Attention shifts to cross-border competition in football this week, as the UEFA Champions League kicks off. Britain has long bucked the sport’s broader economic trends – and England is particularly dominant. The Premier League’s top clubs all look set to progress deep in this season’s competition.
Our summer scorecasting on the Economics Observatory covered the FIFA World Cup – the pinnacle of international football where national teams from around the world compete together.
Since then, we have turned our focus to domestic leagues here in England – football takes place all around the country, providing highly disaggregated insights into areas of the country that national statistics can’t necessarily get to. Each football club somewhere in England’s pyramid is a productive economic unit, where its productivity is nationally recognised through winning football matches and gaining promotion.
But once teams reach the pinnacle of the domestic system, there is a natural urge to reach the next level – for teams in UEFA (the Union of European Football Associations), this is European competition. That natural urge was first pointed out by Walter Neale in his 1964 Quarterly Journal of Economics paper, where he noted that sports leagues are natural monopolies (Neale, 1964). While the European Super League failed, the UEFA Champions League continues to succeed.
Has the UK suffered from British disease in football?
The continent’s top 36 teams – at least according to UEFA’s qualification process, which now very clearly favours teams from its best nations (England, France, Germany, Italy and Spain) – kick off the UEFA Champions League on Tuesday, Wednesday and Thursday of this week.
Of course, that relative ordering – by UEFA’s country coefficients – is again a reflection of the relative productivity of footballing institutions in each country in Europe. Football is one area of economic activity where the UK did not suffer relative decline in the post-war era.
The international landscape had already put the home nations in their place through the creation of the World Cup after 1930 – and with World Cup success in 1966, England showed it could even outpace many competitors on the international scene.
While the 1970s and 1980s were less successful for England, the other home nations regularly qualified for World Cups, and in the 1990s, England reached the last four of the 1990 World Cup and 1996 European Championships. A barren spell after 1996 despite the so-called Golden Generation was ended in 2018, and since then, England have reached two European finals and two World Cup semifinals.
European club competition only really began to take shape in the late 1950s. In its initial years, it was dominated by Spain (Real Madrid), Portugal (Benfica) and Italy (AC Milan and Inter Milan), who shared the first 11 editions.
Celtic (1967) and Manchester United (1968) were the UK’s first winners, and between 1976/77 and 1981/82, only English clubs won the European Cup (what is now called the Champions League). As such, the British disease never really applied in football.
How does the Champions League work?
The Champions League operates in what is called a Swiss system. If you have just got used to the four-team round robin tournaments used every at World Cup since 1982, this is how things used to be in the Champions League.
Now, all 36 teams are grouped in a single league (rather than a number of different groups), and each team plays eight other teams among the 36. It’s not balanced – a team could face four tough away opponents and four easy home opponents - or indeed, eight tough opponents.
After this league stage, the teams finishing from 9th to 16th are seeded and face matches against teams finishing 17th to 24th in a playoff round, with the bottom eight teams being eliminated.
After this comes the round of 16 as the top eight teams in the league stage face the winners of the playoff round – again according to league position. The tournament then proceeds on a knock-out basis with two-legged ties played at each team’s stadium until the final – which this year will be in Spain at the home ground of Atletico Madrid.
What is likely to happen in the first stage of the Champions League?
As we have with domestic football, we have simulated each match 100,000 times. This allows us to get a sense of what is likely to happen. We have also evaluated each team’s attacking and defensive strengths to arrive at predictions.
In this piece, we look at the probabilities that each team has of qualifying directly for the last 16 (finishing in the top eight), or qualifying for the playoff round. Despite falling short in the final last season to PSG, Arsenal are the team most likely to finish in the top eight at 85%. Their closest rivals in Elo terms in England, Manchester City, are only 57%; this arguably reflects a tougher set of eight fixtures for City relative to Arsenal.
Our method, via Elo predictions, does enable some insight into this. The Elo prediction of a match, from a team’s perspective, gives an idea of how difficult each match is. If a team’s average Elo prediction over their eight matches is above 0.5, then on average, they’re stronger than their opponents.
Clearly, the better teams are more likely to fit this category due to having a higher Elo rating. Borussia Dortmund by this metric have the easiest league stage, with an average Elo rating at 0.58, followed by Lille, Bodø/Glimt and Roma at 0.55. Real Madrid come behind these with an average of 0.53, the seventh easiest schedule, and PSG are immediately behind on 0.52.
Arsenal have the tenth easiest schedule with an average of 0.51, and Manchester City have the 23rd easiest schedule at 0.49 – fine margins which may account for that difference.
Figure 1: Who has the easiest league-stage schedule?
Average Elo prediction across each team's eight league-stage matches; above 0.5 means a team is, on average, stronger than its opponents. English clubs in red. Source: Economics Observatory scorecast model, September 2026.
Liverpool are the team who are second most likely to qualify automatically at 79%, with Bayern Munich just behind them on 63% and Barcelona on 62%. Below City sit Real Madrid at 50%, followed by Manchester United on 45%, Aston Villa on 43% and the winners of the last two season’s competitions, Paris Saint-Germain (PSG), on 42%.
That last likelihood is arguably the most surprising finding. But it is often the case that the stronger teams struggle in the league stages, with PSG in particular needing to get through the first playoff round despite eventually winning the competition in the past two seasons, the first ones in this format.
But note that there is almost no chance that PSG exit the competition after the league stage – only a 5% chance of that happening. The most likely exits are for teams either new to the competition like Sabah (99%), or generally from lesser UEFA nations: LASK from Linz in Austria (95%), Slovan Bratislava of Slovakia (83%) and Viking from Stavanger in Norway (73%).
Figure 2: Who goes straight through, and who goes out?
Probability of finishing in the top eight (straight to the last 16) or in the bottom eight (out of the competition), from 100,000 simulations of each match. Source: Economics Observatory scorecast model, September 2026.
What is likely to happen on Matchday 1?
On Matchday 1 (with six games to be played on each of 8, 9 and 10 September), PSG (probability 94%, expected goals 3.9) and Manchester United (90%, expected goals 3.6) are most likely home winners, facing Bratislava and Sabah respectively. Barcelona are also heavy favourites (87%, expected goals 3.7) against another past winner of the competition, Feyenoord of Rotterdam, and Bayern Munich (83%, expected goals 3.8) will expect to beat Bodø/Glimt of Norway.
Real Madrid against Inter Milan, finalists in 2024/25 season, is one of the most evenly matched games in the round. Home advantage is a relatively strong phenomenon in Europe given greater travel distances and unfamiliar circumstances; this perhaps explains why Manchester City are only 37% (expected goals 1.1) to win away against Porto in Portugal. The hosts are 33% to win, with expected goals of 1.0.
Arsenal are the most likely away winners with a 64% chance of success at Napoli. Completing the set of English teams, Aston Villa are 43% (expected goals for 1.7 and expected goals against 1.5) in Bruges, while Liverpool have a 62% chance of beating Atletico Madrid at Anfield.
