EuroLeague Adopts American Practices to Reduce Losses, Draw Fans and Investors

EuroLeague Adopts American Practices to Reduce Losses, Draw Fans and Investors

The EuroLeague (EL) recently announced an extension of its European Framework Agreement (think: CBA with the EuroLeague Players Association) and a new set of regulations that will amplify existing Financial Stability and Fair Play Regulations (FSFPR). The league’s enhanced Competitive Balance Standards (CBS) include a salary cap and luxury tax, and tie player remuneration levels to the teams’ collective business performance for the first time in European sports history.

EL sought to make its FSFPR "regulations a little bit stricter, in order to [help the clubs find financial] sustainability,” Xavi Puyada (CFO, EuroLeague) said.

The hope is that the revamped guidelines will reduce losses by 30-50% over the next three-to-five years.

The new guidelines were “also [designed to help improve] competitive balance in the competition,” Puyada said.

In theory, the stronger the league is from top to bottom, the more attractive it will be to fans and investors alike–particularly, when compared to other European sports properties.

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Speculation exists that the NBA may preparing to announce a new standalone European basketball league. But EL’s move to strengthen CBS was not made in response to those rumors (see: NWSL eliminating draft).

In fact, the recently announced pact was more than three years in the making.

“Our only intention was to make our league better,” Puyada said.

And financially viable for the long-haul.  

“Historically, European basketball has been unsustainable,” he explained. “One of our main priorities, as a league, has been to try and help [all of our] clubs [become] sustainable.”

EL enacted FSFPR to try and stem organizational losses in 2015. However, the guidelines were admittedly ‘quite flexible’ and ultimately failed to solve the problem for most.

Sources indicate that the 18 clubs collectively lost over €150mm last year.

The league worked with teams and the ELPA to try and add teeth to the cost controls this time around. 

“Linking [player] salaries to the revenues that the clubs generate [should] be a major step forward,” Puyada said.

But it will largely depend on how revenues are calculated and monitored for compliance.

The goal is for every team to eventually reach break-even, though that is not a short-term priority.

EL is hopeful that the revamped CBS will make the league more competitive.

“The rotation of clubs that we’ve had playing in the final four of the playoffs each season [has been] very limited,” Puyada said.

That is largely due to financial imbalances that have existed. There were multisport and well-financed clubs spending upwards of €50mm on players annually, while other teams had operating budgets of €10mm. 

"We work with different countries, with different [financial] realities, [and] different taxation systems," Puyada said. "It was very difficult for [many] clubs to be competitive with [the regulations] that we had."

The aim moving forward is to have six or seven teams capable of winning the title each year. And the hope is if the competition becomes more competitive, that it will draw a larger number of fans and investors.

But EL did not implement a strict cap. It couldn’t and still grow interest and revenues.

“We need to [be able to] protect some of the key pillars we have in this league,” Puyada said.

That includes its top young players. NIL has made retaining them increasingly challenging (see: Aday Mara).

EL’s CBS includes an exception that allows clubs to pay players under the age of 23 money that does not count against the cap. There is no max on how much those players can earn.

Clubs will be dissuaded from going over the threshold (exceptions excluded) with a tax that is paid out amongst the non-offenders.

“If somebody wants to spend a lot over the limit, it’s one Euro per Euro,” Puyada said. “So, it’s quite expensive.”

However, EuroLeague does not share revenues equally and the imbalance between haves and have-nots remains. It remains to be seen if clubs that fall into the first bucket will simply pay the tax and proceed as usual.

“Some [likely still will],” Puyada acknowledged. “But they will be funding other teams and that will improve their rosters [over time].” 

The new CBS includes a team salary floor, a minimum amount each club must spend on player salaries. That should force the lowest spending teams to use at least some of the tax proceeds towards improving their roster.

While EL’s recent moves were inspired by American sport concepts, they were not made to necessarily appeal to U.S. investors. 

The new regulations “put the league on another level, [from a business maturation standpoint], compared to other domestic leagues that we have here in Europe,” Puyada said. "We believe [they are] the right tools to generate more money and grow the league [for the long-term].”

It’s worth noting EuroLeague is also the only league in Europe owned by the teams, and that some of its clubs hold long-term licenses (i.e. they can’t be relegated).

Or at least they did. The clubs’ existing 10-year agreements expire in July of 2026.

EL is actively trying to extend those licenses now. There are questions about several clubs, including Real Madrid, FC Barcelona, and Fenerbahce Beko Istanbul, agreeing to sign on.

Outside investors are understandably hesitant to pump more money into the property until they do.

The EuroLeague intends to begin implementing its new regulatory framework next year, regardless; albeit with some flexibility to account for existing contracts. The ‘final model’ will be in place in time for start of the ’27-’28 season.

“It’s [going to be] a change for the European mentality, this new way to calculate salaries and for the clubs to decide on roster compensation based on [league revenues],” Puyada said.

Logic would suggest as American money continues to flow into Europe, that an increasing number of domestic leagues and competitions will follow suit.

But without the same stability in clubs at the top, most seem unlikely to gain the consensus needed for change. It’s simply not the way things are done across the pond.

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