“Never let a good crisis go to waste!” Winston Churchill once famously said.
The COVID-19 pandemic has proven to be a proper one. The billionaires of the world have been aware of the opportunity and raised their combined wealth for more than a quarter during market turmoil. On the other side of the spectrum, the poor have got poorer.
In the world of football, the Premier League is the billionaire who has all the power to take advantage of the broken market and get out of the crisis mightier than ever.
The Premier League TV money is so vital that the loss from empty stadiums turned out to be relatively insignificant in the grand scheme of things. In the recently closed transfer window, the total loss of the Premier League was £911 million pounds, meaning clubs spent big. That is almost £300 million more than the previous summer when new players would still shake club’s chairman hand after signing the contract, without breaking the social distance rules.
Lower leagues of English football (EFL) have not been that fortunate. During the transfer window, Championship clubs had to sell players to compensate for the loss of the matchday revenues, so the total profit was £214 million. The previous summer, they were selling less and buying more, so the total profit was £136 million. The similar situation is the same in Leagues One and Two, only in fewer amounts.
“I think everyone needs to understand, football is so broken that we will not get people to invest if it continues to be in this current state. And that is without COVID-19, said Nigel Travis, chairman of Leyton Orient F.C who compete in League Two, the fourth tier of English football.
“COVID-19 is one thing, the ongoing lack of sustainability in football is another one,” he said in on a zoom conference dedicated to supporters of the club.
Project Big Picture
Two of the greatest English clubs, Liverpool and Manchester United, have been working for a reported three years on the reform project that would reshape English football, and now when ‘strange things’ happen in the world, when footballers are playing in empty stadiums, managers are having virtual press conferences, and Liverpool are losing to Aston Villa 7-2, they decided to act. They called it the Project Big Picture.
There are two key points in the project. The first one – top clubs of the Premier League want more power. The second one – the EFL clubs desperately needs money to survive.
The people in charge of Project Big Picture certainly have been aware of the problem of the unsustainability of EFL clubs. However, the additional loss caused by COVID-19 was the opportunity to finally present their big plan wrought in years before.
“Never let a good crisis go to waste,” chairman of Liverpool Tom Werner and executive vice-chairman of Manchester United Ed Woodward must have had in mind Churchill’s words when they put the following proposal on the table:
- The Premier League would be reduced from 20 to 18 clubs.
- The EFL Cup and the Community Shield would be scrapped.
- Current one-club one-vote principle would be abolished, as would rule that 14 clubs out of the current 20 need to agree on policy.
- Power would be in the nine clubs that have remained in the Premier League longest (Arsenal, Chelsea, Everton, Liverpool, Manchester United, Manchester City, Southampton, Tottenham, West Ham).
- Only six of the nine longest-serving clubs need to vote for major change.
- A £250m payment up front to the EFL, plus £100m payment to the Football Association.
- 25 per cent of Premier League annual revenue would go to the EFL clubs.
After a few days of uncertainty, the proposal was officially turned down on a virtual conference call where all 20 Premier League clubs agreed of not pursuing the deal further. The fateful for the realisation of the big plan proved to be the rest of the Premier League clubs who don’t want to see the ‘big six’ gaining all the power. The Premier League have launched a “strategic review” which diplomatically allowed Liverpool and Manchester United to support the unanimous rejection of the Project Big Picture as well.
We spoke to David Wright, Football business expert and former Soccerex Director, to understand what happened.
“There is continuing frustration of the top six clubs that any measures they propose that would improve their chances of growing revenues can be blocked by the other 14 clubs in the league. The funding and the structural changes were purely a bargaining chip to grab more control over their own destinies,” believes Wright.
However, even though the plan was rejected, the crisis has not gone to waste.
“Do I think those that proposed the Project Big Picture thought it would go through?” Wright asks himself. “I don’t think so – think it was more of a way of putting some contentious issues on the table and forcing them to be discussed and acted upon. Also, hidden behind some of the more significant items in the proposal where things that would be for the wider benefit of the game such as price limits on away tickets, safe standing and the contribution from the Premier League to grassroots. I hope these points don’t get lost in the debate.”
The only deal that has come out of the whole of the project is that the Premier League agreed on funding Leagues One and Two with £50 million pounds. The EFL rejected the offer because the Championship clubs were excluded.
Nigel Travis of Leyton Orient F.C. believes that £50 million is nowhere near what could have been enough for the clubs to endure.
“I would have wanted to see short term support for the £250 million that was on the table because £50 million is only a fifth of the money the leagues are looking for.”
Wright believes this is far from over.
“At the end of the day, EFL still needs more money and the Premier League elite still want more power, so I am sure both parties will continue to pursue their respective needs and wants until they are satisfied.”
“Sure, everybody wants a perfect deal. But out of any radical deal which Project Big picture was hopefully will come compromise and common sense,” Travis concluded.
Significantly, the EFL had been unsustainable way before COVID-19 caused new major losses.
“Our plan for this year was to lose half a million pounds. With the extra loss of £1.5 million that we budgeted for COVID-19 the total loss became two million pounds. EFL clubs will go out of business in the next five or six weeks. They will probably find a way to survive a few more weeks after, but there will come a time when board members have to say they cannot put any more money in the club,” Travis said.
For comparison, two million pounds is what Tottenham will pay to its new signing Gareth Bale for nine weeks of the contract.