Carlton Blade
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Here is a question that will never feature in a Christmas party quiz: which Premier League attendance record was broken this week?No, Luton Town did not find a way to squeeze a few more in for the visit of the champions Manchester City on Sunday. And we are not referring to the huge crowd that turned up to see Arsenal beat Chelsea at the Emirates, which is a Premier League venue but was hosting a Women’s Super League game.
You are never going to get it, so we will put you out of your misery: Tuesday’s crowd of 30 club representatives was a record attendance for a Premier League shareholders’ meeting at the Brunel Building, the fancy London office block in Paddington, west London, that became the league’s headquarters in 2019. And that does not include the “virtual” crowd, who took part in the meeting working-from-home style.
Well done, boys (and girls). But was it a good process?
Not according to some participants, who agreed to speak to The Athletic under the condition of anonymity in order to protect their relationships.
“Chaos” was one description, “shambles” another. And yet three decisions were made and it was all over by lunchtime. So, it could not have been that bad.
Let’s run through the agenda and you can decide if this bumper crowd witnessed success or failure.
According to the programme, item one was a vote on a proposed rule amendment in relation to the amortisation of player contracts. We never said this event was a hot ticket.
For those of you who do not work in accounts, amortisation is the process by which the cost of acquiring something intangible is spread over the useful life of that asset. This is how transfer fees are treated by football’s beancounters: the intangible asset is the player’s contract and the useful life is the length of that contract, because players can leave for nothing once their contracts have expired.
So, if a club signs a player for £100million ($125.3m) and gives them a four-year deal, that fee is spread over four years in £25million chunks and that is the amortisation cost that appears in the annual profit/loss statement — the one the financial fair play (FFP) watchdogs are looking at.
Give the same player a five-year deal and your annual amortisation charge drops to £20million. Give them an eight-year deal and it falls to £12.5million.
But who gives anyone as fragile and flakey as a footballer an eight-year deal unless they are a young Lionel Messi?
Answer: Chelsea co-owners Todd Boehly and Behdad Eghbali. They dish them out like croupiers, which is a fitting comparison given the gamble they have taken on all the players they have bought over the past 18 months still being Premier League-level footballers in five years’ time.
But, from an FFP point of view, it is cute.
In January, Chelsea spent at least £62million on Mykhailo Mudryk but will stretch that fee over the eight and a half years of his contract, the longest deal in Premier League history. A month later, they dropped £107m on Enzo Fernandez but that will only hit the books in £13m instalments over the length of his eight-and-a-half-year deal.
This season, they have already signed 11 players and given them contracts between six and eight years long. The total cost of these players was £419million but the annual amortisation charge is just under £60m. Clever, right? Hmmm, ask us again when some of these guys enter the final years of their contracts on loan in Turkey, with Chelsea paying half their wages.
Still, you cannot have a coherent cost-control policy, which is what FFP is meant to be, if one club is doing one thing and everybody else is doing something else.
So, this summer, UEFA, the people who brought us FFP, changed its rules to say clubs can only amortise transfer fees for a maximum of five years. They can still hand out eight-year contracts if they like; they just have to amortise the purchase price in five annual chunks.
And that is what the Premier League voted to do on Tuesday, too.
We are going to let you into a secret. The Premier League uses a code in its public statements to say if a decision has been made unanimously or not. It is a really simple code, though: if the statement does not say the decision was unanimous, it wasn’t.
“Premier League shareholders today agreed to amend the rule on amortisation of player registration costs to bring it in line with UEFA’s regulations,” the league said. “Going forward, a five-year maximum will apply to all new or extended player contracts.”
You will notice the absence of the word “unanimously”. In fact, this proposal only received 15 votes, with two clubs voting against it and three abstaining. You need 14 votes — a two-thirds majority — to change the league’s rulebook, so this got through with a bonus vote but the result suggests five clubs wanted something else.
And that was to hammer Chelsea by backdating this rule change to the start of the season. If they had got their way, Chelsea’s amortisation charge for the 11 players signed this summer would have risen by £24million to almost £84million. That would have put them at risk of entering Everton territory in terms of the threshold for allowable losses, forcing the club to sell even more players in January than manager Mauricio Pochettino would like to see go.
https://theathletic.com/4997629/2023/11/17/everton-premier-league-points-penalty-ffp/
Not unreasonably, Chelsea pointed out that this would be a bit unfair, as they complied with the rules as they were when they made those signings.
But some clubs think the Premier League’s leadership should have called Chelsea’s bluff and applied this amendment retroactively. They did not, however, have enough support to formally propose this at the meeting, so there was only the proposal to copy what UEFA has done on the table.
Their moods will not have been helped by the fact that Chelsea, having exploited this loophole, voted in favour of closing it. Now, that is quite clever.
To be fair to Boehly & Co, they have been planning to comply with the five-year limit ever since UEFA changed its rule. It might not look like it at the moment, but Chelsea want to compete in UEFA’s competitions again, so this loophole was effectively closed for them this summer.
That does not mean they will stop handing out unusual contracts to exciting talents, though, as Boehly has just demonstrated at the baseball team he co-owns.
If you thought the Moises Caicedo deal was interesting, wait to read you about the arrangement the Los Angeles Dodgers have just made with Shohei Ohtani: a 10-year deal worth $700million in wages for the Japanese star but with the kicker that he has agreed to defer 97 per cent of that bonanza for another decade. He will bank his last cheque for $68million in 2043, by which time $68million will be worth a lot less than it is now but he, presumably, will no longer live in California, a state with the highest income tax in the U.S. Quid pro quo.
So, it is safe to assume that Chelsea are still in the market for blue-sky thinkers when it comes to recruitment and remuneration.
Second and third on the party playlist on Tuesday were two votes that really should have been unanimous, as they seem completely sensible.
The first of those was on a proposed rule amendment in relation to “overdue payables between clubs”: unpaid transfer fees, basically.
From now on, the Premier League board can stop clubs that owe other Premier League or English Football League clubs transfer money from registering any more players. If that does not do the trick, the board can deduct what is owed from the club’s share of the league’s central funds and send it to the aggrieved party.
Again, this aligns the Premier League rulebook with the EFL’s and UEFA’s. To be honest, it is a bit odd that this was not a rule already. Why at least one club did not vote for this amendment is a mystery but the league’s post-meeting statement did not say “unanimously”.
The final vote was meant to be an approval for the league to agree on a new funding agreement with the “NewCo” just set up to run the Women’s Super League and Championship. As far as The Athletic can tell, this one went through, too, but did not make it into the statement. No matter, it involves more money for the women’s game, which is surely something we can all support.
Once the polls were closed, the meeting moved into discussion mode, which sounds very collegiate but… wasn’t.
First up was a quick summary of the domestic TV deal the league struck with Sky, TNT and the BBC last week. Once upon a time, this would have been a presentation that would have made everybody forget about their differences and remember there is power in a union.
But the days when a Premier League chief executive could wheel out new deals worth 70 per cent more than the last one are long gone. Nowadays, standing still is a good result. And that is what the league’s sales team delivered: a four-year package worth £6.7billion, which is a British record for a sports media rights deal and four per cent up on the last time the league went to the market in 2018.
However, that four per cent has only been achieved by giving the broadcasters more inventory — 267 live games a season, up from 200 — and stretching the usual three-year term by another 12 months. It should also be remembered that the 2019-22 deal, which was negotiated in 2018, was a reduction of eight per cent on the 2016-19 deal.
But — and it is a big but — getting any kind of growth for the domestic rights is a huge win for the Premier League when you look at the difficulties the other major European football leagues and sports are having with their deals. It is tough out there and the Premier League’s relative position is only getting stronger. It also continues to deliver significant growth with its international deals.
Now, if the league was in a happier place, with no significant differences of opinion, the clubs would look at their glasses and realise they are half full. But the post-meeting grumbling suggests quite a few think half of their drink is missing.
This leads us to the next item on the meeting’s agenda and, seemingly, every meeting’s agenda for at least a year: the so-called New Deal for Football.
The simplest way to explain this fiendishly complicated proposal is that it is the league’s response to a strong hint from the UK government that it must share more of its TV wealth — more than £3billion a year — with the rest of the game. The catalyst for this request was a combination of the specific financial crises at EFL clubs such as Bury and Bolton Wanderers in 2019, the more general panic caused by the pandemic and the anger caused by the Premier League’s six richest clubs trying to join a breakaway European competition in 2021.
https://theathletic.com/4957498/2023/10/16/epl-efl-explained-deal-english-football/
For the purposes of this article, we must focus on just two aspects of this deal: how the Premier League proposes to fund the New Deal and where it will set the bar in terms of the cost controls that go hand in hand with this increased generosity.
Let us deal with the latter first, as it really should not be that complicated.
As with the amortisation issue, the Premier League is following UEFA’s lead, as the European body announced in 2022 that FFP was dead; long live Financial Sustainability. This new set of regulations has “three pillars”: a no overdue payables rule, which the Premier League has now adopted, a football earnings rule, which is similar to old-fashioned FFP, and a squad-cost rule.
That last one is the novel bit, as it is a more targeted soft-salary cap than European football has become used to. In short, clubs will only be allowed to spend 70 per cent of their revenues on the wages of the players and coaches, plus those amortised transfer fees and any payments they make to agents. That threshold, which will change spending habits, is being phased in over three seasons: 90 per cent this season, 80 per cent next season and so on.
As at least seven Premier League clubs compete in Europe each season (eight have done so this season), a third of the league will have to comply with UEFA’s rules anyway, so they should have no problem with doing the same back home.
But that is exactly the point the other Premier League clubs have been making: staying below the 70 per cent threshold is not a problem when you are banking £50million-plus of UEFA media rights cash. And if you apply that threshold in the Premier League, you just lock in those seven or eight teams forever more.
So, in the interest of competitive balance, the Premier League threshold should be more generous, just as its permitted annual loss threshold has been more lenient than UEFA’s. Which is why the Premier League squad-cost limit is going to be 85 per cent, not 70.
No problem. However, the Premier League wants to impose the 70 per cent threshold on the Championship, and is making that a condition of the extra funding it is offering the second tier.
To be fair, the EFL is relatively happy to accept that condition, as its clubs are sick of losing money. What the EFL is less keen on is clubs relegated from the Premier League being able to stay at the 85 per cent mark, while also enjoying rebranded parachute payments worth more than £50million in the first season after relegation.
This is why many EFL clubs believe their choice is between sustainability and competitiveness, and they are too skint to try to compete anymore.
And that is why it is strange that this issue is still a matter of debate within the Premier League. The EFL has already begrudgingly indicated it won’t scupper the deal over parachute payments or recently relegated clubs being allowed to spend 85 per cent of their revenue on their squads. So, the Premier League’s continued debate on this matter appears to be an attempt by clubs threatened by relegation to make sure that any demotions they do suffer in the future are very temporary.
The debate about how the New Deal should be funded is easier to understand, though, as it is just a classic row about money.
It is a row of two halves. The first is about the £88million “sweetener” that the Premier League’s draft New Deal has promised the EFL this season. This is truly additional money and it is much needed by clubs in the Championship, League One and League Two.
But the New Deal debate has dragged on so long within the Premier League that some top-flight clubs are wondering if that £88million should now be halved, as we are halfway through the season. The logic here would appear to be that it is somehow the EFL’s fault that the Premier League is so divided on this issue that the league’s leadership has not dared to put any of it to a vote.
There is another group of clubs who think the EFL should be given £88million this season… but that will then be clawed back from future New Deal payments.
And then there is another group of clubs who want to fund the £88million by adding one per cent to the existing levy that all clubs pay on transfers. That levy is currently four per cent and it is used to fund players’ pensions and youth development.
But that brings us to the second half of the funding row, as the Premier League is already split on how the entire New Deal package is paid for, with some thinking it should just come off the top of the league’s central income, so the clubs pay for it equally, some wanting to tie each club’s contribution to where they finish in the table, so the successful clubs pay more, and others believing you can fund it all via an increased transfer levy.
Broadly speaking, big clubs like the idea of taking the New Deal money off the top, as that spreads the pain, while smaller clubs think those with broader shoulders should carry more weight. The Premier League board is, as ever, stuck in the middle, which is why the discussion on Tuesday was downgraded to a “temperature check” instead of the vote that the EFL and government have been waiting months for.
