Why Premier League will suffer if the UK leaves the EU


Earlier this week, all 20 clubs in the Premier League expressed support for the United Kingdom remaining part of the European Union (EU). Chief executive Richard Scudamore was concerned that a Brexit vote this Thursday in the country's referendum was at odds with the league's commitment to ‘openness’ and would make it more difficult to protect intellectual property rights, mainly in the form of broadcasting contracts and merchandise. "I believe we, in the UK, must be in Europe from a business perspective," Scudamore said in a speech to the Institute of Directors' annual convention. "I believe in the free movement of goods, but when it comes to services, we must be entitled, especially in the audio-visual world, to territorialism." Should a Brexit vote be successful, there will be a number of possible consequences that would greatly affect the Premier League and, as a result, European and world football as a whole. IMPACT ON TRANSFER PRICES A Brexit vote is likely to cause the sterling (£) to be weaker due to uncertainty about how the UK would negotiate future trade deals. There will also be less investment from overseas companies taking advantage of the UK’s access to the free EU trade market. This would increase the price of signing players from overseas for Premier League clubs. For example, let’s say that Juventus put a price tag of €160 million on Paul Pogba. At the end of June 2015 the €/£ exchange rate was 0.709, but could easily move to 0.900 or even further should Brexit occur. This would increase the price Premier League suitors, such as Chelsea or the two Manchester clubs, would have to stump up to land Pogba from £113.4m to £144m - a rise of over £30m. There would, however, be no change in the cost of buying Pogba for other clubs based in the EU, such as current favourites for his signature, Real Madrid. If overseas players’ contracts were negotiated in € rather than £, this would increase the overall wage bills of Premier League clubs. The combined impact of the above could give England's top-flight clubs p problems in meeting Financial Fair Play targets should they attempt to boost their squads by signing overseas players. A further issue would arise if the UK government applies tariffs to signings of player registrations, although this is one of many government decisions that would take a number of years to be applied. A Brexit vote would at the same time make it cheaper for non-Premier League clubs to buy players from the UK, such as the standout player of Euro 2016 to date, Dimitri Payet of West Ham. With the spectacular growth of football in China in the last 18 months, a player drain to the Chinese Super League could arise as Premier League players become relatively cheaper to sign. APPEAL TO INVESTORS The Premier League is presently very attractive to foreign investors, with 14 clubs having total or substantial ownership from abroad. The good news for such investors is that a Brexit vote would make EPL clubs cheaper to buy, assuming the sterling falls in value. This assumes that the Premier League remains as popular a product as it has been during the UK’s membership of the EU. Should it be more difficult for foreign investors to buy UK companies, then clubs’ values may fall as they will be seen as being less desirable. One of the attractions of Premier League clubs is that with new domestic and overseas TV deals commencing in 2016-17, they are more profitable than ever before. A new breed of investor, who can see financial profit as well as the kudos and glory of owning a club, has been attracted to the Premier League. If the potential profits of buying and selling a team were to fall due to a weakening of the sterling, this could deter investment. ABILITY TO SIGN PLAYERS At present, about 65 per cent of Premier League players are from overseas. English clubs are currently free to sign any players with an EU passport because of freedom of movement of labour rules. What will happen if a Brexit vote arises in relation to movement of labour is a huge unknown. The best case scenario from the point of view of fans (and probably clubs too) is that the UK’s new relationship with the EU continues to provide freedom of labour movement. In this case there would be no change to the ability of clubs to attract players from the EU. The worst case scenario would be that the current rules on signing non-EU players would be applicable to those from the EU, too. These rules only allow signings if the player has played a certain percentage of international fixtures, linked to a sliding scale dependent upon the country’s FIFA ranking. Had such rules been applied historically, then the Premier League would not have seen signings such as Eric Cantona, Paolo Di Canio and Cristiano Ronaldo when they joined clubs at that stage of their careers. More recently, champions Leicester City would not have been able to sign N’Golo Kante from Caen 12 months ago. Brexit supporters claim that this will allow more opportunities for domestic players, especially young ones, to break through into teams. In addition this would have a positive impact on the England national team. This does seem at odds with the general football mantra of ‘if they are good enough they are old enough’ that comes from most managers. Club owners want access to the widest pool of talent possible, so it is no surprise to hear the likes of Karren Brady, chairman at West Ham, give support to the Remain campaign for the referendum. EU WORK PERMITS At present, many South American players can circumnavigate the FA overseas player restrictions through applying for a Spanish or Portuguese passport if their parents are from those EU countries or if they previously satisfied residency requirements in an EU country. Examples of such players are Angel Di Maria when he was at Manchester United, Diego Costa at Chelsea and Leonardo Ulloa at Leicester. Other overseas players are signed by Premier League clubs and then loaned to other EU countries with more relaxed visa rules to gain EU citizenship, before returning to their parent clubs. Whatever happens in the aftermath of a successful Brexit vote, it is likely to be good news for lawyers as they pick through the minutiae of new rules and regulations, looking for loopholes so that Premier League clubs can sign young overseas talent. ARTICLE 19 IMPLICATIONS Under FIFA rules, international transfers of players under the age of 18 are prohibited. These rules do not apply for players between the ages of 16-18 who are transferred within the EU or European Economic Area (EEA). Therefore, if the UK leaves the EU there is a possibility of Premier League clubs not being able to sign young players from the continent. In recent years, we have seen starlets such as Cesc Fabregas, Paul Pogba and Hector Bellerin signed by English teams between the ages of 16 and 18 before developing into top-class players. The prospect of being unable to sign players under the age of 18 will delight many foreign clubs, with the Premier League often accused of ‘poaching’ the very best young talent from academies for a miserly compensation fee. The UK could, however, apply to be part of the EEA, but it is unlikely that the UK government would choose to make this decision solely for the benefit of Premier League clubs. The Premier League's decision to support continued membership of the EU makes sense from a financial point of view. It would enable the league to maintain its position as the most popular and lucrative in the world, and thus have access to many of the best players by paying high wages. The Premier League's motives are solely for self-interest. English players would find themselves at a premium and in extra demand domestically, so what is good for the likes of Chelsea owner Roman Abramovic and Liverpool’s Fenway Sports Group isn’t necessarily best for players such as Andy Carroll and Chris Smalling.

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