There is a wealth disparity between the two soccer leagues that English Football is comprised of: the English Premier League (EPL) and the English Football League (EFL). The Premier League teams earn significantly more in revenue, which grants them mobility. Never was this more evident than when the the Premier League’s Big Six attempted to break away and form a new European Super League. As a result of the wealth disparity and other factors, the English government may appoint an independent regulator to oversee the finances of teams within English Football.
English Football
English Football is composed primarily of two leagues: The EPL and the EFL. The two leagues formulate a football pyramid with the EPL sitting atop the pyramid and the EFL beneath it (see image below).[1] The EPL is the highest revenue producing football league in the world[2] and consists of 20 world renowned teams such as: Manchester City, Manchester United, Arsenal, Chelsea, Liverpool, etc.[3] The EFL consists of three leagues — the Championship, League One, and League Two — each of which consists of 24 teams.[4] At the end of every season, the bottom three teams in the Premier League are relegated to the Championship, and the top three teams in the Championship move up to play in the Premier League.[5]
The teams in the EPL make far more money than those in the EFL. For example, the EPL has a TV rights deal worth more than £1.5 billion a year, or $1,358,849,000 per year.[6] Whereas EPL teams have stadiums in major cities and can charge hundreds of pounds for tickets, EFL stadiums are typically small and exist in small cities or suburban areas.[7] The revenue teams earn in the EFL is drastically different than their EPL counterparts. However, the opportunity to move up to the EPL and play against the best teams in English Football is a great one as it offers EFL teams the chance not only to increase their revenue, but to expand their fan bases and gain sponsors and investors.
A Call for Independent Regulation
During its election in 2019, the English government promised a fan-led review of English Football.[8] This promise was a result of the expulsion of Bury F.C. from the EFL. Bury had been promoted back to the third tier of the English Football, League One, in April of 2019.[9] The club was in financial disarray, and despite being granted a company voluntary arrangement to help clear some of its debts,[10] the EFL determined that the team was not viable and expelled Bury. The expulsion was a result of poor financial management over the years, which unfortunately led to the liquidation of the team. Additionally, in April of 2021, six EPL teams — Arsenal, Chelsea, Liverpool, Manchester City, Manchester United, and Tottenham Hotspur — agreed to form a breakaway league called the European Super League for an entrance fee of £22 million.[11] The Super League would consist of 12 of the top teams in Europe. However, 48 hours after the Super League was announced, all six of the EPL teams backed out due to condemnation from other clubs, immense outrage from fans, and the threat of a £25 million fine and 30-point deduction from the EPL.[12] The attempted Super League added fuel to the fire for the fans involved in the English Football review.
In November 2021, the results of the government-sanctioned, fan-led review was published.[13] The review was chaired by former sports minister, Tracy Crouch[14] and it consisted of 47 proposed changes to be made within the EPL and EFL.[15] The review suggests that the government should create a legislative-backed Independent Regulator for English Football (IREF).[16] It proposes that the IREF oversee financial governance and fairer financial distribution amongst the teams as to avoid financial mismanagement.[17]
Additionally, the IREF would impose a 10% transfer tax on EPL teams, such that whenever transfer deals for players occur, 10% of the transfer fee will be redistributed to smaller revenue teams in the EFL.[18] In this way, the higher revenue earning teams will help support the rest of the teams in the football pyramid, ensuring that all 92 English Football teams have financial security.[19]
The review also calls for increased fan involvement. Two examples are the creation of a “shadow-board” and allowing fans to have a “golden-share” in decision making. The shadow board would be a group of fans that consult with team decision-makers on key decisions, essentially becoming board members for the team. “The ‘golden share’ proposal seeks to prevent” the Super League from happening again.[20] Thus, as “board members,” the fans would also have the opportunity to protect the heritage of the club by taking part in a ‘golden share’ of decisions pertaining to the team stadium, colors, and which competitions the team can participate in.
Other recommendations from the review are a new corporate governance code, equal treatment for women’s football, increased protection of players, and mandatory diversity, equality, and inclusion plans for all clubs.[21]
Next Steps for English Football
In a joint statement, the Premier League teams stated that they “acknowledge the call for some form of independent regulation to protect English football’s essential strengths” and have already taken steps towards governance and strategic reviews.[22] Various front office members from EPL teams have come out to say that it would be foolish to weaken the Premier League teams by redistributing its revenue down the English Football pyramid because the strength of English Football comes from the high level of competition at the top.[23] If an IREF is enforced, the EPL clubs have stated that they would prefer a regulator from the Football Association (FA) because it is “an independent body but not one constrained by government legislation.”[24] The FA is “the national governing body for football in England and is responsible for sanctioning competition Rule Books, including the Premier League’s, and regulating on-field matters.”[25] It is also a shareholder in the Premier League.[26]
It is possible that the 47 recommendations from the review may have prevented the expulsion of Bury and the attempted Super League, but there is still a long way to go before independent regulation becomes a reality. The benefits of an IREF include closing the wealth gap between the EPL and EFL, and ensuring that there is no financial mismanagement, e.g., overspending by the 92 teams in English Football. Similarly, a fan shadow board could ensure that the teams cannot break off and play in new leagues due to the fans having a ‘golden share’ of decision pertaining to their team’s heritage. While discussions about an independent regulatory authority are still in preliminary stages, its introduction could alter the competitive balance and fan engagement structure of English Football for better . . . or worse.
References:
[1] Paul Gerald, A Guide to the Leagues and Clubs of English Football, Groundhopper Soccer Guides (February 2014), https://groundhopperguides.com/guide-leagues-cups-english-football/
[2] Mark Middling, Football: English fans want an independent regulator — here’s how it could help save clubs from ruin, The Conversation (December 2, 2021), https://theconversation.com/football-english-fans-want-an-independent-regulator-heres-how-it-could-help-save-clubs-from-ruin-172720
[3] English Premier League, Table, Premier League (January 8, 2022), https://www.premierleague.com/tables
[4] Paul Gerald, supra.
[5] Id.
[6] Mark Middling, supra.
[7] Paul Gerald, supra.
[8] BBC Sport, supra.
[9] Bury, Bury expelled by English Football League, BBC (August 27, 2019), https://www.bbc.com/sport/football/49451896
[10] Id.
[11] Matt Slater, Premier League clubs who plotted Super League hit with fine, The Athletic (June 9, 2021), https://theathletic.com/news/premier-league-fine-punishment-esl/0GbCbufTUG04/
[12] Id.
[13] BBC Sport, English football ‘needs independent regulator to stop lurching from crisis to crisis’, BBC (November 25, 2021), https://www.bbc.com/sport/football/59406087
[14] David Hytner, Premier League CEO tells clubs he opposes football regulation plan, https://www.theguardian.com/football/2021/dec/03/premier-league-ceo-richard-masters-tells-clubs-he-opposes-football-regulation-plan
[15] Sam Wallace, Premier League clubs united in opposition to independent regulator and proposed transfer levy, The Telegraph (December 3, 2021), https://www.telegraph.co.uk/football/2021/11/29/furious-premier-league-clubs-want-emergency-meeting-outline/
[16] Id.
[17] Mark Middling, supra.
[18] Id.
[19] BBC Sport, supra.
[20] Id.
[21] Owen Poindexter, Premier League Clubs Oppose Independent Regulator, Front Office Sports (December 1, 2021),https://frontofficesports.com/premier-league-clubs-oppose-independent-regulator; BBC Sport, supra.
[22] BBC Sport, supra.
[23] David Hytner, supra.
[24] David Hytner, supra.
[25] English Premier League, Premier League’s Football Partners, Premier League (January 8, 2022), https://www.premierleague.com/about/football-partners
[26] Id.
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