Hi, I’ve been trying to get these out every Friday this season, but some personal things derailed me slightly this week and it took until Saturday. This one is free to read. Enjoy!
This week, England’s Independent Football Regulator published a major report. It was pretty damning about the financial health of the game. 94% of professional clubs in England are losing money, with most outside the Premier League relying on owner funding to stay solvent. This has happened despite revenues surging over the same period. The growth has disproportionately happened at the top, with Premier League revenues rising at a faster rate than the rest of English football.
Source: Independent Football Regulator
Even within the Premier League, we’ve seen revenues at the top rise much more quickly than for the rest of the division.
Source: Independent Football Regulator
This has not even made the Premier League financially sustainable. As Chris Weatherspoon pointed out, transfer fees and wages in England’s top flight have risen faster than turnover. And turnover has risen a lot.
Source: Chris Weatherspoon
Chasing success on the pitch is simply too expensive.
Yes, there is an argument that this shows the strength and popularity of English football. People are still willing to lose money just to be a part of it. But what happens when the revenue stops going up? What happens if we get a downturn? We haven’t seen any of these owners live through a period where English football wasn’t continually growing. Owners in the Premier League largely view it as an asset appreciating in value. What if that stops working out for a period of time? What if the revenues stop going up and suddenly the bills get even harder to pay? A lot of clubs could be in for a lot of pain.
There is a view, held by many over the years, that this is a separate issue from the Manchester City case. City are doing something that is “sustainable”. We’re talking about irrelevant sums to Abu Dhabi United Group, certainly against the reputational damage of deliberately letting a football club go out of business. So, this group argues, let them spend their own money. Let them bring investment into football. Focus the rules on clubs that really might go bust.
But I can see two directions where that ends up, and neither of them are good.
For the first direction, we need to look at France. Qatar Sports Investments bought Paris Saint-Germain in 2011, starting an era of unprecedented dominance to the point where they don’t even particularly try hard in Ligue 1 these days. Of the lineup for May’s Champions League final, only two players (Vitinha and Willian Pacho) started more than half that season’s domestic league games. Their key stars are largely part-time footballers. Ligue 1 is so irrelevant that they get saved for the Champions League.
Ligue 1 is currently broadcast in France by the league’s own streaming service, Ligue 1+. This is after a series of financial difficulties with outside broadcasters, getting the league to a point where it’s just not worth doing business with these people anymore. The offers being made just weren’t acceptable to the clubs. There is no money in French football. The competition has been distorted so completely as to become worthless. This is the world that has been created as one club with very deep pockets has done what it wants.
For various reasons related to how the sport developed either side of the Channel, club football has always been more popular and thus financially stronger in England than France. The Premier League was never going to be quite as easy to turn into one super-rich club’s plaything. But we weren’t that far away. City won six out of seven league titles, with a record four in a row. They won the treble over this same period.
The other direction where this ends up is that one super-rich club’s spending inflates the cost of competing across all levels of football, which is exactly what we’ve seen. City did not start this trend, as Roman Abramovich’s initial raid at Chelsea spent more relative to the cost of transfer fees at the time. Nor were they the sole factor. But they were certainly a big factor.
All those alarming findings from the independent regulator are made far worse because they come in an era where we’ve tried to rein things in. UEFA introduced Financial Fair Play in 2010. The Football League introduced its FFP in 2012. The Premier League introduced its Profitability and Sustainability Rules in 2013. All of this was supposed to bring spending under control avoid clubs coming under serious financial risk. Yet here we are.
A lot of clubs will tell you the rules are being enforced too strongly. We’ve seen clubs selling their best players largely to make the books look acceptable. “It's more about creating paper profits, not real profits”, according to Aston Villa co-owner Nassef Sawiris. “It becomes a financial game, not a sporting game”.
I don’t mean to single Villa out here because they’re far from the only club voicing opinions like this, but I think some tension around the rules is basically a good thing. If the problem is that club owners keep spending money they shouldn’t be spending, they should be complaining if the rules are working properly. Everyone should feel a little constrained.
Sawiris claims that in some respects, the rules “have actually resulted in cementing the status quo more than creating upward mobility and fluidity in the sport”. And I’d have to disagree here. The Tomkins Times has a long-running model estimating the “true price” of Premier League sides, adjusting transfer fees for “football inflation” (i.e. how much transfer prices have risen since 1992), and then observing how much of that money actually gets on the pitch. The blog’s “£XI” rating for teams found, for many years, that even once you adjust for “football inflation”, the richest clubs had pulled far away from the rest, especially compared to the size of the gap in the 1990s. But something interesting happened more recently.
Source: The Tomkins Times
(That absolutely huge spike in the 2000s, by the way, is Chelsea. Relative to the cost of football at the time, Abramovich initially spent in a way Sheikh Mansour never did.)
I’m not sure I’d go as far as to call it the “Fair Play Era”, but once you adjust for the cost of an average Premier League player, the very richest clubs aren’t spending nearly as much as they used to. Chelsea’s spending began to drop off in Abramovich’s last few years and hasn’t recovered, despite the headline fees under BlueCo. Manchester United’s £XI has been gradually falling for around 12 years now.
And Manchester City? You can see them highlighted. Their £XI peaks in 2019-20 and spend most of this decade falling pretty rapidly. But why? What changed? If we believe the panel’s verdict, City were quite relaxed about putting money into the club. If we believe City, financial health was very strong. What happened to the spending?
I have a few theories.
In March 2019, both UEFA and the Premier League announced they were investigating Manchester City’s finances based on the Football Leaks emails. City initially lost the case with UEFA before overturning it and winning at CAS in 2020. The Premier League investigation was continuing in the background.
In late 2021, responding to Saudi Arabia’s Public Investment Fund buying Newcastle United, Premier League clubs voted in new “Associated Party Transaction” rules aimed at preventing sides using overinflated sponsorship deals from businesses with close ties to club owners. Deals with owner connections would be subject to greater scrutiny and “Fair Market Value” assessments. The vote was 18-2 in favour, with City and Newcastle the only clubs opposed to the change. City took the Premier League to court over these rules, and got them somewhat watered down by late 2024.
Of course, in February 2023, City got their 115 charges from the Premier League. But we could also see in the numbers, by that point, a club that was trying to bring spending under control. It didn’t feel like it because football inflation kept doing its thing, but City really were slimming down. The rules were starting to work at the top. Something was nudging the biggest spenders into tightening their belts. And my suspicion is that we need to reduce spending at the top in order to stop the whole pyramid from overheating. It’s chasing the team above you that’s causing the spending. If the very richest spend less then, gradually, everything will come under control and fewer clubs will be facing the precipice. At least that’s what I think.
But the rules need to be enforceable for anyone to comply. City have to believe they could get punished, otherwise they’d spend whatever they wanted. The Premier League really don’t want to be doing this. They’re a television company. They sell the rights around the world to a popular television series called the Premier League. That’s what most of the people who work there actually do. They don’t want to be ruling on how clubs conduct their finances unless it’s really necessary.
And the Premier League still wanted to avoid this situation. As Bloomberg reported recently, they had tried to settle with City before the verdict came out. They wanted City to accept a big fine and say “yeah, we did it, and we’re very sorry we broke the rules”. Then everyone could keep going as they were, because the rules were starting to work. But City said no. They didn’t want to play along. They want to be exonerated. And they want the credibility of the rules in tatters.
The only option, therefore, is to punish City to the fullest extent. The rules have to mean something. If we are to save English football from the brink and bring things under a degree of financial stability, City need to be dealt with. It has to happen.
It is City against every other club in the pyramid.