known is the projection that each participating club is likely to pay $20 million for entry. As noted earlier, this should not be a hindrance as long as projected revenue is expected to outstrip that cost. But would it?
The huge costs will come from facility development. However, this type of development often is undertaken via long term loans and more than likely, FIFA may also provide some grants towards this. Nevertheless, the costs will reasonably spread over several years in a loan arrangement.
Infantino is quoted as stating that such a league will generate at least $200 million in revenue. Such an amount is theoretically possible but would it be enough to sustain such a league in Africa with geographical challenges? If each club is paying $20 million to be part of the league and then has to share a paltry $200 million with multiple other clubs, where then is the attraction to join this league?
However, it seems that the $200 million figure is quite low given the various revenue streams that are possible. For one, the television revenue should definitely be more than such a figure coupled with the advertising and other revenue streams. The league with far more games than the Africa Cup for Nations (AFCON), although with less talent, should generate at least a similar $80 million as the 2019 AFCON yielded. Revenue from talent transactions should also be higher than is currently obtained by African clubs.
Unfortunately, there are revenue challenges especially at the start but the league’s revenue growth will more likely outstrip costs in the long run. Although those are hardly based on hard figures, given that figures are not presently public but comparable estimates advance the idea that such a league would generate a sustainable fiscal structure in the future.
TV Contracts 2019-2022 (annual numbers)
English Football League #1.7billion
Portugal Primera Liga #110m
Primera Division (Argentina) $59m
Allsvenskan (SWED) #48m
*# – Euros