Super League could hurt smaller clubs - sports finance expert

Michael Goldberg of DBRS Morningstar said broadcasting and sponsorship revenues at the domestic levels will still be fairly significant but could go down over time as disparity grows wider

Twelve of Europe's top clubs announced on Sunday they were launching a breakaway, a move that has been criticised by football authorities, fans and politicians who say it entrenches the wealth and power of a small elite of club (Representative Image)   -  GETTY IMAGES

The proposed Super League could see viewership and broadcasting contracts drop at the domestic levels and ultimately hurt credit ratings of clubs not involved in the breakaway, according to a senior vice president of sports financing at DBRS Morningstar.

Michael Goldberg of DBRS Morningstar said the Super League model promotes greater disparity and will see top clubs be more financially well off, able to lure better players and easily win matches in domestic competitions relative to how they were doing so far.

"From a financial standpoint the clubs that are in this Super League will probably be better off but I think it will maybe diminish the product that they're putting on in their domestic league," Goldberg told Reuters on Monday.

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"Then the clubs that aren't participating in the Super League might be at even more of a disadvantage sense than they were before."

Twelve of Europe's top clubs announced on Sunday they were launching a breakaway, a move that has been criticised by football authorities, fans and politicians who say it entrenches the wealth and power of a small elite of clubs.

Goldberg said broadcasting and sponsorship revenues at the domestic levels will still be fairly significant but could go down over time as disparity grows wider and fans "don't want to watch 5-0 results every single week."

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To rate the debt of different football clubs, Goldberg said DBRS Morningstar analyses a club's probability of making its debt service obligations by looking at the magnitude and volatility of its revenues, earnings and cash flows.

"The clubs participating in this Super League, I think the magnitude is going to go up and the volatility will probably go down whereas the club not participating, I think the magnitude could come down and the volatility could go up," said Goldberg.

"So, you get more of a divergence in terms of credit rating and then we would look at the balance sheets as well and how these clubs are capitalised.

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"So, maybe the increase in revenues offsets the increase in debt that these clubs will be taking on to participate in the ... Super League but then some of the lower run clubs might also have to increase their debt in order to get through this COVID period or get through periods of financial stress going forward and you might see credit rating suffers because of that."