Growing discontent among clubs over their earnings from European competitions - and the limited opportunities for taking part - has allowed a high-powered syndicate backed by huge media interests to seize the initiative.
According to plans obtained by The Independent, Manchester United, Arsenal and Liverpool are being lured into taking part with the promise of more money and more regular opportunities for earning it.
In a letter to the Tax Ruling Team of the Dutch Belastingdienst Grote Ondernemingen - the Inspector for Large Enterprises - in Rotterdam, KPMG Meijburg & Co (tax lawyers for Media Partners International - the company behind the breakaway), spells out the case:
"Currently, the European Football market is governed by a monopolistic competition organiser, Uefa ... [whose] exploitation of European club games could be seen as sub-optimal. This results in a deficient and unpredictable revenue stream for the clubs from these competitions.
"Furthermore, the clubs have very little influence on how these competitions are governed and run.
"Our client intends to set up a group of companies to run an alternative football competition. The targeted first operational year would be the season starting August 2000.
"It is envisaged that the new pan-European Football League will comprise two main competitions which will offer an alternative [to] the current Uefa competitions."
The first, it says, will be among the top 32 European clubs in the form of a league competition. The second will be a knockout tournament featuring as many as 50 or more other clubs.
In order to achieve this, five companies will be set up under the European Football League, (or EFL) group banner. These will include EFL Holdings BV and EFL Property BV, both to be set up in Holland because of tax advantages. In the UK, the venture will be run by FootballCo and PropertyCo, where "property" refers to intellectual property rights.
The venture is being underwritten by JP Morgan investment bankers and the Morgan Guaranty Trust to the tune of $3.233bn (around pounds 2bn) for the first three years.
At the helm of Media Partners International is Rodolfo Hecht, the former chairman of Fininvest - the holding company for the vast media interests of Silvio Berlusconi (the former Italian leader). The company and its publicists, Brunswick Public Relations, refuse to say whether Mr Berlusconi is involved.
However, The Independent has established that Media Partners is paying Ff125,000 (pounds 12,500) per month by way of a "retainer" to a Paris-based company called Finincom. An examination of Media Partners' accounts at Companies' House suggests that such a payment could be crippling, as it is is a dormant company worth only pounds 4,489.
Many media observers now believe Rupert Murdoch could be teaming up with Mr Berlusconi to launch a pan-European operation using football as viewer bait.
As reported in The Independent yesterday, they are understood to be in talks with the German media mogul Leo Kirch and the Saudi Arabian Prince Al Waleed Bin Talal, who owns a number of media interests.
Whoever owns the venture, they are promising rich rewards. According to the plans seen by The Independent, clubs will be paid a proportion of the cake "on the basis of the commercial input of the club" - in other words, above a guaranteed amount, thought to be pounds 20m per club per season, success is rewarded by cash.
It is understood each club will have to assign certain television rights to EFL Holdings BV in return for the minimum guaranteed amount. In turn EFL "will realise an arms-length taxable profit in the Netherlands."
Correspondence seen by The Independent suggests that the company has been advised to reduce payments from the EFL group in Holland to the English arm, FootballCo, in return for help with "start-up costs". That way, FootballCo would pay less UK tax.Reuse content