The Difficult Economic Balance in Football

They say you can have too much of a good thing and English football is beginning to find this out. Being the birthplace of the sport and having both the oldest football tournament and the biggest league in the world, the nation is accustomed to enjoying the beautiful game. 

But with so much great football to enjoy, leading figures in the sport are beginning to find that it’s much more difficult to strike a balance that ensures everyone gets a slice of the giant financial pie that the Premier League has created.

Players in the top flight are being subjected to some of the most gruelling schedules ever put together, while clubs in the lower tiers are struggling to make ends meet. Recent attempts to rectify this were quickly shot down by the sport’s many stakeholders. So can this careful balance ever be achieved?

The Birth of a Super League

In the early 1990s, English football emerged from what was probably its darkest period in history. After the Heysel Stadium disaster, English football clubs were banned from competing in European competitions for five years. 

During this time, authorities in the UK began cleaning up the sport, cracking down on hooligans, and making it appeal to a wider audience. As this happened, more and more people were looking to watch their club compete on TV, though competing interests in the sport meant that this wasn’t always possible. 

As a result, 20 of the leading clubs in First Division of the English Football League began creating plans to break away to create their own competition. This led to the formation of the Premier League, which kicked off in the 1992/93 season with more games than ever shown on the new Sky Sports channels in the UK. 

Over time, the Premier League and its clubs have acquired significant wealth. As of the 2018/19 season, Tottenham Hotspur was worth £2.5 billion, followed closely behind by Manchester City, Manchester United, and Liverpool with values of £2.2 billion, £2.1 billion, and £1.6 billion respectively. 

This makes each of these clubs wealthier than countries like Gambia, San Marino, Seychelles, and Samoa. 

A Top Heavy Pyramid

With so much wealth accumulated at the top, these wealthy teams are affecting the clubs below them. Huge pools of cash to spend on players has driven up the cost of talent for clubs in the leagues below the Premier League.

A chasm has also formed between the resources and facilities that these clubs can afford. Many lower league teams must make do with stands constructed at the time when most people still owned black and white TVs and Premier League clubs are able to construct shiny new stadiums that they can also to host corporate events as another source of revenue. 

With Premier League clubs shown on TV more regularly and appealing to a much wider audience, they’re able to generate more revenue from sponsorship deals. This creates a positive feedback loop that means more and more football wealth is accumulated at the top of the pyramid. 

 

Project Big Picture

Earlier in 2020, several big clubs published some proposals known as “Project Big Picture”. If enacted, these plans would have changed the balance of power in English football completely, while granting more cash for clubs in the lower tiers. 

Clubs like Liverpool and Manchester United wanted to both secure their own permanent futures in the Premier League, while also preventing more clubs from falling into administration like Bury FC. 

They also wanted to free up space in their schedules by having bigger clubs removed from the Carabao Cup, particularly as they have their eyes on more international competitions that are expected in the coming years. 

However, the plans were quickly shot down with criticism from the UK government, lower-league clubs, and fans alike. All sides were concerned that this was just a power grab and that it wouldn’t actually solve the problem. Instead, all sides have committed to further negotiations on how to a better balance in English football.

While these talks go on (and likely afterwards too), the biggest football clubs are going to continue to grow their wealth. With several of these teams available to invest in, these may be an option that traders may wish to consider.

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