The unfairness of the revenue distribution system used in the UEFA club competitions

TL;DR

This paper critically examines UEFA's revenue distribution system, highlighting its incentive incompatibilities and proposing strategy-proof alternatives to ensure fairer revenue sharing among clubs.

Contribution

It identifies flaws in UEFA's current revenue allocation mechanism and introduces two strategy-proof methods to improve fairness in distribution.

Findings

Arsenal lost 132,000 Euros due to incentive issues

Current system incentivizes clubs to underperform domestically

Proposed alternatives are strategy-proof and fairer

Abstract

The Union of European Football Associations (UEFA) distributes commercial revenue from its club competitions according to a complex mechanism. Coefficient-based amounts are paid such that the participating teams are ranked on the basis of performances over the last 10 years. Due to the non-anonymity of this allocation rule, all clubs are interested in qualification together with lower-ranked teams, which makes the procedure incentive incompatible. In particular, the English club Arsenal is found to lose 132 thousand Euros prize money in the 2022/23 UEFA Europa League because of exerting full effort in its domestic championship. Two strategy-proof alternatives are proposed to divide fairly this pillar of the revenue distribution system.