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How Covid returned English football’s resources debate to centre stage

The coronavirus crisis has presented English football with an opportunity to reset its structure and values. But it has been here before.

In 1990, when the top clubs in England were seeking to escape the control of the Football League and create a new competition, they approached the Football Association for their blessing. Without it, they reasoned, any plans for a “Premier League” would be dead in the water.

The FA was ready to listen. It was in competition with the Football League for primacy in the English game and had a blueprint for a new competition that might benefit English football as a whole. Cut the number of teams in the top flight to 18, create a regional league structure underneath and make the whole package fit for TV. Fewer dead rubbers, more local derbies, it would be an irresistible proposition. And the FA would take 40% of any TV deal to share among the game.

This plan never became reality. The commercial interests of the clubs hoping to join the new league were an obstacle that the FA, mysteriously even to those involved at the time, was never willing to confront. The Premier League was born shortly afterwards and kept its revenues to itself. Having been given the endorsement of the governing body, its “founders agreement” pretty much cut the FA out of things too. Nice doing business with you.

Revenue breakdown

Thirty years laterand the question of what obligations the elite of English football owe to the rest of the game are once again front and centre. But despite the depth and gravity of the crisis, with even the Premier League calculating the game as a whole is losing £100m a month because of Covid-19, there is no guarantee that a solution will be forthcoming.

Quick guide

The case for and against Premier League support of lower leagues

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The case for Premier League support for the lower leagues

The football pyramid needs assistance and needs it quickly. The Premier League is part of that pyramid but it’s the only tier that can boast billions of pounds in broadcasting revenue. Some of that money should be shared with the lower tiers in order to maintain the structure of the game, a structure that – on the field at least – benefits the Premier League. For example, EFL clubs create the next generation of Premier League stars, either by developing their own talent or by nurturing players on loan. They also help create the drama that is such an important part of the Premier League’s broadcasting appeal. Without the football pyramid there would be no promotion and relegation, no final-day miracles, no returning giants or new blood. These are self-interested reasons for the Premier League to open its wallet, but there are others too. If the football pyramid collapses, if clubs that have been at the heart of their communities for generations are allowed to go to the wall, is that really an outcome the top of English football is willing to countenance? The Premier League already accepts it has a responsibility to the game more broadly. It shares money with the lower leagues through solidarity payments. But these are small in comparison to the amounts transferred in parachute payments, the money given to relegated clubs that only benefits those who have managed to make it to the promised land already. The current system of support, its critics say, only furthers a competitive imbalance which is part of what has led so many clubs to act in a way that was unsustainable, even before Covid-19 struck.

The case against Premier League support for the lower leagues

A lot of EFL clubs have been badly run, some might even say recklessly. This is most obvious in the Championship where the prospect of promotion to the Premier League has caused owners to do crazy things. In 2018-19 the total net debt of the 24 clubs in English football’s second tier totalled £1.1bn, a 14% increase on the previous year. Sheffield Wednesday began the season with a 12-point deduction after having been found to have broken rules intended to keep any spending sustainable. Premier League chairmen, especially those whose sides might be fighting against relegation, look at this situation and ask why they should be expected to prop it up.  At the very least, any bailout would have to come with a lot of strings attached. Premier League clubs are also looking at their own bank balances and seeing a challenging future for themselves. Top-flight clubs are facing reductions in broadcast revenue, their key strand of income, and in many cases suffer as much from the absence of fans as clubs in the lower leagues (in proportional terms, at least). The Premier League argues that the current way of doing things is generous, providing more money to the wider game than any comparable competition in Europe. In 2018-19 that sum, broken down between solidarity and parachute payments, came to more than £250m. That is roughly the figure the EFL is now asking for to fill their financial black hole.

Photograph: Laurence Griffiths/PA

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At base, the current debate is – naturally – about money. The English Football League is asking for £250m to save its three divisions from collapse. The government has made clear that, in one way or another, it expects the Premier League to foot the bill. The top flight, in turn, is unconvinced that a cash transfer is the answer and, indeed, whether saving the game is its responsibility at all.

The EFL’s approach is being led by its chairman, Rick Parry, who was also the first chief executive of the Premier League. He is to the fore in making the case for his competition and also ahead of the curve; he has been repeating his £250m figure (his calculation of how much clubs would lose if fans do not return to stadiums this season) for some months. He has used the media and appearances in front of parliamentary committees to good effect. He has signalled a willingness to compromise, with restructuring a condition of any bailout. He also has almost no power to effect change.

The Premier League holds all the cards. In contrast to Parry’s gregarious, collegiate style, it remains tight-lipped and poker-faced. Meanwhile its clubs have spent more than £1bn and counting in this summer’s transfer window alone. A small organisation given the amount of revenue it generates and cultural significance it holds, the Premier League’s main expertise is in negotiation. That’s how it made its competition the most lucrative domestic football league. So while the EFL signals the alarm over the consequences of empty stadiums, the Premier League points out that it too relies on fans passing through turnstiles and that some of its clubs are not much bigger than the ones in the Championship looking for a bailout.

With the FA sidelined so long ago, it is down to the government to resolve the impasse. But this appears to be a role it is ambivalent about. On the one hand, it repeats its message that the Premier League should “step up”; on the other it has shown no inclination to force this. Direct financial support to the “football pyramid” was supposed to have been one of the conditions for restarting football after lockdown in June. But it was lost in a mist of competing interpretations. The Premier League argued it needed to restart to offer the support it would otherwise have provided anyway, and that argument somehow stuck.

Debt

Now the government, like the EFL, finds itself short of options. The most likely short-term solution may be that the Treasury provides some small amount of funding, perhaps as loans. Not enough to fix the problem but enough to delay doomsday for another few months. It would be of a piece with the decision this week to offer financial support to the National League to allow the premier non-league competition to restart. Another approach, that of intervention in the running of the national game, is so antithetical to the government’s worldview that it can barely even be used as a threat.

And yet, it’s not as if football doesn’t matter to this government. It wanted the Premier League back on TV to “lift the spirits of the nation”. There is a correlation between towns with imperilled community football clubs and new Tory “red wall” MPs. The 2019 Conservative manifesto contained a promise of a “fan led” review of the game, with focus on “local clubs” that are “community assets”. This crisis offers an opportunity to act on ideas it obviously considered important less than a year ago.

Revenue per league

Anyone inclined to hold their breath and wait for a solution may want to watch out for their cheeks turning blue. In this odd Mexican standoff, where not everyone has a gun, there is a reluctance to draw first. But what everyone can agree on is that the crisis is real and must be addressed. The hope remains that more clubs won’t have to go under before something is done.

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