(Bloomberg) -- English soccer is at risk of more financial chaos unless money filters down from the Premier League more evenly to the lower tiers, according to a fan-led government review, which urged clubs to come up with a solution by year-end or face the issue being taken over by an independent regulator.
The report published late Wednesday by former U.K. Sports Minister Tracey Crouch found that despite the wealth in the Premier League, teams across the English game have fallen into administration 62 times since the top tier was founded in 1992. The sport is at a “crossroads,” she said.
Boris Johnson’s government commissioned the review of soccer’s structure and financing in the wake of the ultimately failed attempt by major European clubs, including six from the Premier League, to form a breakaway super league in April. The English teams thought they could make more money while staying in the Premier League, but backtracked after a fierce backlash from fans as well as Johnson and even Prince William.
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Crouch said the super league attempt was “just one of many, albeit the most clearest, illustrations of deep seated problems with the game.” English soccer faces a “stark choice,” she said.
“It is both true that our game is genuinely world leading and that there is also a real risk of widespread failures and a potential collapse of the pyramid as we know it,” she said.
Yet there were early signs of potential tensions over her proposals from the Premier League, which said in a statement: “It is important to everyone that any reforms do not damage our game, its competitive balance or the levels of current investment.”
In addition to an independent regulator, the review recommends a transfer levy on big teams to support those lower down the pyramid, and more effective supporter engagement to tighten up the standard of governance.
It also calls for new owners’ and directors’ tests established by the regulator, with additional protection for key items of club heritage through a so-called Golden Share requiring supporter consent.
The issue of club ownership came under intense scrutiny following the Premier League’s decision to sanction the takeover of Newcastle United by a consortium headed by Saudi Arabia’s PIF. That angered many club owners, who had assumed the takeover -- which had been on hold since July 2020 after the consortium cited “prolonged regulatory delays” -- was not going to happen.
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In an interview ahead of the publication of the review, Crouch said her recommended enhanced owners’ test would have made the takeover bid for Newcastle “more transparent.”
She also said the women’s game should get its own dedicated review, to look at issues including its financial structure and support from the Premier League.
The review of the men’s game refers to the financial gulf between teams who play in the EPL, by far the richest league in Europe, and other professional teams in Britain. She was also asked to look at the collapse of some high profile soccer clubs, such as at Bury and Macclesfield.
The bottom team that played in the Premier League received broadcast payments of 97.5 million pounds ($130 million) from central funds for the 2020/21 season, according to the Premier League.
Clubs outside the Premier League receive a fraction of this, unless they have recently been relegated from the Premier League. Next tier teams in the Championship are likely to be in receipt of annual payments of about 8 million pounds, according to a person familiar with the figures.
Clubs that have been relegated from the Premier League are paid parachute payments, worth 93 million pounds over three years from the Premier League, which are themselves contentious.
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The EFL, which runs the top three leagues outside of the top tier, has long argued that such payments to only a handful of teams distorts competition in the game’s second tier. In a statement, it said it welcomed Crouch’s view that the parachute system needs changing.
Crouch said in the interview that if English soccer had “proper prudential oversight” the Premier League would have “the confidence to distribute further down the pyramid.”
Supporter groups generally welcomed the recommendations. “This is potentially a huge step forward for football governance,” said Kevin Miles, chief executive of the Football Supporters’ Association said. “The government committed to a fan-led review which has listened to the voice of fans. It’s now up to the government to deliver upon the recommendations.”
Fair Game, a group of 31 lower league teams who say they are campaigning for sustainability, integrity and community, said: “Football is broken and today we have a roadmap to fix it.”
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