On the 29th March 2019 at 11pm GMT, the United Kingdom is scheduled to leave the European Union. And, to be frank, that's about all anyone can be more or less certain about. Months of negotiations have, like Paul Pogba's penalty run up routine, been a case of one step forward, two steps back, with any pretense of substantive talks having long since been replaced by a bilateral mix of ideological intransigence and political incompetence. The uncertainty resulting from the impasse affects everything from trade to immigration to a peace process. And then there is football.
As it currently stands, Premier League clubs, have access to, what in essence is, a two-tier global transfer market. The upper tier comprises the European Economic Area (EEA), and EPL clubs can freely sign any player from within this economic zone. The second tier is composed of the rest of the world and it's here that things become significantly trickier for EPL clubs. Strict rules dictate that in order to sign for a EPL club from outside the EEA, a player must command a transfer fee or salary which exceeds the median paid by EPL during the previous year or have represented their country in a fixed percentage of international ties. The exact percentage is calculated on a sliding scale with respect to a country's FIFA world ranking. So for comparison, where a player from a top ten rated team is required to appear in 30% of international matches, a player from a side ranked 31-50th must appear in 75% of ties. The Premier League fears that the advent of Brexit will remove EPL clubs for their current privileged position and place them at a significant competitive disadvantage with respect to their European competitors. The potential problem is exacerbated by the fact that the regulations governing transfers from outside the EEA are significantly stricter in the UK than they are elsewhere in Europe. So, if post-Brexit, a simple transposition of the rest of the world rules for the EEA rules were to occur, it would be doubly disadvantageous for the EPL.
Previously straightforward transfers would be complicated by bureaucratic exigencies and restrict EPL clubs' scope in the transfer market. For example, if the transfers to the EPL of players with EEA passports from 1992 until the end of last season had been assessed using the harsher criteria, only 591 of 1,022, would have succeeded in obtaining a UK work permit, that leaves 431 transfers, including those of N'Golo Kante, Riyad Mahrez, and Mikel Arteta, which would not have been completed. For non-elite clubs who have established extensive global scouting networks to identify up and coming talent, a revision to the regulations could render such infrastructure obsolete. Moreover, given that by necessity fewer players will qualify for work permits, the market will become condensed, prices will inflate, and non-elite EPL clubs could find themselves muscled out of the global transfer market.
To compound matters, EPL clubs would also be barred from signing young European talent. Transfers of U18s are banned globally by FIFA, but an exception is made in the case of transfers occurring within the EEA. Heretofore Britain's membership of the EEA has allowed EPL clubs to cherry-pick some of the finest talent from around the continent, and enabled the likes of Cesc Fabregas, Hector Bellerin, Paul Pogba, and Gerard Pique to spend their formative years at English academies. Withdrawal from the EEA doesn't just imply a talent deficit however, it also has financial implications. Youth development is an extremely cost effective strategy, which promises potentially sky high rewards for relatively low levels of investment. The financial model is perhaps best exemplified by Southampton, a club which over recent years have generated a significant proportion of their income through the sales of academy products like Gareth Bale, Alex Oxlaide Chamberlain, Luke Shaw, Adam Lallana, and Calum Chambers. In light of UEFA's financial fair play regulations youth development has become an increasingly integral mechanism for maintaining competitiveness in a sustainable manner. A prohibition on signing the best young European talent could hurt clubs that have come to rely on this source of potential income to remain solvent.
In this instance the EPL's pain is the FA's gain. With less European talent competing for spots in academy programs, a premium will be placed on nurturing young British talent in their stead. Indeed, in a post-Brexit context where international transfers could be incredibly convoluted affairs, transfer fees for the best British talent would likely rise, and, thus, improved academy facilities would in themselves become financial investments. Obviously, any scenario which favours the development of British talent aligns with the modus operandi of the FA, as underlined by their aim to increase the percentage of British players in the EPL to 45% by 2022. It also places them at the opposite end of the ideological dichotomy, which divides Brexit into its hard and soft variants, from the Premier League. Whereas, a hard Brexit would benefit the FA's self interest, the makeup of such a political arrangement would prove detrimental to the global brand that is the Premier League.
Behind the scenes, you can bet your bottom dollar, that the Premier League will be lobbying for a soft Brexit, or, save that, by appealing to the league's exceptionalism as an entity of both global reach and national economic significance, for a clause to safeguard said standing. Clues to the Premier League's intent in this regard can be drawn from their efforts to press the British Government to abolish all work permit restrictions for players from across the globe. Clearly, therefore the ideal for the Premier League is a fully liberalised international labour market but this stance doesn't gel well with the model of immigration reform envisioned by Brexit and vehemently championed by some MPs. Does the space between their diametrically opposed ideologies offer wiggle room for a compromise to be reached or is it simply an intractable difference of opinion? Politicians will be wary that by agreeing to a compromise on immigration reform with the football industry that they are also opening the door to similar compromises elsewhere. Such ideological drift could undermine the integrity of Brexit and hence, to a degree, the democratic process itself. Reassuring the political establishment that this wouldn't be the case may be the single most critical issue facing the Premier League at present.
Since one of the stipulations covering rest of world transfers states that transfer fees must meet a certain threshold to be approved it follows that the adoption of those regulations in the aftermath of Brexit could represent a financial time-bomb. Inflexible adherence to such a policy would result in transfer fees being governed not by market economics but by regulatory forces. The issue is, while the principle of supply and demand states that transfer fees will rise naturally in a supply restricted market, a regulatory mechanism which establishes minimum transfer fees with respect to a previous year's median is also inflationary. A financial ecosystem wherein inflation begets inflation cannot be sustainable in the long run, particularly so when the external cornerstones of financial viability could themselves be threatened.
Domestically, TV rights, which are the bedrock of the EPL's financial hegemony, have already been subjected to deflationary pressures, with both SKY and BT securing their latest deals at slightly discounted rates. In truth the domestic shortfall is more than off-set by increases secured from global markets, but that shouldn't disguise the fact that international subscriptions are likely more fickle in nature than home-based ones. Which, in light of uncertainties arising from Brexit, poses a fundamental question. Is the Premier League brand resilient enough globally to withstand a diminution in the number of elite players plying their trade in England? While other factors undoubtedly contribute to the EPL's international popularity, the gilded contributions of superstars enhances the brand immeasurably both commercially and in a sporting sense. In the event of an outflux of talent other leagues would stand to benefit at the EPL's expense. For argument's sake if that were to manifest as the EPL losing its primacy as the World's most commercially attractive league, clubs could wave goodbye to bumper TV rights, to generous sponsorship deals, and to the purchasing power arising from them. When you add in the necessity to comply with UEFA's financial fair play regulations, the budgetary squeeze becomes a binding obligation for a wholesale rethink of clubs' entire business structures. Business as usual simply wouldn't exist anymore. Again, if this scenario were to come to pass, the non-elite would be impacted disproportionately. Elite level clubs would continue to derive collateral benefits from their status and success, which would in turn make them less susceptible to external deflationary pressures. For example it could be expected that they would oppose the current practice of collective bargaining and move irreversibly toward individually negotiated TV deals in order to protect their global status and balance sheets.
If the EPL's future appears bleakly Dickensian at this point, the potential impact of Brexit on club ownership could make it outright dystopian. The phenomenon of Sugar Daddyism has turned several of the league's big hitters into little more than play things of the super-wealthy. The short-termism of the prevailing zeitgeist, particularly evident at such clubs, which aggressively prioritises immediate success over anything else does not mesh with the more circumspect reality that increased regulation may introduce. Grandiloquent projects at Chelsea and Manchester City may increasingly find themselves drifting on the currents of their owner's palpable disinterest, which given the club's outright dependence on their benefactors could turn them into zombie like entities; more successful versions of Newcastle if you will, doing little more than tick over. Indeed, what's to stop City's owners from shifting the focus of their patronage to, another of their clubs, Girona, for example, so they can sidestep the impact of Brexit altogether?
While, in a post Brexit landscape characterised by spiraling transfer fess and reduced revenue streams, it will be the non-elite clubs which will feel the pinch first, that is not to say that some of the bigger fish will remain immune from the financial contagion. Manchester Utd, though insulated to a degree by the strength of their global brand, are inching along a financial tightrope. Buffeted by debt and reduced sporting competitiveness on either side, the aggregate effect of adding Brexit to multiple other financial stressors could test the commercial resilience of the Old Trafford club. How far those limits stretch before they reach breaking point is anyone's guess. If for example Utd's financial health continues to be buoyed by a latent appeal reaching back to the glory of the Ferguson era, will the commercial elastic stretch across a prolonged barren spell? As was evidenced during the financial crisis, there are myriad unseen factors at play, and giants can fall at any time.
While in truth the exact implications of Brexit for the EPL have yet to become clear, that in itself has become the problem. With the entire spectrum of outcomes from best to worst case scenarios still remaining on the table contingency planning becomes a hopelessly Herculean task summed up by the seeming contradiction of preparing for everything and nothing at once. The prospect of Brexit seems likely to exacerbate inequalities between clubs and to accelerate the already steady drift to an asymmetrical, top-heavy league, that for the best intentions of collective bargaining and the cliched sophism of "no easy matches" is already the everyday reality. While the direction of that drift would seem irreversible, measures could be employed to slow its flow. Any attempt to simply shoehorn the current rest of world transfer regulations and their inbuilt inflation into the void left by leaving the EEA should be resisted. Instead an entirely bespoke regulatory framework, cognisant of both financial and sporting outcomes, should be devised to oversee transfers between the UK and the EEA. Ultimately, football is simply a game played by footballers, if the EPL can find a financially sustainable mechanism for retaining the services of the very best players then they can safeguard the league's financial future. If on the other hand, for what ever reason, they can't, then, just like everything else Brexit related, who knows?
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