As Euro 2004 kicks off, Richard Giulianotti looks at the rise of football nationalism but finds that club loyalty is the true victor

Football's European Championship finals kick off this weekend in Portugal. The quadrennial tournament has grown exponentially in recent times. Euro '92 in Sweden - featuring eight teams, two weeks of games, compact venues and the motto "Small is Beautiful" - now seems as quaint as it does archaic.

The European Championships show that globalisation processes can intensify, rather than weaken, cultural expressions of national identification. Since the 1970s, each nation's supporters have differentiated themselves through distinctive songs, stories, dress and patterns of association. Portugal will be no different.

Failure to qualify for the finals can engender a national sense of cultural marginalisation. For the teams taking part, the extent to which they reflect a distinctive, modern sense of their country's population varies from case to case. The multiethnic French team features numerous first and second-generation immigrant players from the Maghreb and sub-Saharan Africa, and represents France as a nation of nationalities, unlike the German team, despite its massive foreign-born population. The Netherlands side has similarities with the French team, despite reports of "racial" divisions in the side within the past decade. But while Sven Goran Eriksson's England features several crucial black players, the team is still typically absorbed by sports commentators within traditionalist narratives of Englishness regarding 1966 - beating the Germans and the "Three Lions" - that predate the massive contribution of black players to the English cause. For the new post-Soviet nations such as Croatia, with its national side literally wrapped in the flag, football success in Europe promotes a strong sense of national validation.

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But what of the different styles of play? National identification through coaching and playing style remains largely intact. Apart from England, Portugal and Greece, all sides will have their teams and tactics determined by coaches from their own nation. Although most teams would seem to be opting for an adaptable 4-4-2 formation that is straight out of the global coaching manuals, there are significant national differences in playing style and technique. The Scandinavian sides emphasise endeavour and maximising their limited resources, the Italians are competitive if frustratingly overcautious, the English play powerfully while lacking technical brilliance (and a proper left-sided midfielder), and the French and Dutch play the best football but do not necessarily win tournaments.

As for the supporters, the distribution system employed by football's governing body Uefa means that plenty of tickets to the top fixtures have been siphoned off by professional ticket touts and agencies for sale to the highest bidders rather than to those supporters who regularly follow their national side.

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Then there is the question of security after "nationalistic" clashes at other European tournaments. The Portuguese police say their riot division will be "a last resort", but their English counterparts feel that hooligan incidents are inevitable. English fans' experiences will also be significantly influenced by the extent to which they can self-police and socially differentiate ordinary England fans from hooligans.

As far as the Portuguese are concerned, the tournament's ability to promote national integration and cultural participation will be balanced against the financial costs it incurs. Somewhere between €600 million (?400 million) and e1 billion has been spent on stadia and related projects by a government facing its worst economic period in the past 20 years. To recoup that kind of outlay, the spin-off benefits to local businesses need to be sizeable. While Euro 2004 is expected to attract 1.5 million visitors to Portugal, this represents only about 6 per cent of the nation's annual tourist intake. If Portugal fails to reach at least the semi-finals, and if the standard of play is lethargic in the summer heat, then the tournament might be judged a disappointment by the Portuguese, international football watchers and sponsors.

One positive transnational dimension of this tournament of nations is Uefa's continuing participation in humanitarian causes, such as its link-up with the International Committee of the Red Cross. This includes an annual donation of about ?440,000 and a pledge to disseminate humanitarian messages concerning children and warfare to a cumulative television audience of 7 billion viewers throughout the tournament. Uefa is also involved in a range of development projects that will be publicised during Euro 2004, some of which aim to break down national barriers. For example, its Open Fun Football Schools programme in the Bosnia-Herzegovina region of the former Yugoslavia has brought together thousands of coaches, young players and their guardians from different, opposing communities to play and watch football and has helped to build social contacts between those recently at war.

But on the global stage, club football is a stronger challenger than ever to national associations and national teams. Euro 2004 carries markedly less financial and cultural significance next to Uefa's club competitions.

The Champions' League, inaugurated in 1992, is European football's annual, season-long cash cow. It can pull in more than ?400 million, with the winners earning up to ?25 million in prize money. The European Championships offers up to only about ?13 million to the winners. The Champions League is strongly marketed according to the worldwide branding of its superstar players and clubs, such as Brazilians Ronaldo or Roberto Carlos at Real Madrid or Ronaldinho at Barcelona. Meanwhile, consider the media marketing of Euro 2004: much of it is built around celebrity players such as Beckham, Henri, Zidane and Figo, best known for their exploits at club level.

For international football fans following the world's biggest teams, there may be other summer attractions. The July tours and fixtures involving their clubs could well take priority. In recent years, clubs such as Manchester United and Real Madrid have targeted the Asian market by playing friendly fixtures before massive crowds. This year, Barcelona will transport their Ronaldinho-led crew of global celebrities to Japan and South Korea for warm-up games.

The biggest tournament, planned by the Champions World organisation, takes place in North America. Nine teams - including Celtic, Chelsea, Liverpool, Manchester United, Milan, Porto and Roma - will play 11 games in seven major cities.

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For many directors and coaches at top clubs, international fixtures are something they'd prefer to keep to an absolute minimum and have become a source of open conflict with the game's governing bodies.

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These clubs have become better placed to advance their interests. The G-14 is the legally established body that represents 18 of Europe's top sides.

Its members were instrumental in prompting the reform of the European Cup into a "Champions' League", which favours the competitive and financial interests of clubs from the biggest leagues.

A major focus of dispute between top clubs and the governing bodies concerns the payment and control of players. Clubs argue that they pay the players, look after their medical needs and release them for fixtures involving their national teams during which they may be seriously injured.

National football associations argue that players want to play in international games, that such fixtures increase the public exposure and marketability of players and that these games generate revenues that benefit top clubs and the grass roots of the game. Nevertheless, to protect their high investment in labour resources, leading clubs are considering legal measures to gain release fees and injury compensation from the governing bodies that call on players for internationals.

A broader structural problem concerns the increasingly compressed football season. Domestic and international club tournaments are exhausting enough for players, whose recuperation periods are seriously eroded when they then go on to compete in summer competitions such as Euro 2004. Football's governing bodies, meanwhile, compound the problem by inventing new tournaments such as the "World Club Championship" and by musing on the expansion of existing events (such as making the World Cup finals a biennial occasion).

These disputes are given added piquancy by the fact that, within an increasingly neo-liberal football environment, the largest clubs tower over their national associations in financial terms. Celtic and Rangers each have turnovers that are over three times that of the Scottish national association. Culturally, the largest clubs have transnational fan bases that national sides cannot match. With the possible exception of Brazil (the sole "world" national football team), national sides do not pick up the kind of shirt-buying, sponsor-following, celebrity-watching, match-following football consumer that the "world" club sides in the English or Spanish leagues avariciously pursue.

In terms of the game's future political economy, national football associations would prefer a "neo-mercantilist" arrangement to remain. The English football association, for example, will continue to control the Premiership and its television revenues. The largest clubs, alternatively, would seem to be growing nearer to the neo-liberal model of transnational corporations: they use a local base to market themselves globally, recruit labour from across the world, minimise their regulation by the national associations and look forward one day to formulating their own television deals and to establishing stronger business and competitive ties with their kin in other nations.

Over the past 20 years, the political economy of football has shifted in favour of Europe's leading clubs and players, and it is difficult to see how that trend will be halted or reversed. When set within that long-term perspective, the three weeks in sunny Portugal appear as something of a minor, if distracting, interlude.

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Richard Giulianotti is a senior lecturer in sociology at Aberdeen University and author of Sport: A Critical Sociology , published by Polity Press.