Football’s New Deal: What is at stake in game’s biggest overhaul in decades
The Premier League’s New Deal – a £130 million-a-year financial rescue package for the rest of the pyramid – could be sealed this week as clubs finalise details at a meeting on Tuesday.
Telegraph Sport dissects what is at stake in the game’s biggest financial overhaul in decades.
What is it?
The so-called “New Deal for Football” is a strings-attached plan to dramatically increase support packages to ensure there are no more lower-tier expulsions like Bury in 2019. Cheques in the region of an extra £90m this season, an extra £100m next season and then an extra £170m the season after that are set to be handed over by the 20 Premier League clubs.
As part of the vision, Championship clubs will get the lion’s share, with League One and Two clubs sharing around 30 per cent. Caveats are aimed at curbing so-called “Wild West’’ spending, which has been at up to 110 per cent of revenue for the second tier in recent years. Existing Championship teams will be restricted to as little as 70 per cent expenditure as part of the deal, although the EFL has negotiated an “equity top up”, which could amount to another 20 per cent of wiggle room. Relegated clubs, who benefit from parachute payments, will have limits on wages and transfers at the slightly higher immediate threshold of 85 per cent.
The Premier League will also insist some of the extra funding is spent on infrastructure rather than wages. There will also be a stipulation that all Premier League under-21 teams are invited to play in the EFL Trophy.
Why has it come about?
The Premier League has been reviewing its distribution models for at least four years, having come under pressure amid the furore sparked by Project Big Picture and European Super League breakaway plots. Ministers had also demanded more support payments from executives as lower-league clubs came close to folding during lockdowns. The subsequent fan-led review then ratcheted up the pressure even more by saying it must agree a deal or face the prospect of being forced to by legislation.
The league’s biggest driver to get a deal done in the coming weeks is to ward off a more restrictive model which inched closer when the new independent regulator for English football was outlined in the King’s Speech earlier this month.
Executives came under more pressure in the wake of Everton’s 10-point deduction for spending breaches, with MPs now calling for legislation to be hastened. Dame Caroline Dinenage, chair of the Culture, Media and Sport Committee, said the Everton verdict illustrated “that the status quo cannot continue”.
What’s the hold up?
Insiders have said an agreement has been “on the runway” for weeks, but, ahead of a final vote on Tuesday, there remains a fierce divide between clubs over whether the proposals for footing the bill are fair.
Several smaller clubs complain a sliding scale payment system based on merit alone would leave them paying a much higher proportion of their revenue into the solidarity pot.
Manchester City, for instance, could be paying as little two per cent of its revenue, which could equate to around £15m. That figure is dwarfed by club revenues soaring to a record £712.8 million this year – almost £100 million more than the season before.
City, Manchester United, Liverpool, Chelsea, Arsenal and Tottenham have often been at odds with the other clubs over how the new solidarity system should be paid for.
Last year they were outvoted after initially proposing those playing in Europe should not have to contribute more, and each club’s contribution should strictly mirror their Premier League income.
A transfer levy of sorts in addition to the traditional formula of relating contributions strictly to prize money is likely to offset some concern that the “Big Six” is not contributing enough.
What do clubs in the EFL think?
Championship clubs expressed some unease about being restricted to 70 per cent expenditure, but the EFL-brokered equity top up has eased concern.
The EFL had initially been seeking 25 per cent of pooled media revenues from the Premier League in the new financial settlement. Calculations with the EFL suggest the New Deal equates to around 15 per cent of net media revenue from the Premier League and EFL media deals combined. Top tier estimates claim around 21 per cent is being shared once transfer levies and other payments are taken into account.
The EFL had also sought the abolition of parachute payments and the introduction of merit-based payments in the Championship whereby the club finishing top would earn twice as much as the one at the bottom, with the same ratio applied to the Premier League. It was argued that all those measures combined would reduce the “cliff edge” between the Premier League and the EFL.
However, the Premier League has repeatedly refused to debate its parachute payment model. Having been updated on the proposals at a meeting on Sep 28, there is now broad agreement in the EFL that the overall deal on the table is too good to turn down.
