English football is a paradox. The Premier League is wildly successful: It’s the most popular domestic league globally, generates close to double the revenue of the second-biggest European league and earns more in overseas broadcast rights than the NFL (which stages its annual showpiece, the Super Bowl, on Sunday). The 30-year-old league has been a magnet for investment, and the money that has poured in has attracted some of the best players in the global game, from Argentina’s Sergio Aguero to Norway’s Erling Haaland (though never the greatest of all, Lionel Messi, the Argentine who spent most of his career at Barcelona in Spain and now plays for Paris Saint-Germain in France).
In a country starved of Brexit success stories, the Premier League is a bona fide star, having seamlessly extended its dominance despite predictions that clubs would have a more difficult time recruiting players from overseas after the UK’s exit from the European Union. That might seem like cause for celebration of a Global Britain exemplar. Instead, the national conversation around football is steeped in angst.
The Premier League’s decision this week to charge Manchester City with more than 100 financial-rule violations adds to the impression of an industry that lacks effective controls and is in need of an overhaul. A government-mandated review last year described the game’s foundations as fragile and at risk of collapse. The Manchester City charges, which the club denies, were announced days before the government was scheduled to unveil a white paper based on the review. The release was subsequently postponed until later this month (for unrelated reasons, according to reports in British media).
The root issue facing the game is the distorting impact of the vast money inflows that the Premier League has attracted. Football clubs in Britain have long been the playthings of rich business owners. What has changed in the era of globalization is that the rich are much richer, and often from overseas. Chelsea, controlled by Los Angeles Lakers co-owner Todd Boehly, broke the British transfer record last month in paying £106.8 million ($129 million) for Benfica’s Enzo Fernandez. Forty-four years ago, Nottingham Forest created a sensation when it made Trevor Francis the game’s first £1 million player, equivalent to a mere £6.5 million in today’s money. The squad of Abu Dhabi-owned Manchester City is valued at more than £900 million.
Throwing such sums around has become the price of competing at the highest level. For billionaires indulging a passion or state actors looking to burnish their international profile (besides Abu Dhabi, Saudi Arabia’s sovereign wealth fund is also a Premier League owner, having bought Newcastle United in 2021), earning an economic return on these investments may not be the primary consideration. The concern is how this spending cascades down the rest of the football pyramid. It raises the bar for everyone, putting pressure on smaller clubs to extend themselves to avoid falling behind. Without a deep-pocketed benefactor to backstop losses, that’s a risky path for financially weaker teams.
The most vivid illustration of this peril can be seen in wage-revenue ratios. Analysis by UEFA, European football’s governing body, indicates that total wages as a proportion of revenue shouldn’t go above 70% if a club is to have a chance of breaking even. In the Premier League, the ratio was 71% in the 2020-21 season, down from 73% a year earlier, according to figures from Deloitte. For the Championship, England’s second-tier league, the ratio rose to 125% from 120%. That’s clearly unsustainable. Championship clubs have posted pretax losses for the past five years. “There now can be no doubt that significant change is required to drive long-term sustainability, without the need for continual owner funding at this level,” Deloitte said in its last annual review of football finance.
The impact isn’t confined to England; it is fanning out through Europe too. Spending on transfers by Premier League clubs doubled to a record £2.8 billion this season. In the January transfer window, Chelsea’s gross expenditure was more than the combined total of all clubs in Germany’s Bundesliga, Spain’s La Liga, Italy’s Serie A and France’s Ligue 1. The Premier League’s outlays prompted La Liga President Javier Tebas to call the UK a “doped market” that could jeopardize the sustainability of European football.
Throwing the book at Manchester City, the domestic game’s most successful club in the past decade, could be viewed as an attempt by the Premier League to show it can get its own house in order before regulation is imposed from outside. Any such hopes are probably forlorn. The government has already endorsed the 2021 fan-led review, whose centerpiece recommendation was the creation of an independent football industry regulator.
Football isn’t just an industry. Clubs are more than businesses: They are social institutions, part of the fabric of communities, and cultural and heritage assets. So it matters greatly when they go bankrupt. The review was triggered partly by the 2018-19 collapse of Bury, a club founded in 1885 that had existed through several wars and more than two dozen prime ministers, and whose disappearance had a “devastating impact” on the local economy, according to the report.
Ultimately, it’s difficult to see how even the giants of the Premier League will continue to thrive if they undermine the football ecosystem that supports the health of all. Better regulation and fairer revenue-sharing arrangements with smaller clubs would put the game on a surer footing. It would be better to act before the music stops.
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Matthew Brooker is a Bloomberg Opinion columnist covering finance and politics in Asia. A former editor and bureau chief for Bloomberg News and deputy business editor for the South China Morning Post, he is a CFA charterholder.
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