- Premier League suspends £881m deal
- Disagreements on financing resolution
- Clubs dissatisfied with terms
The CEO of the Premier League, Richard Masters, has informed clubs that the league “has no mandate” to enter into an £881 million financing agreement with lower-league counterparts.
Disagreements regarding the magnitude and structure of the proposed financial resolution have intensified among the professional football pyramid’s tiers, as evidenced by the Premier League’s decision to suspend negotiations on the matter.
Just before the holiday season, Richard Masters informed the twenty Premier League clubs that the league would “temporarily suspend further discussions with the EFL [English Football League]” due to its inability to obtain a mandate to execute an agreement.
The postponement of additional negotiations with lower-league counterparts is indicative of the discontent among numerous Premier League clubs regarding the £881m ‘New Deal’; the necessary majority vote of 14 clubs does not appear imminent.
Due to the uncertainty surrounding the scope of English football’s new independent regulator and the overall cost of the subsidy to the EFL, club owners and executives have become increasingly dissatisfied in recent months.
Premier League clubs would essentially transfer approximately £900 million to their 72 EFL counterparts over the course of six years in accordance with the agreement. An instantaneous £44 million payment could reduce the total cost from £925 million to £881 million if ratified.
Nevertheless, during a shareholder meeting earlier this month, the Premier League refrained from formally voting on two ‘New Deal’ resolutions. Instead, the Premier League requested clubs to provide written responses to the resolutions shortly before the holiday season.
Premier League Faces Opposition
According to sources, there was still a lack of support for both the deal’s overall value and the funding mechanism that would be utilised to execute it.
The English Football League had requested that Premier League clubs contribute an initial payment of £44 million in an effort to jumpstart the funding settlement, the subject of which has been the subject of negotiations for months.
On Tuesday, a source with direct knowledge of the situation reported that there were increasing demands from high-level executives for the New Deal to be authorised concurrently with, rather than before, the agreement on financial controls. Anticipatedly, consultations on a new set of reforms will commence in the new year.
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In addition, they stated that the Premier League was in the process of finalising the specifics of a financing mechanism that would mirror the variety of perspectives held by its clubs.
The priority for the Premier League was to reach a sustainable agreement that would benefit the game in the long run, according to the source, as opposed to signing a “quick-fix” contract.
Reportedly, the Premier League has informed the EFL of its decision to “pause” discussions regarding the New Deal for the time being.
However, the most recent development is likely to disappoint Whitehall, as ministers and cross-party MPs have been exerting pressure for months to reach a resolution on the New Deal.
Mr. Masters wrote to clubs in the summer to convey his optimistic outlook regarding the imminent signing of the contract.
Certain club administrators representing clubs other than the “big six” (Arsenal, Chelsea, Liverpool, Manchester City, Manchester United, and Tottenham Hotspur) have been privately cautioning their clubs that the New Deal settlement, as it stands, could result in significant financial harm to them.
Financial Concerns and Regulatory Disputes
It is believed that at least one club in the bottom half of the league has expressed concern about the possibility of borrowing money this year to finance its potential share of the EFL payout.
A number of Premier League clubs are uneasy with the government’s proposals for a bespoke licencing regime. Some of these clubs believe they should withhold the New Deal until there is more clarity regarding the operations of the regulator.
There is also a desire for more stringent regulations regarding associated party transactions, which pertain to player and commercial dealings with affiliated companies or organisations that share the same ownership framework.
Clubs received the New agreement, delineated in the autumn, scheduled to endure for six years. In the final twelve months of the period, in 2028-29, the EFL would receive £190 million from the agreement.
The allocation of funds to lower-league clubs would supplement the £110 million in annual solidarity payments currently in place, as well as additional funds designated for junior development.
The government stated in a white paper released earlier this year: “The existing revenue distribution is inadequate, which exacerbates financial unsustainability issues and disrupts the stability of the football pyramid.
The document emphasised a disparity of £4 billion in combined revenues between Championship clubs and Premier League clubs during the 2020-21 season.
Since the Conservative Party’s 2019 general election manifesto, in which Rishi Sunak pledged to continue reforms initiated by Boris Johnson, pressure has increased for a new regulator.
