Everyone made fun of him at the time, but Arsene Wenger was right.
In 2012, after Arsenal lost to Sunderland in the FA Cup and while trailing 4-0 against AC Milan before the second leg of their Champions League round of 16 tie, Wenger solidified his team's approach for the rest of the season. He said: “The first trophy is finishing in the top four.”
While it seemed to some that this lack of ambition was the cause of Arsenal's seven-year trophy drought, that was not entirely true. The construction costs of Arsenal's new stadium had crippled their ability to spend as much as Manchester United, Manchester City and Chelsea; Wenger was simply citing the economic reality in which he lived.
To have a chance of competing with those teams in the future, the Gunners needed to secure the additional millions of dollars in revenue generated by qualifying for the UEFA Champions League by finishing in the top four of the Premier League.
While there are no trophies for finishing in the top four, finishing there was much more likely to lead to a Premier League or Champions League title than winning the FA Cup or League Cup. And if finishing in the top four is more important than two of the competitions in which they distribute trophies, well, in a way is his own trophy.
It's not like we don't treat it as such either: the top-four race is one of three ways we add texture to each season along with the title race and relegation battle. (I don't think this was done on purpose, but I applaud our collective hive mind for not settling on “race” to describe a competition between teams trying to avoid something, rather than achieve it.)
Even with the added guarantee of a fifth place in the Champions League for the Premier League, this season has been no different. From now on, Manchester United, Aston Villa, Liverpool and Chelsea will be judged primarily by whether or not they get one of the five places. As Liverpool manager Arne Slot put it in February: “If we don't have the Champions League, it definitely hasn't been an acceptable season… That has a huge impact on the way this club is run.”
The impact on revenue is huge, but in the world of over-matching and player burnout, could there be a hidden benefit to missing out on the world's most prestigious competition for a season? After all, Man United and Aston Villa, two of the current top four teams, will not be playing in the Champions League this year.
Maybe missing out on the Champions League isn't such a terrible thing for Premier League teams after all?
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The economic impact of missing the Champions League
Take Liverpool as an example.
After almost winning the quadruple in the 2021-22 season, everything fell apart the following year. Jurgen Klopp's side finished fifth, the first and only time in his eight full seasons at the club that they did not qualify for the Champions League.
The impact here is quite simple. Based on data from Kieron O'Connor's excellent Swiss Ramble, here are the club's broadcast revenues in European competitions across all of Klopp's full seasons at the club:
• 2016-17: none
• 2017-18: 81 million euros
• 2018-19: 111 million euros
• 2019-20: 80 million euros
• 2020-21: 88 million euros
• 2021-22: 120 million euros
• 2022-23: 84 million euros
• 2023-24: 27 million euros
In 2016-17, Liverpool were not in any European competition, and in 2023-24, they were in the Europa League. As Slot said in February: “When I came here and only signed Federico Chiesa, it was after one Europa League season.”
This is true and less income means less money to spend on improving equipment. But what's interesting is that Slot suggests that the financial impact of missing out on the Champions League actually comes a year later. The transfer expenses at the club also suggest this.
The €12 million deal for Chiesa was Liverpool's only permanent move in the summer of 2024. But after the disappointing 2022-23 campaign, Liverpool spent a combined €172 million (according to Transfermarkt) on the acquisitions of Dominik Szoboszlai, Alexis Mac Allister, Ryan Gravenberch and Wataru Endo ahead of a season without Champions League games.
Don't forget: they also agreed a Premier League record nine-figure deal with Brighton for Moisés Caicedo, who instead decided to join Chelsea, another club who failed to qualify for the Champions League after four consecutive top-four finishes.
Now, I'm not entirely convinced that Liverpool have only cut their spending in 2024 due to the lack of revenue from the previous season's Champions League. They also signed current backup goalkeeper Giorgi Mamardashvili from Valencia to a deal that will become permanent next season. They had also agreed to sign Martín Zubimendi from Real Sociedad, but he made a last-second U-turn and stayed in Spain for another season before joining Arsenal last summer. In addition, they also had to resolve the contractual situations of their three best and most expensive players: Mohamed Salah, Virgil van Dijk and Trent Alexander-Arnold.
Unlike in 2012, when clubs like Arsenal were competing financially with the top four teams in all of Europe's other major leagues and the extra European income could mean you signed someone who would otherwise have gone to AC Milan, the Premier League's biggest clubs are now only really competing with Real Madrid, Bayern Munich, Barcelona and Paris Saint-Germain for talent. The rest of the Premier League now competes with the four best teams from all of Europe's major leagues.
The combined commercial and broadcast revenue generated by the top flight in England means that losing revenue from the Champions League, on average, is not as painful as it used to be. In 2022-23, Liverpool and Chelsea ranked seventh and ninth, respectively, in overall revenue among all clubs. In 2023-24, without any club in the Champions League, they ranked eighth and tenth.
The potential benefit of not being able to win the Champions League
In 2016-17, with Liverpool regaining the top four after finishing in eighth place and Chelsea winning the Premier League title after finishing in tenth place the previous season, a new theory seemed to emerge: not having to play in the Champions League was actually beneficial to your performance in the Premier League.
To prove this, a trained astrophysicist and Harvard professor wrote a blog post where he analyzed the relationship between the season-to-season change in European games played by a given team and the season-to-season change in points earned in the Premier League.
“[For] “For every extra game a team plays in Europe, it can expect to lose half a point relative to the previous season,” he wrote. “Therefore, if a team plays 12 more games, it will be 6 points less.” [on average] than the previous season.”
The author, interestingly, was Laurie Shaw, who now holds the title of “chief scientist” at Liverpool. At the time Shaw wrote the article, other analyzes had determined that there was no “hangover effect” for teams playing in Europe. In other words, teams that had just played a match in Europe did not perform worse than expected in their next Premier League match. Shaw's work suggested that there is a kind of cumulative effect of dedicating additional resources (energy, strategy, travel, etc.) to European parties.
Last month, blogger Markstats analyzed the past three seasons and found that there is still no clear hangover effect in the Premier League. Since we can't ask Shaw to rerun his analysis for every season since 2016-17, I decided to do so, but only with the Champions League matches.
This is what it looks like when plotting all pairs of seasons in which a team competed in the Champions League in at least one of them:
Although it is not a strong relationship, it is close to the same relationship that Shaw observed in 2016. You can see it in the downward slope of the trend line.
According to these data: for every extra Champions League game a team plays, it loses on average a little more than a third of a point. Thus, every three extra games in the Champions League are worth approximately one point in the Premier League table. And if we remove last season, when the total number of Champions League matches increased for everyone, then the numbers match Shaw's: one point lost for every two additional Champions League matches played.
Now, there are many confounding factors here. When some teams miss out on the Champions League, they have usually been unlucky to an unsustainable degree. The same thing happens in the other direction: sometimes teams qualify for the Champions League due to unsustainable streaks. How much of this is inevitable regression to the mean? And how much of this is a genuine decline in performance related to the more intense games on your schedule?
But at least there is something here. It seems reasonable to expect better teams to play more games in the Champions League, so the fact that on average teams perform better in the Premier League while playing fewer Champions League games suggests to me that there is a real negative effect of the additional cost of high-level games.
I also looked at the total number of games played from season to season in all competitions, and there is basically no relationship with changes in points, suggesting that there is something about the Champions League in particular that affects domestic performance.
Of course, it would be absurd to say that it is better not to be in the Champions League. We don't watch or care about sports because of the financial results they produce: finances help produce the results and be produced. by the results. The goal of all this is to try to win things like the Champions League and the Premier League. The way to do this is by participating in the Champions League.
But I do think we have potentially entered a stage of growth in the Premier League where the teams are so rich and the competition is so gruelling, that there is the potential for an exponential one-year boost for a club leaving the competition. You'll still have plenty of money to spend on your squad due to last season's European income, you'll probably have better luck in the future, and you'll have a full season without the potentially harmful effects of all those midweek Champions League games.
Whoever falls out of the top five this season would seem a logical choice to bounce back and get back into the Champions League spots next year. So, Liverpool or Chelsea fans: there's something that might help you sleep at night.
