THE CHAMPIONS LEAGUE : A GAMBLE THAT PAID OFF BIG / THE NEW YORK TIMES ( RECOMMENDED READING )

May 15, 2012


The Champions League: A Gamble That Paid Off Big


By ROB HUGHES

STOCKHOLM — Bayern Munich was at home, about to kick off its UEFA Champions League semifinal against Real Madrid. Nearly 1,300 kilometers away, the three men who 20 years ago transformed the way the tournament is played, marketed and viewed on a global scale watched the game unfold at the Grand Hotel.

.When the Champions League theme, based on Handel’s “Zadok the Priest” rang out, you could feel the excitement in the men who commissioned it: Lennart Johansson, Jürgen Lenz and Klaus Hempel.


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While the match was under way, there was no mistaking the allegiance of the Germans, Lenz and Hempel. Indeed, Johansson chided them in a kindly, patriarchal manner.

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Johansson, at 82, is by some distance the eldest of the three. But it was his openness to their commercial concept that completely changed the tournament that, from 1992, has grown into the richest televised sporting contest on earth.

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Billionaires now run the teams most likely to win the Champions League, and when the final is played Saturday between Bayern and Chelsea in Allianz Arena in Munich, the victor and the vanquished will each have earned in excess of $66 million from this season’s share of the profits.

.The final is one match, but it is estimated to be watched by more people globally than the National Football League’s Super Bowl. It is a gargantuan event that has outgrown the gamble that UEFA — through its then-president Johansson — took by pushing through an idea from Lenz and Hempel.

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Men talking about money and about redesigning a European Cup started in the mid-’50s may not be so exciting as watching Franck Ribéry and Arjen Robben running down the wings for Munich or Didier Drogba leading the Chelsea attack.

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But one goes with the other. It was a complete triangle of sports, television and marketing that Hempel and Lenz brought to the table when they persuaded Johansson and his chief executive at UEFA, Gerhard Aigner, to adopt their idea.

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The two Germans learned from the Dassler family, which founded Adidas and pioneered the way that sports are sold. The pair quit Dassler’s marketing company, ISL, before it collapsed into still-unresolved litigation.

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They took time off to cycle across continents. They also spent some time at a fitness clinic in Lugano, Switzerland, where for three hours each day they worked on the idea they would present to UEFA, the ruling body of European soccer.

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Johansson was already aware that the tournament was in danger of fragmenting. The biggest clubs, most notably A.C. Milan, had visions of breaking away from UEFA and dividing the spoils from television and marketing for themselves, which from UEFA’s perspective defeated its own objective of distributing some of the income to the smaller clubs and to the 52 federations responsible for developing grass-roots soccer across Europe.

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Johansson’s background in sports administration started at that grass-roots level, and Aigner fought hard for the principle that some of the profits should filter down to the smaller clubs.

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“You are in the back of the train,” Hempel and Lenz told UEFA. “You should be driving it.”

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UEFA, in as many words, told the entrepreneurial pair to put their money where their mouths were. UEFA demanded a guarantee of 150 million Swiss francs, worth around $160 million at current rates, to go ahead with their proposal.

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“We went back to Switzerland and called our banks,” recalled Lenz, “and we couldn’t come anywhere near to such a sum. When we made the estimates, we knew, surely, that we could reach five-eighths of that. But 150 million was beyond us.”

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Eventually, they found a backer in their homeland. Deutsche Bank put up the guarantee, largely by persuading a wealthy businessman who could appreciate the vision of the two men, even though the businessman admitted he knew nothing about the sport.

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The idea was up and running despite the resistance of some of the clubs and even some national associations, like England. The supposed breakaway was headed off when Milan’s owner, Silvio Berlusconi, with his political clout in Italy and his media empire, was at one point left alone with Johansson in a hotel room near an airport.

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“I had to tell him I would fight him, and fight the 14 clubs who talked of forming their own Champions League and taking all the money,” Johansson said. “We spoke in English, and I said ‘I cannot understand your thinking. Milan will earn a hell of a lot of money inside, not outside, UEFA.’

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“I was quite aggressive, and after a time Berlusconi said ‘All right, I’m in.’ And he kept to his word.”

Milan has won the Champions League three times. It has made, and spent, a lot of money. And even if today it is not quite in the league of the highest spenders like Real Madrid, Chelsea, and Manchester City, it still is a perennial in the tournament that was reborn in 1992.

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That guarantee of 150 million francs is dwarfed by the finances of the tournament today. This month, UEFA announced that, despite Europe’s financial struggles, the 32 clubs that take part in the Champions League over the next three seasons can expect a 15 percent raise from the prize money this season.

Increased demand will provide more than $2 billion a year in revenue.

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The concept of central marketing, and pooled television and sponsorship income, will always favor teams at the top. The qualifiers will share $997 million, plus whatever revenue they can make from ticket sales and merchandise.

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UEFA retains a share — about a third of what it pays the clubs — for operating costs, and it distributes the surplus through what it calls solidarity payments to its member countries, leagues and clubs.

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Johansson, Lenz and Hempel have handed off the baton to younger men, led by Michel Platini, the current president of UEFA. But their legacy is the model that became the world’s most watched event — a tournament that manages the golden triangle of sport, broadcasting and marketing in its modern form.