First Touch

Financial Regulation: Football’s Own Wild West

Anyone who has ever settled down to watch a good ole western will be familiar with the usual tale. The cowboys shoot up the town, drink the saloon dry, shoot the piano player, rob the bank, but just as they prepare to mount their horses to gallop to the next town the God darn’ sheriff turns up. Of course, we all know the sheriff.  That man of solid principles and integrity. He believes in upholding the law even if his wife is begging him not to strap on his holster.

By Derek Ross

From that moment we viewers are full of anticipation for the inevitable gunfight where the baddies will be done down because the sheriff is always quicker on the draw. And so, for Sheriff read Financial Regulator. Yes, siree the sheriff is a comin’. Galloping towards the frontier with the ferocity of a lone wolf. His badge gleaming like a beacon of justice amidst the chaos of lawlessness that is those Premier League clubs who won’t be happy until they have fired all their bullets into football’s financial regulations.

Yep, those very same regulations that all twenty of them voted for until the whiskey wore off, and they then decided they wanted different ones. It puts me in mind of that famous line by Groucho Marx who once remarked that ‘I have principles, and if you don’t like them, I have others!’ 

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The Big Announcement

So, on Monday 11th March 2024 it was announced without fanfare by that Lunar Society that is the Premier League, that their own controversial profitability and sustainability rules were going to be ripped up like junk mail and replaced by a new system of financial regulation. This new system will be more in keeping with the squad cost-to-revenue ratio contained within UEFA’s Financial Sustainability Regulations.

Those regulations seek to limit clubs participating in European competitions to only spend seventy per-cent of revenue on transfer fees, and player wages. But hold your horses pardner. This little square dance doesn’t suit our cowboys. No ma’am. They want a more generous, surprise, surprise, model that will enable clubs to blow up to eighty-five per cent of revenue on squad cost. 

Naturally, the bigger clubs will always want to spend more, but only on themselves. The rest of the football family, also known as the EFL can go whistle dixie because the Premier League has zero intention of giving up more than the poultry nine-per cent they currently get from all football revenue.

Indeed, a deal to increase funding to EFL clubs from £340m to £500m wasn’t even voted on. So much for stabilising the football pyramid. As far as the Premier League is concerned pyramids are something in which the rest of footballing family can be buried!

The increase in EFL funding will happen of course, but not until the regulator grabs the Premier League clubs by both barrels and asks them to cough. It’s also worth mentioning here that once approved, any new rules will not affect the ongoing cases of financial transgressions regarding Everton, Nottingham Forest, or Manchester City, who will continue to be judged on existing financial rules. Oh well, it was probably a nice thought while it lasted!

Self Interest

The Government has warned on more than one occasion that it wanted the wild west of the Premier League authorities to come up with a new financial settlement amongst themselves or one would be imposed upon them by powers set to be given to a newly independent regulator, sheriff! 

Anyway, these Clubs can’t say that they didn’t see all this coming. Particularly among a group who are less united than the Royal Family, and where the King of Clubs is conducting open warfare with its own governing body.

For those premier league clubs envious of Manchester City and going after them because they don’t really like the way the club managed to find its way to the throne is not in any way a demonstration that this organisation can be trusted to regulate itself. It might be fair comment to argue that Manchester City is not a football club at all but an outlying sporting subsidiary of a very dubious nation-state with whom our own government does billions of pounds worth of ‘deals’. 

In this context it should be borne in mind that over forty-per cent of Premier League clubs are majority owned by foreign investors. This figure is only heading in one direction so don’t be surprised when more small boats full of those seeking to expand their portfolios cross the channel. And don’t forget that those who aired the most concern about the Newcastle buyout were their Premier League rivals who feared a new competitor would inevitably drive-up costs by offering higher wages and larger transfer fees.

So why would you trust such a collection of outlaws whose sole interest is the onward rapacious pursuits of wealth accumulation, often at the expense of their own regulatory boundaries and the rest of the footballing community’s s well-being 

Thankfully, we now know that Manchester City and the Premier League have recently set a date for processing that Everest-sized mountain of financial charges that the club need to finally answer. Indeed, the world’s richest and most profitable club has been on football’s death row for over fourteen seasons paying legal fees larger than the GDP of a small African country in the hope of any sentence being commuted.   

The Bill that would establish a financial regulator is going before Parliament this week, though definite date. But, either way, it looks like the sheriff is mounting up because these Premier Clubs don’t seem to care about the lawman on his way to town. They’re going to hold out for a showdown and it ain’t gonna be perdy! 

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The New Proposal

So, this new proposal would look more attractive the more money your club generates. It will be particularly attractive on Tyneside where the richest club in world football that is Newcastle United has more money than it is allowed to spend which has made it more frustrated than a spotty teenager on a first date.

The fact is, that if you’re allowed to spend eighty-five per cent of your revenue on players and wages, and your revenue is £800m, you’ll be able to spend £695m on players and wages. But if your revenue is £200m, you’ll only be able to spend £185m on players and wages. At the time of writing Manchester United’s wage bill alone is over two-hundred and five million!

This entire fiasco reveals what every dog in the street knows, and that is that the Premier League teams are only interested in the own financial we’ll being, and I would further in that it is only the top six-eight clubs who are solely interested in maintaining a closed shop, and who will be the real beneficiaries. Personally, I don’t see the Burnley’s and Sheffield United’s of this world suddenly rolling around like pigs in cow s**t in ecstasy. 

Of course, the pertinent question is this. Is a limit of spending eighty-five per-cent of revenue on player transfers and wages etc preferable to a thirty-five million per year loss? Currently no Premier League club can have made a loss no greater than £105m across the previousnthree seasons. If the answer to the above question is yes, then maybe we’re are beginning to move in the right direction? 

A Breakdown In Trust

It has come to a sorry juncture where trust between clubs, and trust between leagues and divisions has been shattered. Drunken, lawless cowboys are always greedy. But the serious question is whether the Premier League itself is fit for purpose? This is particularly pertinent when twenty clubs first interest is their own, and where the good of the greater game doesn’t appear to form much of their thinking.

And while we’re at it, fans haven’t forgotten the self-serving attempt by the top Premier League clubs to establish a multi-billion franchise in the form of a European Super League that would surely have all but destroyed the domestic game. For that little act of footballing treason those clubs received a sanction that basically amounted to a schoolboy slap on the wrist for forgetting to submit his homework. 

The Sheriff Is On His Way

But the regulator is coming. That custodian of equilibrium, tasked with wielding the sceptre of oversight to maintain harmony within the realm of new rules and regulations. And once he rides into town, he will set about ensuring that English football mends its ways, and is put upon a financially sustainable course. Added to this will be a set of specific obligations that a club will be required to meet before being granted a licence to compete by the regulator. These include, appropriate resources, fit and proper owners, fan interests, and approved competitions. 

In this context, approved competitions mean clubs could forfeit their licence if they signed up for something not endorsed by the regulator, so is that adios to any European Super League? Erm…Don’t believe it for a moment. Anybody who thinks that idea is dead I would invite to show me the death certificate.  But fit and proper owners will mean more rigorous investigative powers to establish who will own a club and where their money comes from. 

Up until now, whether you’re buying an oil well or stashing your millions away in some off-shore tax haven, buying a world -renowned English football clubs has attracted less enquiries about the source of such wealth than a domestic burglary!

However, as much as these measures will be welcome it is the imposition of proper financial controls that will attract the strictest scrutiny. But all jokes and Sheriff’s aside, it is surely way past time for the Premier League to put in place a set of financial rules that it will abide by, to accept sanctions when they don’t, and to support the leagues below them with a little more than, when taking the humongous amounts of cash they rake into account, amounts to little more than pocket money!  

If we all want enhanced competition and real sustainability, then sound regulation is the only way forward. Regrettably the Premier League has proved itself of being incapable of doing either. The Sheriff is coming, and he can’t arrive soon enough! 

Derek Ross is an occasional contributor for First Touch. He also writes for Soccer 360 and The Top Flight   

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