The champions league now consisted of eight different group as the competition became bigger as two sides were to progress from each group. Lazio enjoyed success in the group stages as they dominated their group, featuring Leverkusen and NK Maribor. The runners up, Dynamo Kiev also progressed to the knock out phase. Group B saw Barcelona to success in their group as they demolished Arsenal at Highbury in the process and Italian club; Fiorentina joined them in the last sixteen. The reigning champions, Manchester United, found themselves comfortable in group D as they skipped past Sturm Graz, Croatia Zagreb and Marseille in a weak group. Real Madrid showed their mighty value in group E as they easily finished top, thrashing Danish champions, Molde, 4-1 in the process. Valencia and Bayern Munich occupied the top two positions in Group F. Chelsea made their Champions league debut in group H and they won it whilst smashing Turkish champions, Galatasaray 5-0 on the way. Hertha Berlin finished the group runners up to join them in the last sixteen.
The second round was formatted into four groups. Group A consisted of Barcelona, FC Porto, Sparta Praha and Hertha Berlin. Barcelona and FC Porto occupied the top two positions to progress to the quarter finals. Manchester united and Valencia both finished first and second respectively in their groups. The two favourites, Real Madrid and Bayern Munich qualified from Group C and Lazio and Chelsea progressed for Group D.
Chelsea and Barcelona met each other in the quarter finals, Chelsea surprised the Spaniards as they won the first leg 3-1, however in the second leg they were humiliated 5-1 and Barcelona were into the semi finals. They met Valencia in the semis which proved to be an interesting encounter as Valencia ran out 4-1 winners in the first leg, they lost the second leg 2-1 and Valencia booked their tickets in the final of the champions league. Real Madrid beat defending champions Manchester United in the quarters and they were awarded a semi final tie against Bayern Munich. Madrid took the early initiative by strolling to a 2-0 victory in the first leg. Munich recovered in the return leg; however they lost 3-2 on aggregate.
The final featured two Spanish clubs, Real Madrid and Valencia. Madrid took the lead late on in the first half through Morientes. Steve McManaman doubled the lead mid way through the second half and with fifteen minutes remaining, Raul Gonzalez made it 3-0.