This latest, supermarket sweep-esque spending bonanza, however, stands as the latest manifestation of English football’s seemingly ever-expanding financial bubble. It should therefore come as no surprise that the government’s move towards an independent football regulator to oversee several key areas of the game, including financial sustainability and a new test for club owners and managers, has become all the more necessary.
The rate of inflation in football since the turn of the century is enough to make the current challenge to the Chancellor look relatively easy. Chelsea’s eleventh-hour decision last week to spend £107million on a 22-year-old defensive midfielder with half a season’s experience in European competition is a model case study of the astronomical prices currently on offer for premium football talent.
Yet it’s not just transfer fees that have driven up prices and loosened purse strings Currently, it is reported that at least 19 players in England’s top division are paid more than £200,000 per week, while twenty Premier League clubs each receive £84 million in annual broadcasting fees. At the same time, qualifying for elite European competitions such as the UEFA Champions League is increasing prize money and brand awareness. Last year, clubs received more than £13 million just for qualifying to the group stage.
The era of financial power ushered in by the Premier League, however, has not gone unnoticed or unchallenged by its competitors. Earlier this week, Javier Tebas, president of Spain’s La Liga, described the English football market as “doped”, while Ilja Koenzig, chief executive of German top division club VFL Bochum, said that “more and more, it seems that German clubs will be more. The premier of developing players. Will be sold to the league.”
Such discomfort is surprising. Last month, Southampton FC, a club currently at the bottom of the Premier League, spent a match with 40 La Liga and Italian Serie A clubs. Chelsea, meanwhile, saw more spending than top-division clubs in Spain, Italy, France and Germany.
But more pressingly, this anarchic culture of consumption is creating problems closer to home. An eye-watering increase in investment in the Premier League has forced clubs to spend extra money to maintain their position. Efforts to close the gap on elite teams without limitless spending have proven (almost, with the exception of Leicester City in 2015/2016) impossible. Indeed, of the twenty clubs in the current iteration of the Premier League, 15 have seen net spending in excess of £100 million over the past five seasons.
Such increases in spending often threaten the financial sustainability of clubs in the long term, with the risk of financial chaos if the Premier League’s financial bubble bursts. The problem is exacerbated in the Championship, where parachute payments to relegated clubs by the Premier League have severely distorted the competitive balance of the competition over several seasons. As my report for think-tank Civitas points out, this leads to a culture where clubs that don’t benefit from parachute payments spend beyond the means of those who match them, often putting them on the brink of financial peril.
As the government’s fan-led review of football governance pointed out last year, it is partly a result of this culture of instability that has kept English men’s football in the “last chance” saloon. Decades of power struggles, lack of financial control and poor decision-making at the highest levels have led to a financial Wild West within men’s football.
The recent plight of clubs such as Derby County, docked 21 points in the 2021/2022 season to enter administration, shows just how imminent the perils of the current situation are. Comparatively speaking, the derby got off lightly. The modern history of English league football is littered with stories of clubs unable to stay afloat in the current financial football climate – Bury FC, Macclesfield Town, Chester City and Rushden & Diamonds FC are among those who have joined football since 2011. Growing institutional cemeteries.
All this while the Premier League and the English Football League locked horns over a financial redistribution package, and Newcastle United began an era of funding from the Saudi Public Investment Fund, led by Crown Prince Mohammed bin Salman.
Some form of independent regulation, so long the ugly duckling of all possible solutions, is long overdue. But English football must now proceed with a degree of caution that does not always come naturally. An indefinite and excessive period of red tape overseen by Whitehall bureaucrats risks harming sport, as do laissez-faire policies. An independent regulator must be immediate but not imposed indefinitely.
More than ever, English football needs a strong, authoritative Football Association to govern the game. The primary task of any independent regulator must be to help oversee the modernization of the Football Association, devolving more power to it in the medium term. First, however, football must be brave enough to change.