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Basically, every European country has a top league (in England, it's the Premier League; in Italy, Serie A; in France, Ligue 1; in Spain, La Ligua; and in Germany, the Bundesligue, although I probably misspelled the last one). The top finishers in each league go into next season's UEFA Champions League, which is a supplemental tournament, structured rather like the World Cup, to determine the "best of the best" among European clubs. Although teams compete in their own leagues, for many top players, the ultimate goal is a Champions League title rather than merely winning their team's national league.
Interestingly, there is a tournament _above_ the Champions League, the World Club Cup, where the Champions League winner and similar winners of other regional competitions worldwide meet to determine the world's best. (Last year, the winner was Inter Milan, the year before, Barcelona) Strangely, that competition doesn't seem to have as much visibility as the competitions that precede it.
And, in case you were wondering, the U.S. is part of a similar regional tournament -- in our case, it's the CONCACAF Champions League. The CONCACAF final is coming up this week, I believe, between Real Salt Lake and Monterrey of Mexico. A RSL victory would be huge for the United States, because, up until now, a U.S. team has never defeated a Mexican team for the title.
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