David Owen: Can Ajax and Leicester gatecrash the super-elite?

I have in the past been critical of the financial impact of the Champions League on European club football, and its role in reinforcing formation of a super-elite based partly on whether clubs happen to be located in one of the most lucrative European national TV markets or not.

There are now signs, however, that the huge sums it is possible to earn from a good run in the tournament are giving fringe clubs a shot at appending themselves to this elite – provided their Champions League windfall is managed skilfully. Bear in mind that the amount distributed to the 32 clubs who qualify for the Champions League group stage rose in 2018-19 to a towering €1.95 billion. That amounts to an average of more than €60 million per club.

The two case-studies that have led me to this conclusion are Leicester City and now Ajax Amsterdam.

The Leicester team of earlier in the decade will be remembered, of course, for their staggering achievement in winning the 2015-16 Premier League title. But it was not until the following season that the full impact which the unexpected accomplishment might have in transforming the long-term future of the club became apparent.

The domestic title gave the Foxes entry to the Champions League, and the more than £70 million the club generated while reaching the quarter-finals was a big factor in the near doubling of annual turnover to £233 million reported for 2016-17.

This top-line boost was so substantial that, even though costs, naturally enough, shot up as players looked to be rewarded for their success, the ratio of staff costs to turnover – a widely-watched measure in modern football – dropped to a comfortable 48.3% from 62.4% in the title-winning season.

The club also reported a then Premier League-record pre-tax profit of £92.5 million.

The other key knock-on effect of winning the Premier League was that the value of the squad skyrocketed. In the past three-and-a-half years, therefore, the club has been able to boost both cash flow and profit in the transfer market while retaining the firepower necessary to import new talent.

Critically, I think, the Thai-controlled club cashed in its bluest chips comparatively gradually –  N’Golo Kanté was first to leave in July 2016, followed successively by Jeff Schlupp (January 2017), Danny Drinkwater (September 2017) and Riyad Mahrez (July 2018). Indeed, two of the chief title-winning kingpins – Kasper Schmeichel and Jamie Vardy – remain first-team fixtures.

This ensured that the squad – despite the odd scare – remained comfortably of top-tier standard, while recruitment has been judicious enough to unearth new gems: Harry Maguire joined from Hull City only in July 2017, but has already been shipped on to Manchester United at enormous profit. The careers of James Maddison and Youri Tielemans may in time follow similar trajectories.

In the meantime though, Maddison and Tielemans are key members of a Foxes squad that, under the canny eye of manager Brendan Rodgers, are starting to signal that they might once again have a Champions League spot within their compass. With Chelsea and Manchester United rebuilding, and North London giants Arsenal and Spurs struggling for form and consistency, Leicester have taken the opportunity to slip into third place, with a visit to Anfield next up on Saturday.

The day after Leicester pumped five past Newcastle, it was reported that Holland’s Ajax had more than doubled their annual turnover in 2018-19 to a fraction under €200 million.

This, of course, was a season in which the club of Johan Cruyff and Ruud Krol came close to reviving past glories by reaching the Champions League semi-finals. As a consequence, revenue payments from UEFA were said to have risen by no less than €76.8 million to €77.9 million. After-tax profit was put at €51.9 million.

It is too early to be sure, but first signs suggest that the Amsterdam club may be managing the aftermath of last season’s impressive campaign as skilfully as Leicester.

Two young stars of the 2018-19 squad – Matthijs de Ligt and Frankie de Jong – have departed to super-elite clubs on big money transfers. But a clutch of competitively-priced new arrivals have come in and the team has made a dream start to its 2019-20 Champions League campaign, posting twin 3-0 victories over Lille and Valencia to lead Group H, which also features Chelsea, with room to spare.

Another run to compare with last season’s and the Dutch club, which dominated European football in the early 1970s, could be well on the way to re-establishing itself among the continent’s quasi-permanent elite, in spite of the handicap of a comparatively small domestic broadcast market.

David Owen worked for 20 years for the Financial Times in the United States, Canada, France and the UK. He ended his FT career as sports editor after the 2006 World Cup and is now freelancing, including covering the 2008 Beijing Olympics, the 2010 World Cup and London 2012. Owen’s Twitter feed can be accessed at www.twitter.com/dodo938.