Are We Seeing The Early Stages Of A Crisis In The EPL, And What Does It Mean For Celtic?

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I like to read in the mornings and at a night, catching up with news and stuff from around the world. Earlier today I read an article on the website of the World Economic Forum relating to famine and how it is not related to a lack of food.

It wasn’t particularly surprising to read that, in a world where food waste is now an accepted problem, but the article was fascinating, and eye opening, all the same. A famine usually has multiple causes, many of them to do with politics. Reading it reminded me that crisis is never about one thing; a crisis emerges from a combination of factors, often some that appear, on the surface, to have no relation to one another.

Coincidentally, after I was finished with the famine piece I read an illuminating article on the English Premier League, and the writer was asking whether or not the slip in their European performances was a consequence of not having a proper winter break, or because of the “demanding nature” of the domestic league. Excuses, excuses.

But something in that article piqued my curiosity and got me thinking about something I’ve been meaning to write for a while, an article on the existential crisis facing the EPL, and that crisis is very real.

As I was saying earlier in the piece, crisis is never about one thing. The performances of English clubs in Europe is, itself, an issue which has many different causes, but one of them is clearly money. The EPL has far too much of it. It’s become about glamour rather than about functionality. Ironically, you can see that in the Leicester team that’s got to the quarter finals. They aren’t filled to the rafters with global superstars, unlike some of the English sides who’ve crashed out of Europe already. They are a functional, hard working side with some very good players who can do a very good job when all the parts of the machine are working in tandem.

English clubs, as a whole, used to be very good at that, which is why as EPL money has continued to swell the ranks of their teams with “better players” their performances in the big competitions have continued to degrade. What does it mean to talk about an “English team” in Europe these days? Most are filled with foreign players and run by foreign coaches. With the managers, in particular, you see a revealing trend; England has an obsession with finding “the next big thing.” Which is why the league has been a killing ground for a lot of careers.

The EPL is a bloated monster, and a lot of predictions have been made about its eventual demise, but I do not believe many of those were based on a “wide angle lens” view but chose to look at single elements instead of the big picture, and you can’t look at that big picture and not see that the current system is in a heap of trouble.

First there’s the obvious one; the prevalence of table-top boxes or card sharing devices which can stream football at near perfect quality, depending on your internet connection. As these get more sophisticated, and the buffering issues are resolved with better servers, the “need” for people to spend fortunes on pay TV subscriptions will be eroded. Technology is miles ahead of the satellite companies on this one; there’s no end in sight to this and no law they pass or marvellous “magic bullet” they create will resolve this issue.

I would argue that these boxes and devices won’t have the impact some people evidently expect; we’re not looking at The End of Sky because of them. Sky makes a chunk of its money from advertising; don’t let anyone kid you that by buying one of these devices you are “striking a blow” against them. As long as you’re watching at all you are giving these people want they need most, exposure for the companies that pay them fortunes for ads. Those companies know that whilst Sky might lose customers their own brands aren’t at all, and they will continue to pay the company on that basis.

But whilst it’s not an existential issue for Sky, it does eat into the bottom line, and that will clearly impact on their ability to offer the EPL the kind of crazy money they currently do. Sky subscribers are roughly split into two categories; those who for the movies and those who pay the premium rates for the sport. The desktop box phenomena and companies like Netflix and Amazon have already eaten into the movie and TV side of the business which is why Sky moved to a very efficient, and very sexy, streaming service of its own … the market has dictated that. It’s a matter of time before they change the way they promote sports … and it will change everything.

Imagine if they made individual matches available to stream instead of presenting the whole lot as one big package. Who would actually pay to watch West Brom v Hull on a Monday night? Think those clubs would get the same “collective bargaining” agreement they do now? Not in this lifetime, and that will alter the ground under their feet.

Now put BT Sport into the mix; a lot of people said BT’s entry into the market would cut the money Sky offered to the EPL. That was nonsense, as anyone who’s got the slightest knowledge of economics knew full well; instead, the opposite happened. The EPL negotiators found themselves in a bidding war and the price they were able to command went up and up and up. What happens, though, if BT one day decides not to double down on EPL coverage?

They already have the Champions League for another negotiating term. They also have the FA Cup, and if the reports are to be believed they are making a big play for exclusive rights to Scottish football … if they get that then they’ve got a very interesting opportunity … to cut right back on their EPL coverage or simply to from it entirely. They’ll know if that’s doable based on their internal numbers … but if they were to bow out that would leave Sky the only broadcaster bidding.

And that would definitely change everything.

BT’s entry into the EPL market means that the two companies are now spectacularly over-paying for the product. Market forces work in a simple way; when that’s no longer supported by growth forecasts or hard numbers they’ll hit the brakes. If BT walks away the colossal scale of Sky’s folly will become even clearer, and they will either freeze their offer or reduce it. And we know that the more English clubs have the more they will spend … and that’s a disaster if Sky ever has to cut their input into the league because a lot of that league will already be spending consonant with that sort of income and as a result they’ll be sitting on a time bomb.

Don’t underestimate the machinations of the 21 Century Fox bid for Sky; although ostensibly “controlled” by the Murdoch family, these are actually distinct companies with different boards of directors, different pools of shareholders and very different priorities, and if Fox’s executives decide Sky is overpaying for this product then there’ll be cuts come what may.

The problems are exacerbated magnificently by England’s collapsing national co-efficient which guarantees them four Champions League group places under the new rules which are coming in. Right now Spain and Germany are in front of them, but Italy is behind them and France are behind that.

It’s not difficult to see circumstances where Italy knocks England into fourth and although French teams are still way off the pace, Monaco just knocked Manchester City out of the Champions League in a year where PSG came within a minute of putting out Barcelona. Had that happened their national efficient would have risen in a year when England’s suffered. And that could be a serious harbinger of trouble for the future.

A few weeks ago, the EPL took the unusual decision to play a match on a Champions League night, in violation of UEFA regulations. I lamented on this site about how those same regulations had resulted in a television blackout for the Scottish Cup replay between Hibs and Hearts last month, a scandal about which something really ought to be done.

But the EPL will get away with doing that, because UEFA typically levies fines on the national association rather than individual leagues; it’s pretty clear that the heads of the don’t really have all that much time for FA regulations or consequences to that body which accrue for their own actions. That’s a problem the FA will have to grapple with, that and the near total contempt EPL clubs have for the FA’s own showpiece cup completion; some form of change is coming there and that could have its own knock-on effects.

Another issue more and more coming to into play is that other leagues have started to flex their muscles. China is a case in point, but the United States market has the potential to be the most lucrative on the planet and although football there is organised differently and there are salary caps and quotas those rules are being eroded by time and the expansion of the game itself. It’s already a draw, and once their clubs start to realise they have access to wealth even the EPL can only dream about and the potential to grow it like no other country the imperative to do so will grow until it can’t be contained. Emerging markets represent, easily, the biggest existential threat to the pre-eminence of the EPL but for one, massive, over-riding issue.

Far and away the biggest issue facing the EPL, and which will impact on every single aspect of the league, is Brexit, and it becomes clearer with each passing day that the hard Brexit which would result in the most serious long-term effects is now inevitable. Some kind of work permit system looks a certainty.

There will be no “special dispensation” for football, no matter what some might cling to. The English FA is known not to favour one anyway; they’d be quite happy with a scenario that saw clubs spend more of their money on domestic players and youth development, with the view that it would help the game here as a whole. Any dispensation would have to be agreed by the Home Office and they know they will face a political backlash, and possibly even legal consequences, if they try to create special dispensations for individual market sectors.

Add to that the possibility that leaving the Single Market will impact on the pan-European nature of football TV rights, and you can see how Brexit is a game-changer, for England and Scotland both even without a serious impact on player purchasing.

But the likelihood is that there will be such an impact and that it will cut the number of expensive foreign players in the Premiership. It will mean those players which do go there will all have to come from a pool of existing internationals who would qualify automatically. Those players will get ever more expensive, but you’d be amazed how few of those guys from Germany, Italy and Spain leave their respective national associations to go to England at the moment.

The impact on a handful of clubs is likely to be little more than a financial one. But clubs who currently spend obscene amounts of money on foreign talents but who wouldn’t be able to attract the real cream would find themselves in a serious squeeze. Forget teams like Stoke being able to go for second tier footballers from the big countries as they can right now; that becomes impossible under work permits and quotas.

At Celtic, we will feel the hammer hit us especially hard if we’re still tied to England when it happens. The types of players we’ve been able to sign over the years are guys who were “emerging talents” and likely to break into their national sides with the right development. We’d not get those guys if we had to apply for work permits for them. Let’s take Dembele; if we were trying to him from France we’d have faced a double problem; a work permit application and the fact there’d probably be a dozen other French players, like Martial, competing for the same small number of them. Guys like Van Dijk, Wanyama and others … forget it.

One of the enormous ironies of the Brexit situation as it affects football is how much better off our clubs would be if we were independent and part of the EU, being able to cherry pick talents from all across the continent, unfettered, whilst English clubs were forced to jump through hoops for their own signings. The value of players in EU countries would go down too, with the English money no longer on the table, inflating the market.

That’s another game-changer.

The long term impact on the EPL of the biggest clubs having a handful of top European talents, a smattering of “emerging talents” and the rest of the league made up of domestic players at ever increasing prices can only be guessed at … but standards would fall across the boards. The league would lose its lustre, particularly if the kind of footballers who’ve tended to end up there stayed in their own domestic surroundings and improved the quality of those competitions.

Sky will not be kind to English football if that happens. If other leagues begin swelling with top tier talent whilst England stagnates there’ll be an influx of TV money towards those leagues instead; it’s a ruthless business, and one that doesn’t discriminate. If fans get more satisfaction out of watching the Bundesliga than the EPL that’s where the big cash will end up.

It might take ten years, but the EPL will not command anywhere near the kind of money it does now when the ripple effects of that take hold.

Under normal circumstances, anything that hurt the EPL’s ability to keep on spending would benefit us in terms of retaining our best players, Celtic has to weather the Brexit storms as best it can, but it’s clear than in terms of Brexit it’s a disaster for our current business model and we’re far better in the EU than outside of it. This isn’t going to become a political article, but the evidence of that doesn’t need to be oversold anyway; any person with a fraction of common sense understands this.

The EPL is facing problems on many fronts. Do they equate to a crisis? No, but they have the potential to. What makes it worse is the nature of the problems themselves; every single one of them has the potential to grow further, and present major drama for the league in their own right.

What does this all mean for Celtic?

That rather depends on where we are in relation to Brexit; that’s the one that could most easily wipe the slate clean but that won’t benefit us if we’re dragged into the same swamp; in fact, the effects on us could be far worse than they are for the average English club because, at least in the beginning, they will still have the financial wherewithal to international players and those exceptional few who would get dispensation through the work permit system and players of even average talents and who play in the domestic game would see their values increase many times over. It’s difficult to see that as something other than a disaster.

It seems pretty clear that the EPL party can’t last forever. We have to be in a strong a position as possible to take advantage of the end when it comes, and the chances are that if a change came quickly, suddenly, it would be a collapse on an unparalleled scale which would leave many clubs in serious financial peril.

We are prepared for a lot of eventualities. If you listen carefully to what our new head of recruitment said the other day, we’re going to be looking more and more close to home; that’s an indication of how people inside Celtic think Brexit is going to go, and whilst players like young John McGinn can be turned into genuinely outstanding footballers – Stuart Armstrong has, after all – the consequences for us, in European terms, aren’t so great.

This is why it behoves all of us to keep an eye on political developments as well as sporting ones; when the wall comes tumbling down it will probably be the politicians who decide whether it offers us opportunities or whether chunks of it hit us on the head.

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