Premier League finances are about to change again

Marketers always say that the Premier League is the Most Competitive League In The World (tm), largely because there’s a different(ish) champion every year. Bayern Munich has been Bundesliga champion every year since 1756, Juventus won their 937th Serie A championship last season, PSG gets handed the Ligue Un title every year due to lack of interest, and Barcelona and Real Madrid have tended to alternate possession of La Liga’s shiniest plate every year since Columbus sailed the ocean blue.

I exaggerate a bit, but still - England at least puts up a show of having some competition, with the title rotating between Manchester and London most years recently (with one stopover in Leicester, just to see how the other half lives). If you define “competitive” as “each team in the league has a decent shot at winning the title”, it’s not particularly that, but there are, in any given season, four or five teams that are in the title race until probably the end of the calendar year, which isn’t the worst thing in the world.

What’s the common thread through all this non-competitiveness? Money, of course. The big teams not only have it, they build structures in their leagues to make sure they keep it, in increasing proportion to the other teams in their leagues, to ensure that the big teams stay big and the small teams can only get so much bigger.

One of the key mechanisms for that growth management in England was the Short Term Cost Control set of rules. Those rules were put into effect in 2013, and they ensured the following:

- Clubs could not dump all their TV money straight into salaries
- Clubs could not dump unlimited money into their salary budget

The way the rules worked was fairly clever - a club could only increase its overall wage bill using TV money by 8% a season. This allowed for a little extra investment but prevented big clubs from gaining an even bigger advantage, and protected small clubs from overextending themselves.

The other part of STCC was that if a club wanted to increase their total wage bill by more than 8%, they could - as long as 100% of any increase over that 8% came from non-TV revenues, which means commercial deals (sponsorships). On the surface, this seems reasonable - if a club gets more commercial money, they should be able to spend it as they see fit, including on wages.

The problem, though, is hopefully fairly obvious. Big clubs, by their very nature, have vastly bigger commercial revenue deals than small clubs. Do you think that there’s a massive Brighton & Hove Albion endorsement opportunity awaiting the club in Indonesia, for instance? No, because they lack the global reach of a Manchester club, Chelsea, or Arsenal. So of course, the big clubs had more discretionary income to invest in salaries than the small clubs. But, that’s going to change starting this season.

Those Short Term Cost Control measures are being entirely eliminated effective this year. What this means is that clubs are now free to plunk down TV money if they want, and are free to increase their spending as much as they are comfortable doing (within the bounds of Financial Fair Play - owners still can’t just dump a billion dollars into a club and say “go buy players with this”). What does this mean for the Premier League?

It means that mid-table clubs, particularly ones who are super close to being contenders for a European place through Premier League table placement, can now spend the extra money it would take to get where they want to go. It means that bottom-tier clubs can buy that one player that might help solidify their league status for another season. It essentially means a cash injection for the entire league - an injection that will, of course, benefit the big clubs as well, but will arguably have more of a positive impact on those mid- and lower-tier clubs, and will probably raise the competition level of the Premier League top to bottom.

It doesn’t mean that the big clubs are disadvantaged, of course. This is just another weapon for them, and removing these rules won’t mean the Big Six will all of a sudden be sweating a Burnley title challenge. But it will mean that games at the Burnleys of the world may not always be walkovers for powerhouse teams any more (insert Arsenal under-performance joke here).

It’s rare that I say “well done, league!” to a financial decision, because said decisions are generally to the detriment of at least 15 teams in the league, but this decision seems to be made with an eye towards making all teams better, which is something I can definitely get behind as far as the overall Premier League product goes.