Project Big Picture: My Coup-a-Choo

Coup, Coup, I just want you…

In October 2020 Sam Wallace of The Telegraph revealed ‘Project Big Picture’ (PBP). An attempt by the American owners of Manchester United and Liverpool to radically change the layout and governance of the English game.

The project was hailed by some as addressing wealth distribution issues and financial losses made by clubs, especially those in the lower leagues. In truth it was a power grab by people who see football as a business. They see fans as mugs to be patronised, monetized and provide a backdrop that looks good on television when selling broadcasting rights.

Under present arrangements there is an approximate three times multiplier in terms of revenue earned by clubs between different sectors.

The ‘Big Six’ teams in the Premier League earn about three times the income of other Premier League teams. These in turn generate three times that of clubs in receiving parachute payments in the Championship, who have three times that of other clubs in the Championship, who have three times revenues of League One clubs.

The PBP headline proposals seemed very seductive with the emphasis on:

  • £250 million to clubs in the EFL
  • 25% of the Premier League TV deal going to the EFL (compared to presently about 13%, and much of this to clubs in receipt of parachute payments).
  • The Premier League would be reduced to 18 clubs, supposedly to help reduce fixture congestion
  • Carabao Cup scrapped.
  • Enhanced voting rights were to be given to nine clubs in the Premier League with the longest consecutive number of seasons in that division, with just six votes needed to pass changes in regulations.
  • The English FA would be given a ‘gift’ of £100 million.

An analysis of PBP proposal revealed that the devil was in the details.

£250 million to the EFL: This would be very welcome by clubs caught in a pincer movement of having to play matches to earn broadcast revenue but missing out on matchday income.

Premier League clubs generate 13% of income from matchday, but this is much greater in the EFL.

The small print of PBP revealed the £250 million proposed was not however a donation from the Premier League but instead a glorified payday loan which would be repaid from future share of broadcast revenues.

There is no doubt that clubs in Leagues One and Two are in desperate need of financial support and tend to have owners who are less wealthy.

The Premier League did apparently offer £50 million in the form of grants and these loans, but this was rejected by the EFL, as was a potential £350m offer for 20% of the EFL broadcast rights from a US based private equity company.

The sticking point in relation to financial assistance was in relation to the Championship. Owners of Championship clubs were collectively worth over £30 billion, according to reports in the English media, and so Premier League clubs questioned why they should provide financial assistance when the Premier League was itself unable to generate matchday revenue.

25% distribution of collective TV revenues to EFL clubs

Again this proposal looks very democratic, as the gap between the Premier League and EFL has grown significantly from when the Premier League started in 1992/3.

In that season Premier League broadcast revenues were £51 million, but this had increased by over 5,800% to over £3 billion by 2019, of which about half came from UEFA competition participation and international deals.

EFL clubs historically kept almost all of their deal with Sky Sports, worth £119 million a year, which is about 7% of the sum earned by the Premier League for its rights.

Embedded within the small print of PBP was a proposal to allow clubs to sell their own rights for up to eight games a season internationally. The revenues from these matches would be kept by the clubs themselves. In addition should the UK government lift the historic ban on matches being broadcast at 3pm on a Saturday, then clubs would be allowed to sell these rights too. This could result in the Premier League, instead of selling a package of 380 matches to overseas broadcasters, instead would have 162 on offer. The price paid by international broadcast partners, who have been willing to offer extra for exclusivity, would fall substantially.

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In addition the Premier League would be responsible for marketing and selling EFL matches too. Therefore EFL clubs would be in receipt of 25% of a much smaller cake than club owners may have thought they would be sharing. Whatever revenues they did receive would be subtracted from the £250 million advanced by the people behind the people at PBP.

By taking some of the matches in house and keeping all the revenues the gap between the Big Six clubs and the remainder would increase substantially. Uncertainty in terms of match results, a contributory factor to the popularity of the Premier League, would be substantially reduced as smaller clubs would not be able to compete for talented players, or refuse offers from the larger clubs for their stars. A less competitive Premier League would make it harder still for the organisation to persuade broadcasters to pay premium prices for a smaller product.

Reduction in the size of the Premier League and abolition of the Carabou Cup

If you are the owner of a club such as Manchester United or Liverpool, then having to play league matches against the smaller clubs such as Burnley and Crystal Palace is a chore. It is harder to charge premium prices for lucrative hospitality packages and the competitive nature of the Premier League makes it difficult to rest players. Then there is the genuine risk that the smaller club might refuse to roll over and win the match, as we’ve seen with Palace winning at Old Trafford and Villa thrashing Liverpool.

The ‘Big Six’ know that UEFA matches are lucrative, and so an expanded Champions League competition would be very lucrative.

The present UEFA Champions League format, which has eight groups of four teams followed by a two legged knockout matches and a final, means clubs can play up to thirteen games. Ideally club owners would like to see an expanded Champions League where there are more matches and more certainty of qualifying for the tournament.

By reducing the size of the domestic league this could be achieved, freeing up valuable weekday slots for an expanded European competition. Various proposals have been made, many of which involve clubs having a dozen group matches followed by a knockout format similar to what is presently the case. This would potentially increase the total number of Champions League matches to 19. In addition a proposed later start to the Premier League season would allow clubs to organise more pre-season tours, which are very lucrative for a handful of clubs.

Therefore the larger clubs would certainly have substantial financial benefits from the proposals, more games against glamourous (European) competitors and opportunities to synchronise more pre-season tours with commercial deals being signed in overseas countries.

As for the ‘Other 14’ clubs in the Premier League, they would have fewer fixtures, so less matchday income, and thus the wealth gap in the division would grow further.

Relegation to the EFL normally comes at a cost in terms of jobs as well as income. When Aston Villa were relegated in 2016 their employment numbers fell by 833 within two seasons. Similarly for Sunderland, relegated the following season, 226 jobs were lost in the same period. Usually when one club is relegated it is replaced by another, so there is a much smaller net impact on national employment, but reducing the size of the Premier League will negate this happening. These job losses are an irrelevance to the cheerleaders of PBP.

Just being in the Premier League can have a positive impact on a town/city’s overall wellbeing. When Brighton were promoted to the Premier League in 2017 the club arranged for an economic impact report after the first season in the top division. This report showed a net benefit to the local economy of £212 million, as being part of the Premier League brings added exposure and businesses in the local supply chain generate extra income, especially when matches are played at home.

The Carabou Cup, whilst being relatively unloved in terms of interest and attendances in the early rounds, contributes at least a third of the EFL domestic broadcast deal according to media reports. The clubs who would therefore lose out are the ones most in need of financial support.

Two clubs would also have to be kicked out of the EFL to accommodate a smaller Premier League, but given the lack of concern by the football authorities over the demise of Bury and Macclesfield Town this would have not caused too many sleepless nights for executives.

Parachute Payments

PBP proposes that parachute payments are abolished. Instead clubs promoted to the Premier League would have £25 million a year deducted from their share of broadcast rights for the first two seasons and this would be repaid to those clubs upon relegation.

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This would make it far more difficult for those clubs who are promoted to compete with those already in the Premier League. Equally when they were relegated they would have a financial advantage over existing Championship clubs, which is one of the reasons why some people criticise parachute payments in the first place.

Whether existing parachute payments within the EFL itself for clubs relegated between divisions and to the National League would also be abolished is unclear. If parachute payments are as evil as their critics claim, then why do they exist in the EFL itself? There is certainly a case for saying they are too high, but the logic behind them, which is to prevent relegated clubs going bust following relegation, has some merit.

Voting Rights

The proposed change to voting rights angered many people in football, anyone with respect for democratic process is likely to hold dear the concept of one person one vote. PBP aimed to destroy that and would effectively only require six clubs to be able to determine the future of English football.

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The somewhat bizarre proposal to have nine clubs with enhanced voting rights over issues such as broadcasting rights, ownership of clubs and promotion/relegation appeared to be a cynical move to get more support from some of the non Big Six clubs for the initial change to the Premier League constitution. Leicester City, who have won the Premier League more recently than Arsenal, Manchester United or Spurs were not going to be included in the elite voting gang.

This was seen by some commentators as revenge from the owners of those clubs who missed out on a Champions League place that Leicester stole from them in 2016/17 by having the temerity to win the Premier League the previous season through having the best team that season.

If clubs streaming matches proves to be lucrative, then it would only take 6 club owners to increase the number of matches streamed from the proposed eight, and this could be expanded into domestic as well as international broadcasting.

The control of English football by six clubs would be North Korean in its grip. For Newcastle’s takeover to be approved or rejected by the owners of Manchester United and Liverpool is staggering. There would be no incentive for the ‘Big Six’ to become a ‘Big Seven’ and therefore if the likes of Villa, Leeds, Everton do have genuine ambitions to break into the existing elite they could be easily thwarted.

For clubs in the Championship, they would be controlled by six clubs in the Premier League. In terms of existing governance, as well as not advising member clubs of the potential private equity investment, the EFL board rejected a few months ago a recommendation from Jonathan Taylor QC’s governance review for independent directors, and chief executive Dave Baldwin mysteriously resigned within 48 hours of PBP being announced. These things are probably just coincidences though.

Academies

Clubs in League One and League Two would no longer have to have academies. Instead Premier League clubs would be able to loan out up to four players to a single club. If the EFL club sacks the manager the Premier League club would be able to recall those players immediately.

This would mean that lower league clubs effectively become incubators for larger clubs, as the present Elite Player Performance Plan, which gives EFL clubs some (but not very much) compensation when their academy players are snatched by PL clubs, would cease to exist.

Small town clubs would therefore have little incentive to maintain academies, which would reduce opportunities in these areas, and have a knock on impact on employment and physical health development.

England and the FA

The authors of PBP say that the national team will benefit from PBP due to fewer fixtures. At present clubs tend to play their second string teams in the Carabou Cup, so scrapping this will have negligible impact upon England regulars. In terms of reducing the size of the Premier League, all that will happen is that the matches foregone will be replaced by bloated European Competitions, a FIFA World Club Championship, summer tournaments and friendlies.

If the Qatari or Russian government had been offering £100m ‘gifts’ to those who were choosing the destination of the FIFA World Cup then the media would probably accuse them of making bribes.

The authors of PBP have offered millions to the English FA (whose chair Greg Clarke seems to have been involved in the project too) who presently have a ‘golden share’ which can be used to veto issues such as voting rights and relegation/promotion.

Fans

There is a proposal to reduce ticket prices for away matches to £20, this will no doubt be welcomed by fans. The other proposal to provide some form of subsidised travel to away matches sounds better than it is in reality. The vast majority of fans travel to away matches by public transport or car as they prefer to arrive early at matches to see the sights, sounds (and let’s be honest pubs) of the places that they are visiting.

Conclusion

Whilst PBP was ‘unanimously rejected’ at a Premier League meeting following its leak to the press, many of the ideas contained within will resurface as those at the top try to increase their share on the finances of English football.

There have been 49 clubs who have participated in the Premier League to date. These proposals will make it much more difficult to increase that number due to proposed changes to the playoffs, where the club finishing third bottom of the Premier League will now participate, with the benefit of a PL budget.

The present 58% of total revenues shared by 30% of clubs (i.e. the ‘Big Six’) is not enough in the eyes of their owners, and to quote Gordon Gekko in the film Wall Street “The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit”.