This latest, Supermarket Sweep-esque spending bonanza, however, stands as just the latest manifestation of English football’s seemingly ever-expanding financial bubble. It should hardly come as a surprise therefore that the Government’s move towards an independent football regulator to oversee several key areas of the game, including financial sustainability and a new test for club owners and directors, has become even more necessary.
The rate of inflation within football since the turn of the century has been enough to make the current challenge to the Chancellor appear easy in comparison. Chelsea’s eleventh-hour decision last week to spend £107 million on a 22-year-old defensive midfielder with half a season’s experience in European competitions is a model case study in the astronomical prices currently on offer for premium footballing talent.
Yet it is not transfer fees alone that have seen prices rise and purse strings loosened. At present, it is reported that at least 19 players in England’s top division are paid in excess of £200,000 per week, whilst each of the twenty clubs in the Premier League receives £ 84 million annually in broadcast fees. At the same time, the prize money and brand awareness generated from qualifying for elite European competitions such as the UEFA Champions League themselves continue to soar. Last year, clubs received over £13 million simply for qualification to the group stages.
The era of financial power being ushered in by the Premier League has, however, gone neither unnoticed nor unchallenged by its competitors. Earlier this week, Javier Tebas, President of Spain’s La Liga, described the English football market as “doped”, whilst Ilja Kaenzig, Chief Executive of German top division club Vfl Bochum, stated that “more and more, it looks German clubs will be reduced to developing players to be sold to the Premier League.”
Such unease is unsurprising. Last month, Southampton FC, a club currently at the bottom of the Premier League, spent more than all 40 La Liga and Italian Serie A clubs combined. Chelsea, meanwhile, saw more expenditure than the top-division clubs in Spain, Italy, France and Germany put together.
More pressingly, however, this anarchic culture of spending is creating problems closer to home. Increasingly eyepopping levels of investment into the Premier League have led to clubs having to spend excessive amounts of money simply to maintain their position. Attempts to close the gap to the elite teams without immoderate spending have proved (almost, with Leicester City in 2015/2016 the exception) impossible. Indeed, of the twenty clubs in the current iteration of the Premier League, 15 have seen net spending of over £ 100 million over the past five seasons.
Such increases in spending too often jeopardise the financial sustainability of clubs in the long run, with a risk of financial chaos if the Premier League’s financial bubble were to burst. The problem is more acute in the Championship, where the granting of parachute payments to clubs relegated by the Premier League, over a number of seasons, distorts the competitive balance of the competition too sharply. As my report for the think-tank Civitas has noted, this leads to a culture whereby clubs not benefitting from parachute payments spend beyond their means in order to match those who do, often placing them on brink of financial peril.
As the Government’s Fan-Led Review of Football Governance noted last year, it is as a partial result of this culture of unsustainability that has put English men’s football in its “last chance” saloon. Decades of power struggles, lack of financial regulation, and poor decision-making at the highest level have led to a financial Wild West within men’s football.
The recent plight of clubs such as Derby County, docked 21 points during the 2021/2022 season for entering administration, shows how imminent the dangers of the current situation are. Relatively speaking, however, Derby got off lightly. The modern history of English league football is littered with stories of clubs unable to stay afloat in the current financial footballing climate – Bury FC, Macclesfield Town, Chester City, and Rushden & Diamonds FC are all amongst those that, since 2011, has joined football’s growing institutional graveyard.
All this whilst the Premier League and the English Football League continue to lock horns over a financial redistribution package, and Newcastle United begins an era of funding from a Saudi Public Investment Fund chaired by Mohammed bin Salman, the Crown Prince.
Some form of independent regulation, for so long the ugly duckling of all potential solutions, has become long overdue. But English football must now move with a caution that has not always come to it naturally. An indefinite and excessive period of red tape overseen by Whitehall bureaucrats risks damaging the sport as much as a policy of laissez-faire. An independent regulator must be an immediate but not indefinite imposition.
More than ever, English football needs a strong, authoritative Football Association, with a wider remit to itself regulate the game. The primary task of any independent regulator should surely be to help oversee a modernisation of the Football Association, with a view to handing it more power in the medium-term. Firstly, however, football must be brave enough to change.
Aaryaman Banerji is a football researcher at the Civitas think tank
Two Jeff Bezos superyachts, 27 Royal Weddings, 1,811 Ferrari Enzos, 233.5 million Big Macs. Whatever your metric of choice, the £ 815 million spent by Premier League clubs alone during last month’s ‘January Transfer Window’ makes for eyewatering reading.
This latest, Supermarket Sweep-esque spending bonanza, however, stands as just the latest manifestation of English football’s seemingly ever-expanding financial bubble. It should hardly come as a surprise therefore that the Government’s move towards an independent football regulator to oversee several key areas of the game, including financial sustainability and a new test for club owners and directors, has become even more necessary.
The rate of inflation within football since the turn of the century has been enough to make the current challenge to the Chancellor appear easy in comparison. Chelsea’s eleventh-hour decision last week to spend £107 million on a 22-year-old defensive midfielder with half a season’s experience in European competitions is a model case study in the astronomical prices currently on offer for premium footballing talent.
Yet it is not transfer fees alone that have seen prices rise and purse strings loosened. At present, it is reported that at least 19 players in England’s top division are paid in excess of £200,000 per week, whilst each of the twenty clubs in the Premier League receives £ 84 million annually in broadcast fees. At the same time, the prize money and brand awareness generated from qualifying for elite European competitions such as the UEFA Champions League themselves continue to soar. Last year, clubs received over £13 million simply for qualification to the group stages.
The era of financial power being ushered in by the Premier League has, however, gone neither unnoticed nor unchallenged by its competitors. Earlier this week, Javier Tebas, President of Spain’s La Liga, described the English football market as “doped”, whilst Ilja Kaenzig, Chief Executive of German top division club Vfl Bochum, stated that “more and more, it looks German clubs will be reduced to developing players to be sold to the Premier League.”
Such unease is unsurprising. Last month, Southampton FC, a club currently at the bottom of the Premier League, spent more than all 40 La Liga and Italian Serie A clubs combined. Chelsea, meanwhile, saw more expenditure than the top-division clubs in Spain, Italy, France and Germany put together.
More pressingly, however, this anarchic culture of spending is creating problems closer to home. Increasingly eyepopping levels of investment into the Premier League have led to clubs having to spend excessive amounts of money simply to maintain their position. Attempts to close the gap to the elite teams without immoderate spending have proved (almost, with Leicester City in 2015/2016 the exception) impossible. Indeed, of the twenty clubs in the current iteration of the Premier League, 15 have seen net spending of over £ 100 million over the past five seasons.
Such increases in spending too often jeopardise the financial sustainability of clubs in the long run, with a risk of financial chaos if the Premier League’s financial bubble were to burst. The problem is more acute in the Championship, where the granting of parachute payments to clubs relegated by the Premier League, over a number of seasons, distorts the competitive balance of the competition too sharply. As my report for the think-tank Civitas has noted, this leads to a culture whereby clubs not benefitting from parachute payments spend beyond their means in order to match those who do, often placing them on brink of financial peril.
As the Government’s Fan-Led Review of Football Governance noted last year, it is as a partial result of this culture of unsustainability that has put English men’s football in its “last chance” saloon. Decades of power struggles, lack of financial regulation, and poor decision-making at the highest level have led to a financial Wild West within men’s football.
The recent plight of clubs such as Derby County, docked 21 points during the 2021/2022 season for entering administration, shows how imminent the dangers of the current situation are. Relatively speaking, however, Derby got off lightly. The modern history of English league football is littered with stories of clubs unable to stay afloat in the current financial footballing climate – Bury FC, Macclesfield Town, Chester City, and Rushden & Diamonds FC are all amongst those that, since 2011, has joined football’s growing institutional graveyard.
All this whilst the Premier League and the English Football League continue to lock horns over a financial redistribution package, and Newcastle United begins an era of funding from a Saudi Public Investment Fund chaired by Mohammed bin Salman, the Crown Prince.
Some form of independent regulation, for so long the ugly duckling of all potential solutions, has become long overdue. But English football must now move with a caution that has not always come to it naturally. An indefinite and excessive period of red tape overseen by Whitehall bureaucrats risks damaging the sport as much as a policy of laissez-faire. An independent regulator must be an immediate but not indefinite imposition.
More than ever, English football needs a strong, authoritative Football Association, with a wider remit to itself regulate the game. The primary task of any independent regulator should surely be to help oversee a modernisation of the Football Association, with a view to handing it more power in the medium-term. Firstly, however, football must be brave enough to change.