In classic UEFA fashion, there are now two coefficients for double the "fun" and confusion.
The old coefficient system is one of the two. It's based on your performances in Europe for the five season preceding the current one - so for this season's competition, it's based on European performances from the group stage onwards between 13/14 and 17/18. This has no impact on the financial distribution - it's used to decide the seeded teams for qualifying rounds (irrelevent to us as English clubs no longer take part in them), and the pots for the group stage (which is fairly important). You get two points for a win, and one for a draw, as well as bonus points for progress. (4 points for being in the CL group stage, 5 points for reaching the last 16, and then 1 extra point for reaching each of the QF, SF and Final. For Europa sides, you also get the 1 bonus point for reaching eash of the QF/SF/Final, as well as a minimum of 3 points for the group stage - this isn't added to your total, it's just a minimum you'd still get if you reached the group stage but did worse than 1 win and 1 draw and didn't reach 3 points for wins/draws). Additionally, every club will instead use 20% of their league's coefficient if their own score is less than that - so if e.g. Wolves suddenly qualified for the CL having not played in Europe for several years, their coefficient would be 20% of the English League's score rather than 0, which would still see them ranked better than clubs like Lokomotiv Moscow or Standard Liege.
The new one isn't used for anything in terms of the tournament itself, just as part of the financial distribution. Points are accumulated the exact same way as in the old system, but over ten years rather than five - so for this season, performances all the way back to 08/09 are relevent. There's also no minimum score - if you haven't played in Europe for ten years, you score zero. And importantly, there's also an additional type of bonus points - Title Points. You get 12 points for every Champions League you've won in the five preceding seasons, 8 points for each you've won before then but after the Champions League replaced the European Cup in 1992, and 4 points for every pre-1992 European Cup. You also get a quarter of that amount of points (so 3, 2 or 1 depending on how long ago it was) for every Europea League, UEFA Cup or Cup Winners' Cup you've won. The clubs qualified for the Champions League are then ranked from 1st to 32nd based on this ranking, and the amount of money allocated based on coefficient is divided into 528 equal shares. The 32nd ranked club then gets 1 share, the 31st gets 2 shares etc up till the 1st ranked club gets 32 shares. This season each of those shares was worth €1.1m - so bottom-ranked club AEK Athens got that, us in 19th got €15.5M, United in 5th got €31m and Real Madrid at the top got €35.5m.
This new system isn't great for us sadly. First of all, going over ten years means we've got lots of fairly crap Europa League seasons in there because we never took it too seriously. Winning most of your group games and getting to the QF can be as good as getting to the CL knockouts, but we tended to play rotated sides, stumble through the group stage, and lose one of the early knockout ties. We're probably one of the ten best teams in Europe right now, but to rank 10th over ten years we'd need an average of 18.5 points per year, and before last season we'd done worse than that in every year bar one. The second reason, and part of why we need a pretty strong average, is because our title points are rubbish - we only get 3 for our 3 'minor' European trophies pre-1992. Liverpool, for instance, get 28, bumping them up 8 places in the rankings or in other words giving them around an extra €8.8m per year they qualify regardless of how well they actually do. Right now that isn't a deal breaker, but we can probably expect the amount of money allocated this way to increase over time, so there'll be even more benefit to us keeping up our consistent recent performances in Europe.
Brilliant post, thank you.
For the pot of money that is available, I assume you have to qualify for the current years competition in order to get the pay out?