A deep run in a knockout competition moves a club's ranking substantially. The size of that movement is out of proportion to the evidence the run actually provides.
Knockout ties are decided by very small samples
A tie is settled over one or two matches. Across that span, the better side wins considerably less often than its underlying quality would suggest over a full season.
Football's low scoring makes this worse than in higher-scoring sports, because a single deflection or refereeing decision can determine a result outright.
A club that advances four rounds has therefore won perhaps eight matches, which is a small fraction of a season and a correspondingly weak basis for a ranking judgement.
Ranking points reward progression regardless of difficulty
Coefficient systems award points for reaching each round, and those awards do not usually depend on the strength of the opponents beaten to get there.
Two clubs reaching the same round therefore gain the same, even where one navigated the strongest sides in the competition and the other met none of them.
Because draws are seeded, the difference in path difficulty between two clubs in the same round can be very large, and the ranking is blind to it.
The gain persists for years
Coefficients accumulate over multi-season windows, so a single strong campaign continues to support a club's position long after the squad that produced it has changed.
That is defensible when the run reflected genuine quality and misleading when it reflected a favourable draw, and the system cannot separate the two cases.
The consequence is better seeding in subsequent seasons, which produces easier groups, which produces more points, compounding the original distortion.
Domestic form is the better evidence and counts for less
A league season provides many matches against a consistent set of opponents, which is a far more reliable measure of a club's standard.
Continental ranking systems weight domestic results only indirectly, through a country's overall coefficient, so a club dominating its league gains little from doing so.
This is why rating models that incorporate all matches frequently disagree with coefficient tables, sometimes by many places.
Financial rewards amplify the distortion
Prize money increases with each round reached, so a fortunate run delivers revenue that funds recruitment for the following season.
A club can therefore convert a short sequence of favourable results into a permanently stronger squad, which makes the ranking eventually correct for reasons unrelated to why it was awarded.
The reverse also holds. A strong club eliminated early loses both the points and the revenue, and its ranking decline can become self-fulfilling.
