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Football bosses appear before the Culture, Media and Sport Committee - ©Parliament

EFL makes strong case for regulator as MPs question football bosses

Premier League CEO Richard Masters and EFL chairman Rick Parry appeared today before Parliament’s cross-party Culture, Media and Sport Committee. MPs quizzed the pair on the need for an independent regulator and the state of football finances.

The committee hearing lasted almost two hours, so it’s impossible to cover everything which was discussed, but we’ve highlighted a few key themes below. You can watch the full hearing here.

There were strong contributions from members of the FSA’s All Party Parliamentary Group for Football Supporters with questions on whether the Premier League listens to supporters (Julie Elliot MP), Reading FC’s crisis (Damian Green MP) and the financial disparity between the Premier League and Championship (Clive Efford MP).

Parachute payments

The redistribution of football revenue throughout the pyramid took up a big chunk of the committee’s time and, within that, the issue of parachute payments probably featured some of the most eye-opening stats for supporters.

Rick Parry talked at length and made a very convincing case that current parachute payments cause massive instability within the game – “the gap, cliff edge, the major divide”.

The new deal proposed by the Premier League would allow relegated clubs to spend 85% of their revenue on wages while other clubs in the Championship would be limited to 70%. 

Clubs in the 85% band already receive way more revenue and would then be allowed to spend a higher percentage of that revenue. Those clubs also tend to bank more in transfer fees from the sale of players – Parry said around £50m income per club in recent times.

This leads to a massively imbalanced league where the top handful of recently relegated clubs have huge budgets for transfer fees and player wages compared with those who have spent their recent seasons in the EFL.

The underlying threat to football’s competitive balance is that the same handful of clubs could repeatedly be promoted to (and relegated from) the Premier League – creating a de facto closed shop league.

“Relegated teams would be able to spend £110m and we’d be constraining other clubs to spend £20m,” said Parry. “The clubs have had to decide between sustainability and competitiveness which is a horrible choice. It’s a ridiculous choice for the system.”

Parry made the case that this wasn’t about trying to “kill” clubs coming down but about getting a redistributive model which is balanced enough so that parachute payments aren’t even needed. 

In response Masters said that he didn’t think parachute payments would be removed although acknowledged it was a “conundrum”.

He said the Premier League was one of the most egalitarian in football when it came to sharing revenue with “profit and sustainability rules providing an advantage to Premier League clubs in the bottom half so they can aspire to be in Europe”.

Do the leagues want an independent regulator?

“Both of us want a football solution not a regulator-imposed one,” said Premier League head honcho Masters.

However, the EFL’s Rick Parry repeatedly made clear that he thought independent regulation was the best way to solve the game’s redistribution problem – and pointed out that it could have been done anytime in the last 30 years if football had shown the will to do so.

“We’re very supportive of the direction the Government is taking and we rather like the licensing system. Our purpose is making the clubs sustainable which needs two things – a fairer method of redistribution and better regulation to make sure clubs aren’t profligate,” said Parry.

“We’d prefer the regulation was done in football but we don’t mind who does it as long as there’s transparency, competence and we do think by having statutory powers the regulator will have a major advantage in compelling clubs to provide the right information. 

“Backstop powers are absolutely fundamental – the regulator must have the power to actively intervene to secure the sustainability of the pyramid for the benefit of fans and communities.”

Julie Elliot MP: “Fans are the lifeblood of the game – an incredibly vocal group of people in my constituency.”

Julie Elliot MP pointed out that nine out of 10 fans backed the case for an independent regulator and asked whether Masters had been trying to kick it into the long grass. Masters denied that and said he was “totally accepting of the bill”.

Do points deductions make league tables meaningless?

“One of the big problems with points deductions is punishing clubs for things which might have happened three years ago,” said Parry.

He pointed out that a “big advantage” with an independent regulator would be its power “in moving to squad cost ratios and controlling costs in real time”. This would give leagues powers to monitor budgets and intervene proactively rather than retrospectively – clubs can stop reckless owners spending money they don’t actually have.

“There’ll still be complaints because you’re constraining the squad but if you’re going to adopt the philosophy of keeping clubs alive you have to have some form of financial regulation operating in real time,” added Parry. 

“In the Reading case we are specifically going after the owner but we think if we have a better regulatory system then we will get better quality owners, which is in part why we’re more than happy to move over to the regulator taking over the Owners and Directors Test.”

Women’s game and the Saturday blackout

Rupa Huq MP moved questions on to the women’s game and asked whether there was an argument for lifting the Saturday 3pm blackout in the women’s game.

Rick Parry said the EFL supported the growth of the women’s game – “the potential is enormous” – while adding that Article 48 [which enforces the blackout] applies to both the men’s and women’s game. 

“Our legal interpretation is that Article 48 applies to the entire game so if we disapply it for women’s football we also have to disapply it for men’s football. I think Article 48 is one area where the PL and EFL are joined at the hip. It would need very careful consideration before Article 48 goes,” said Parry.

Richard Masters said the Premier League was in ongoing discussions with the FA about its involvement in developing the women’s game saying they had made a financial loan to NewCo and have a place on the board.

He added that he did agree with Parry’s analysis that Article 48 couldn’t be divided into “different bits” but felt that the “closer we work together the more we can take advantage in the broadcast markets”.

  • You can watch the full hearing here.

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