URZZ1871 and the problem of wealth distribution to the Football League.
Read the published article, hosted by http://www.footballbloggingawards.co.uk/blog/football-blog-question-sovereignty-problem-wealth-distribution-football-league/
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Everyone knows the Premier League has got pots of money, don’t they? Pots of money which they don’t share enough of? Pots of money which encourage their own member clubs to squander on ever-increasing wage bills, whilst football lower down the pyramid withers on the vine? So surely everyone in the world wants to see more of the Premier League’s vast TV income go to clubs in the Football League and below? Well, I don’t…
That’s not actually true, I do – of course I do! – surely everyone who loves football must want a much fairer of income across the whole game? But what I don’t want is wealth distribution in its current form, or an extension or continuation of the way the Premier League shares wealth at the moment. I think what we have now has created an extremely unhealthy situation – one so dangerous that it means the 72 Football League clubs no longer have effective sovereignty over themselves and their own league.
The problem is the “solidarity payments” – the payments which the Premier League make to the Football League for distribution amongst their 72 clubs each season. At £2.3M each season for Championship clubs (excluding recently-relegated ones who get parachute payments), and much less for clubs in tiers three (£360,000) and four (£240,000) these sums are hardly massive when you consider the depth of the Premier League’s coffers. But they’re big enough to make up a significant portion of a Football League club’s annual budget – a portion big enough to ensure that the loss of these payments would cause massive financial impact to clubs. With clubs in the Championship last season having an average wages/revenue ratio of 106% and aggregate net debts of over £1 billion, finances are already on a precipice. Not only is this £2.3M more than clubs receive from the Football League’s own TV deal, it represents more than 10% of the committed annual wage bill for every single Championship club not receiving parachute payments. So the loss of this sum would likely be enough to push a fair number of those clubs over the edge, which would be a calamity akin to the loss of the ITV Digital money in 2002.
And that leaves the Premier League in a very strong position. They know that the money they give the Football League clubs has created a culture of financial dependency, and they have no qualms in exercising the financial muscle this dependency brings them. At least twice over recent years they’ve threatened to withdraw financial support in order to get their own way, and the Championship clubs have crumbled under these threats. I know this sounds like the ravings of an anti-Premier League zealot, so let’s look at the specific examples.
The first came in the summer of 2010. The Premier League proposed an increased figure for solidarity payments, which would accompany increased and extended parachute payments for relegated clubs. There was considerable disquiet amongst Football league clubs that this change – giving relegated clubs £48M over four years rather than £12M a season for just two years – would effectively create a “Premier League Two”, making it so much harder for tier one and two clubs to progress as well as tipping the financial balance too much in favour of relegated clubs. In fact, a mini-rebellion by a number of tier one and two clubs at the Football League’s initial meeting in April 2010 meant that this proposal was defeated, a pretty rare event in itself.
The Premier League response was to make it clear that their offer was an all-or-nothing one, and that preserving the status quo was not an option. Football League clubs could either accept the new deal of increased solidarity payments together with extended and increased parachute payments, or all deals were off. Faced with the financial implications of this, at a second meeting at Walsall in May 2010, the Football League clubs buckled and the rebellion fizzled out. I understand it was the Championship clubs who were behind this collapse, and without their support the lower-level clubs knew the game was up – which makes sense as it’s the Championship clubs who had the most to lose and for whom the numbers were better. So the Premier League’ new financial package was meekly accepted by Football League clubs, and on the back of this the Premier League even slipped a couple of new rules into the Football League’s rulebook.
One of these, for instance, was a requirement that all Championship clubs move to all-seater accommodation within two years of their arrival there. This rule had no benefit to the Football League or to its clubs – in fact, it was likely to cost them extra money – and was not required by safety legislation. But that year the Premier League had very nearly been caught out by the state of Blackpool’s ground upon their promotion, and so felt it necessary to insist that another league should insert a rule into its constitution – a rule with only one aim, to protect the Premier League’s “brand”.
The other example comes just over a year later, in October 2011, with the Premier League struggling to get the Football League clubs to agree to a radical new youth development structure, the Elite Player Performance Plan (EPPP). There were fears amongst many lower league clubs that the terms of this would render their future youth development activities unrealistic. In particular, the change to compensation payments, which were no longer based on a player’s potential but now became a fixed fee determined by the costs of training a player, was denounced by many.
It was clear that the Premier League would face opposition from a significant number of clubs in getting this scheme accepted, so what did they do? No surprises, of course – they made an all or nothing offer. If their proposals weren’t accepted “as is” they would immediately withdraw the £5.4M each year they gave Football League Clubs for youth development. They also threatened to go off alone and set up their own youth development system, excluding Football League clubs.
Interestingly, a couple of the clubs who the clubs which made up the Football League Board voted individually against the proposals, although as Board members they recommended acceptance of the proposals. But, despite the disquiet and unhappiness of many, the proposals were voted through – those clubs with academies or centres of excellence just could not afford the sudden loss of the youth development subsidy. As Dario Gradi, one of the sanest and most decent men in football, said at the time ““Basically the Football League clubs have been bullied into agreeing to what the Premier League wants. … What they are saying is, ‘If you don’t do as we say, we won’t give you any money’.”
I don’t doubt that there have been other examples of the Premier League threatening to withdraw funding to get their own way, nor that there will be in future – if, for instance, the Premier League did a U-turn and supported Greg Dyke’s ludicrous “B-teams” scheme, would the Football League be able to resist the imposition of this if solidarity payments were about to be withdrawn?
And as the sums involved get larger, the Football League’s financial dependency on them gets greater, the Football League clubs become more and more like a junkie desperate for their next hit and willing to do anything to get it, and the Premier League relish even more the control that comes with their role as pusher – except it’s money rather than hard drugs they’re dispensing.
This clearly can’t be healthy or good for the future of football. The clubs which comprise the Football League should surely be free to make their own decisions, without being forced to make ones that suit the Premier League after being led to them by virtue of football’s equivalent of a fiver on a piece of string.
In short, the Football League clubs should have sovereignty over their own league, but this is something that clearly they don’t have while the Premier League has such financial power over them. Yes, it’s their own stupid fault for accepting this money and for getting themselves into such a parlous financial position that they can’t afford to lose it, but for the long-term good of the game and the long-term independence and survival of the Football League this ridiculous situation must change.
The seventy-two clubs need to get their finances in order so that they can stand up to the bullies who threaten to withdraw their money, because only when they have enough cojones to do so will anything change and they’ll get control of their league back. Until then, the Premier League are unlikely to spontaneously relinquish their hold over the Football League – and other parts of the game – by changing to a financial scheme where payments are unconditional and come with no strings attached. Because they know that “He who pays the piper calls the tune” and that the power that dispensing a little of their riches around the game gives them is great value for money.
I wish I had an optimistic and upbeat note to end on, but sadly I don’t – things look bleak and I can’t see any changes coming soon, such is the financial mess the Football league is in and their dependence on Premier League money. I just wish the Premier League would be honest about it, and change the name of these payments. For what they euphemistically call “Solidarity Payments” ought, really, to be called “Got them by the Short and Curlies Payments.”