There were a lot of new faces at the Premier League shareholders’ meeting in London on Tuesday but the conversations were the same as ever.
A bit like Freshers’ Week, but without the drinking games, although some of those might be needed at the next get-together in November if the league is ever going to break the deadlock on how to replace its profitability and sustainability rules (PSR).
As regular readers will know, PSR is English football’s version of UEFA’s financial fair play (FFP) regulations. But after more than a decade of trying to cap how much money teams can lose over a three-year period, European football’s governing body added the “squad cost rule” (SCR) to its regulations in 2022. SCR limits how much clubs can spend on their first teams by linking it to their football-related revenues. The change was phased in, with the limit being 90 per cent of revenues in 2023-24, 80 per cent last season and 70 per cent in this one.
The “old” bit of FFP, the “football-earnings rule”, has gone in the other direction, with clubs now allowed to lose €60million (£52.4m; $70.4m at current rates) over three years, as opposed to €30m under the pre-2022 regime, with permission to go to €90m if the sides involved are in “good financial health”, which basically means having very rich owners.
At least seven Premier League teams each season enter the three UEFA competitions (though it’s nine of the 20 this season), so English football’s top tier has been talking about moving to an SCR-led approach for almost two years. The conversations had been fairly constructive, as several clubs (you know who you are) have grown to dislike PSR.
So, with everybody either operating under UEFA’s SCR or desperate for a change from PSR, this should be the easiest rule change the league has ever introduced, right?
Wrong!
Why? Well, it depends on who you talk to and, sometimes, when you talk to them.
The Athletic discussed with club representatives — granted anonymity to speak openly — who were present at Tuesday’s meeting to see what went on.
Villa and Chelsea both fell foul of UEFA spending rules (Darren Staples/AFP via Getty Images)
What the Premier League would like to do is replace PSR, which lets clubs lose up to £105million over a three-year period with an 85 per cent SCR limit, plus something called “top-to-bottom anchoring” (TBA).
The theory is that the extra SCR headroom should enable those teams not in receipt of UEFA top-ups to lean on their owners a little more so they can compete in the Premier League. And if that is not enough to level the playing field, anchoring will limit the amount the top sides can shell out on their squads by tying it to a multiple of the lowest-earning club’s revenue.
The thinking is, with UEFA expanding its competitions, those sides playing in the Champions League are racing away from their domestic peers. And that is before you factor in the added riches on offer from FIFA’s expanded Club World Cup, which boosted its winners Chelsea’s bottom line by more than £80million last season.
Here is the first point of contention.
If you set the TBA multiple too tight — let’s say, at four times the bottom club’s revenue — Chelsea, Manchester City et al may breach it already, and they and any other teams with global aspirations will cry foul. But if you set it so loosely that nobody would ever breach it, what’s the point of the thing?
The Premier League believes a multiple of five is about right, as nobody currently breaches it and no Premier League club can claim they are being restrained in the transfer market. The league says this is about “future-proofing” itself from threats to its competitive balance, which it believes is what makes it so attractive to broadcasters worldwide.
Most small and medium-sized teams like the idea. So do the likes of Arsenal and Liverpool, who see this as a way of delivering some “shareholder value”, which is code for actually making a real profit. Both Manchester clubs and Saudi-owned Newcastle United hate it though, as they say it ties their hands.
With a two-thirds majority — 14 of the 20 clubs, if everyone votes — needed to approve a change, putting TBA to a ballot is a risk. One club executive, speaking anonymously because they will be banished from the gang if they are caught talking to a journalist, thinks the clubs are “70/30” in favour of a 5x multiple.
But there are lots more minor gripes.
Some teams prefer UEFA’s “reporting perimeter”, which is accountancy-speak for what you can include in your annual revenue.
The game’s European governing body does not believe selling a club-owned hotel or chunk of their women’s team to a subsidiary should be included. UEFA also does its calculations based on the calendar year, not the football season. And it does not let sides that outsource their catering or merchandise operations to double-count the revenues their partners earn from those activities and the royalty payments they receive for outsourcing them.
Some clubs like these measures and think the Premier League should follow suit; some don’t.
Then there is the spectre of the newly-established Independent Football Regulator (IFR), who will be running a licensing regime for men’s professional football in England that is focused on sustainability. If the IFR is going to be doing this anyway, does the Premier League need to have its own rules on “liquidity”, especially if this means some of the smaller teams might even need to borrow money to meet the “cash in the bank” requirement?
And, finally, all clubs would like more clarity on what happens if somebody else (it is never about themselves, of course) breaches SCR. The proposal is that small transgressions would result in fines but bigger ones will bring sporting sanctions, such as transfer bans or even points deductions. But when does small become big?
Given all these complaints, fears and unanswered questions, is it any surprise that one mid-ranking club on Tuesday suggested having both PSR and SCR next season? The Premier League said no, by the way, it is one or the other.
So, the clubs and the league now have two months to hammer out their differences, because if the new proposals are not put to the vote in November, the former are sure to tell the latter that they cannot go into the January transfer window without certainty over the rules. And that means PSR, despite its unpopularity, will roll over for another season.
Oh, well, at least the Premier League is still coining it in, though, right?
Erm… yeah, kinda. Put this way, nobody needs to start a collection for any of the top-flight clubs just yet, but they received some less-than-stellar updates from league officials on Tuesday.
The first was some news from the media sales team, who have had a stranglehold on the league’s employees of the month award for about 30 years. Their announcement was that new broadcasting deals were close to being signed in the Balkans and Vietnam. Back of the net!
Not so fast. The values of both deals are likely to be down on the current ones, although they were inflated somewhat by a political row in Serbia between the government and the media empire controlled by Southampton’s majority owner Dragan Solak and a commercial arms race in Vietnam. Now that peace has broken out in the two markets, the Premier League’s slice of the action has fallen.
Next up was a presentation from the marketing folk on this year’s Premier League Summer Series in the United States — three double-headers of pre-season friendlies in Atlanta, Chicago and East Rutherford, just outside New York City, featuring Bournemouth, Everton, Manchester United and West Ham.
Manchester United took part in the Summer Series with Everton and others, but the U.S. tournament lost money (AJ Reynolds/Getty Images)
The good news was that everyone had a great time. The bad news is that the tournament still lost money for the league. Not as much money as it lost in the 2023 edition, when it was more than £5million in the red, but still a loss, which is a bit of a head-scratcher when you consider that Manchester United’s game against West Ham at New Jersey’s MetLife Stadium on July 26 drew a bigger crowd than the Club World Cup final did two weeks earlier at the same ground.
Not that anyone from the Premier League’s legal department will be making fun of their colleagues in marketing.
The hit the lawyers are inflicting on the league’s profit and loss account is so terrifying, nobody even asked about it on Tuesday.
Of course, nobody is going to have a pop at the Premier League when its aggregate annual income is projected to clear £6.9billion this season. It is doing fine.
As is UEFA, and it could be about to do even better thanks to its new relationship with Relevent Sports, the American sports agency it hooked up with earlier this year to sell its global media rights — a decision that shocked some in the industry, as it brought the curtain down on a 34-year relationship with Swiss-based TEAM Marketing.
Relevent delivered on its promise to beat TEAM’s best effort in the U.S. when it brokered a six-year, $1.5billion deal for the Champions League rights with Paramount in 2022. We are now about to find out if Relevent can work its magic away from its home territory as it is starting the tender process for the next cycle of rights to the Champions League, Europa League and Conference League in Europe’s five biggest markets on October 6.
The plan, which was leaked to French newspaper L’Equipe and Italian magazine Oggi last week, is to see if Relevent can entice one or more of the global streaming giants to take a big run at it, perhaps even for one of them to secure a game it could show exclusively around the world, much like Netflix and YouTube have done recently with NFL matches.
And, in other departures from the past, broadcasters and streamers will be able to bid for rights in multiple markets at the same time, and for longer periods than the three years that the European Commission has insisted upon for decades. The next cycle starts in 2027, so these deals should go beyond 2030.
The big five are France, Germany, Italy, Spain and the UK/Ireland, and it will be interesting to see how Amazon Prime Video responds to this opportunity, as it already has the rights to first-pick Champions League games in Germany, Italy and the UK/Ireland, and had some Premier League rights from 2019 until this season. Others to watch will be sports streamer DAZN, which picked up the global rights to the Club World Cup this summer, and Apple, which is in a 10-year global rights deal with MLS.
This column has regularly featured items about the adventures and misadventures of the various multi-club ownership (MCO) groups that have proliferated across global football in recent years. For every City Football Group, there has, unfortunately, been a 777 Partners.
It has been a rollercoaster for the MCO model, but no group has experienced as wild a ride as Brera Holdings has this month.
Until last week, the Irish-based group’s claim to fame was being the first MCO to get a public listing when it floated on New York’s Nasdaq in 2023.
Its first four investments were in small football clubs in the Italian city of Milan, plus Macedonia, Mozambique and Mongolia, before buying a majority stake in Juve Stabia, a second-division team based near Naples, Italy. But that move did not do much for the share price, which had been bumping along at about $7 for over a year.
Until September 18, that is, when the price rocketed above $50, an increase of almost 600 per cent, for a moment before settling back to $24.90 at close of trading. It then dipped to $16.60 the following day, before climbing back past $25 at time of writing.
Are Juve Stabia six points clear at the top of Serie B? Has Brera discovered the Mongolian Messi? Has the Italian volleyball team it also bought become a social-media sensation? No, no and thrice no.
Brera has decided speculating on football players will take too long, so they have raised $300million from U.S. and United Arab Emirates investors and bought a huge wedge of crypto tokens. Brera is about to change its name to Solmate, as it has become a crypto treasury for Solana tokens, or SOL, the cryptocurrency used on the public blockchain platform of the same name.
This column wishes them all the best but please remember, nothing written here should ever be taken as investment advice.
(Top photo: George Wood/Getty Images)
