So, a cat is out of the bag and those loveable reds, Liverpool and Manchester United, driven by their shareholders Fenway Sports Group and the Glazer family, albeit strangely detached from the news themselves, seek to secure their current economic advantage and protect their future revenues.
The timing is fascinating. There is no doubt in my mind that this is an opportunistic, pre-emptive strike against the prospect of worsening conditions in the future. It’s done at a time when the EFL in particular is crying out for a solution to their problems.
From the perspective of Liverpool and Manchester United the timing is particularly interesting. Liverpool’s owners FSG are considering reversing their company into a SPAC (special purpose acquisition company) run by Billy Beane and Gerry Cardinale, valuing FSG at an incredible US$ 8 billion. People on Wall Street are also talking of a capital raise by Manchester United to fund the more than £120 million hole in their revenues caused by an absence of paying customers at Old Trafford. The prospect of what is proposed would sit well with institutional investors. Similarly for Tottenham with their considerable debt held by private investors.
There’s a compelling case for believing the financial outlook for the Premier League will become increasingly uncertain. They are currently in the middle of a perfect storm over maintaining the broadcasting value of individual games and thus future rights values (how ironic that the expulsion of fans from stadia could burst the media rights bubble), domestic broadcasters have significant pressures on their revenue streams – subscription and advertising, plus what was previously considered to be the growth segment – regionally based overseas rights sales looking far less secure.
Add in the prospect of extremely poor domestic economic conditions reducing the numbers of corporate sponsors, premium seat purchasers and the rank and file of ordinary fans no longer able to maintain season tickets, satellite subscriptions and the purchase of kit and club merchandise and the prospect of maintaining current income levels reduce rapidly.
Thus if there’s a chance the cake is going to get smaller in the future, the greedy (or needy) must ensure they get a bigger proportion of the cake.
How will they achieve that?
- Place the ability to change rules and regulations including FFP, remove the Premier League chief executive, approve contracts for broadcasting and media rights and veto the Premier League board’s approval of any proposed change to a club’s ownership into the hands of “the big six”
- Make the Premier League smaller, reducing the League to 18 from 20
- Restructure the distribution of broadcasting rights taking the current ratio of highest to lowest payment from 1.8:1 to 4:1 – meaning the Champions receive 4 times the amount of the club in 18th place
- Provide space in the domestic calendar for the elite clubs to participate in potentially more lucrative European (Super) Champions League games and out of season overseas tours
- Abolish parachute payments
- Give individual clubs the right to sell rights to eight (47% of home) games directly to all territories outside of the UK
- Re classify shareholder rights for members of the Premier League. Effectively three classes of shareholders (i) the big six (who subject to unanimous agreement among the six, carry a majority) (ii) Long term shareholder status for three additional clubs, West Ham United, Southampton and Everton who can only influence decisions in the event of a serious split between the big six (a 4-2 or 3-3 division) and (iii) the other nine clubs who have membership of the Premier League but no votes (the Glazers love issuing limited voting shares)
What do they need to offer to get support?
They’re offering sweeteners in the way of:
● The Premier League will provide £250 million to the EFL to compensate clubs for lost revenue arising from Covid-19
● A one off grant of £100 million given to the FA to maintain sustainability, including grassroots football
● 8.5 % of annual Premier League revenue to go on operating costs and “good causes”, including the FA
● 25 % Premier League revenue to go to EFL clubs
● The abolition of the League Cup and Community Shield
● Restructuring of the Championship, League One and League Two. All divisions to have 24 clubs, thereby reducing the total number of League clubs to 90
●A new loan system including the ability to allow clubs to send 15 players out on loan domestically at any one time, with up to 4 at a single club in England
● A women’s professional league to run independently of the Premier League and the FA
● A fan charter including away tickets to be capped at £20, and a focus on safe standing
In isolation, some of the ideas have merit. The funding of the EFL and the prospect of sharing future income. The removal of parachute payments would make the Championship a much more equal affair. The flipside is that relegated clubs would be much more vulnerable to asset stripping in terms of Premier League clubs cherry picking their best players. The fan’s charter is obviously appealing to fans.
However, in total, the above does not compensate at all for the greater financial and power transfer the proposed scheme offers the big six. Imagine a situation where the six largest clubs can change the rules and regulations at a whim. Imagine they can determine who owns a competing football club thereby controlling the level of competition they may face in the future. Imagine they can harvest all the developing player talent for their own purposes in the future.
This has nothing to do with securing the future of the Premier League nor securing the EFL. Ignore the nauseating comments by Rick Parry regarding Henry and the Glazers valuing the football pyramid. This is a badly conceived, appallingly presented, opportunistic attempt at a power and money grab. It’s destined to failure because it provides too many advantages to the selected six whilst condemning everyone else to a bit part.
There are intelligent people on the Liverpool and Manchester United boards. They will know you don’t present a coup that doesn’t offer those outside the coup any upside. The fact that this is the best they can come up with after three years of planning is concerning. It is a huge misjudgement and any idea that either of these clubs have interests for the future of the game beyond their own very narrow interests is blown away. The one positive is that their naked self interest is now exposed for all to see. It should never be forgotten that two of the finest clubs (in football terms) do not respect or value the game, nor the competition that creates their fortunes.