Analysis | English Football Could Do With a Little NFL-Style Socialism

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By Amit


It’s a fair bet that not everyone will be a fan of the government’s proposed English football revolution, which will create an independent regulator and push for a more equitable sharing of the revenues generated by the world’s most popular soccer league. When the idea was floated in 2021, the chief executive officer of Premier League club Leeds United decried redistribution as “Maoist collective agriculturalism.” That’s a little rich. If you want to see an example of a sporting industry that truly embraces egalitarian principles, try starting in that well-known socialist country, the United States of America.

The most popular US professional sports — including football (the US version, played mostly with the hands), baseball and basketball — are far more interventionist in their pursuit of a level playing field. Salary caps, player drafts that give the weakest teams first pick of emerging talent, and revenue splits  to all clubs regardless of size or on-field success are common features. These all aim to prevent excessive dominance by one or several franchises, and preserve the element of uncertainty that is so fundamental to the appeal of sporting contest.

A better lens through which to view the issue, rather than political ideology, is antitrust. The economic case against monopoly and cartels is well established. When a company has become so successful that it has forced all competitors out of the market or into positions of irrelevant subservience, then there are fewer restraints on how it can treat customers. In consumer markets, the consequence may be overpriced coffee or lousy broadband service. In sport, it’s boredom.

Anyone who has followed soccer in England over the past few decades is aware of the issue. The Premier League, for all its spectacular international success, has become dominated by a cabal of six to seven rich clubs (notwithstanding the astonishing success of Leicester City, which won the league as a 5,000-1 outsider in 2016). Money increasingly drives success, and that has widened the gap between that elite group and everyone else. In turn, a gulf has opened between the Premier League and the rest of the professional game. The Premier League has increased its share of revenue earned by clubs in the top four divisions to 83% from 57% in 1993, its first year, according to the government’s white paper on reform of the industry released Thursday. Combined revenue across the top four men’s leagues reached about £6 billion ($7.2 billion) in 2020-21, up more than 20-fold in the past three decades.

The deleterious effects of increased wealth polarization aren’t confined to a more ossified and predictable top division. The money that has flowed into the upper echelons of the game has distorted incentives throughout what the government refers to as the football pyramid. This creates a “casino gambling” mentality in which clubs have incentives to overspend to reach the more lucrative levels of the game or just to maintain their position, according to Kieran Maguire, an accountancy lecturer at the University of Liverpool who focuses on football finances. That dynamic contributed to the collapse of clubs such as Bury and Macclesfield Town, which, along with the ill-conceived plan by six breakaway clubs to join a proposed European Super League, helped to trigger the government’s review.

There are many elements to the white paper, though few are more significant than financial redistribution. The current revenue-sharing arrangement is insufficient; it contributes to financial unsustainability and has a destabilizing effect on the wider game, the government says. The paper gives no target for a settlement (the English Football League that comprises the three lower divisions wants 25% of all pooled broadcast revenue, according to Sky Sports) and refrains from mandating the independent regulator to impose one.

This is the threat, though. Despite pressure from government, the parties “have made limited progress on reaching an agreement and it remains a very real prospect that a football-led solution will not be reached without external pressure,” the paper says.

The Premier League’s reaction was muted, recognizing the white paper as a “significant moment” while cautioning against letting regulation damage the game. It’s understandable for an organization that built its product into a huge global success to resent having regulation taken out of its hand. But the Premier League didn’t do it all alone. It’s part of an an ecosystem, and can’t flourish forever if its success undermines the foundations of the game. 

Ultimately, the government’s proposal is about preserving competition rather than leveling down those who’ve done too well. It has more to do with Adam Smith than Mao.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Matthew Brooker is a Bloomberg Opinion columnist covering finance and politics in Asia. A former editor and bureau chief for Bloomberg News and deputy business editor for the South China Morning Post, he is a CFA charterholder.

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