With a £5.5bn three-year television deal on the horizon, England's top clubs will be urged to give more to the grassroots
The birth of the Premier League 21 years ago was largely born of a desire among England's top clubs to keep more of their TV income, and its exponential growth ever since has been fuelled by the billions of pounds poured in by broadcasters at home and abroad. The arguments, backroom deals and mournful cries of those who fear the money generated by football's boom years will leave behind wonderful memories but little in the way of grassroots facilities, have echoed down the years ever since.
When Sir Alan Sugar told Sky's Sam Chisholm to blow ITV "out of the water" in 1991, he could not have known how far and how fast that first £191m contract would spiral. As the numbers – which this time around will hit £5.5bn over the next three years when they are revealed to club chairmen in April – have continued to grow, the debate about how the money is distributed has intensified.
A watershed moment was seemingly reached in 1999 when, in return for support in helping the Premier League maintain its collective approach to selling TV rights in the face of pressure from Brussels, Labour's Football Task Force thought it had secured a commitment to channel 5% of revenues into grassroots football. The Premier League has since argued that the deal only applied to domestic income, not overseas sales, and that it was not binding in any case. Some of the principles, such as the distribution of so-called "parachute payments" to relegated clubs, were contained in that Founder Members Agreement. Others, such as the so-called "solidarity payments" that now go to the Football League and the Football Conference, have been introduced more recently as the disparity between the top and bottom has grown.
The percentage of money that goes to the rest of the game and to the grassroots has not risen, but the Premier League would point out that as the overall pie has got bigger, so the size and scope of its financial contribution has also increased. In general, around 16% of its TV revenue has gone outside the Premier League over the course of the current cycle, but the majority of that goes to the Football League, and most of that to relegated Premier League clubs. Only around 4% is distributed beyond the Football League to grassroots and community programmes.
Yet the Premier League's influence now ranges wider than ever and, through its financial muscle it effectively controls or finances everything from five-a-side courts in disadvantaged communities to supporters' organisations to community schemes at home and abroad. It argues that it shares more of its money, more widely, than any other league in the world. It also suggests that the reason it brings in billions in broadcasting revenue is due to the strength of the product. If it stops investing in that, there would be less to go round for everyone.
From Brixton to Botswana, the Premier League can point to the effect its money is having on the ground and the success of some of its projects in reducing anti-social behaviour, getting kids into sport, promoting Britain abroad and myriad other benefits. Not to mention (and they do) the £1.2bn tax contribution that football players make to Treasury coffers. But as the money flowing from the Premier League to the rest of the football pyramid has become more important, so the level of control it has exerted has also increased.
The last restructuring of the Football League's distribution formulae was accompanied by several conditions surrounding youth development and its rulebook. Today, Championship chairmen will meet to register a protest against the latest proposals to further increase parachute payments by a much higher percentage than solidarity payments in a move they fear could fatally undermine their ability to compete in an era of Financial Fair Play regulations.
Meanwhile, at this point in the funding cycle an atmosphere of paranoia exists among some of the organisations that depend on the Premier League for their funding, either in whole or in part. Across whole swathes of the game, the Premier League has effectively supplanted the Football Association because it controls the cashflow. Through the Elite Player Performance Plan, into which it will pour £320m over the next four years, it will essentially take control of the development of young players. It will even play a role in the new school sport plan unveiled recently by prime minister David Cameron. Critics argue it exerts power without responsibility, while the Football Association has most of the responsibility but none of the power. Ultimately, the proportion of hard cash it pours into grassroots projects will remain largely unchanged, despite the huge uplift in TV income
Its contribution to the Football Foundation last year, for example, was 1% of its overall revenue. Many would argue it should be higher, but it can point to the fact it invests more than either the government or the Football Association.
The recent culture, media and sport select committee was just the latest to wonder how healthy it was for the Premier League to exert such control over organisations that exist to benefit the wider game on the basis of the money that pours in from fans subscribing to pay TV channels to watch Premier League football.
The Football Foundation, set up in July 2000 to try to reverse decades of underinvestment in grassroots facilities, has been responsible for leveraging around £800m into new pitches, mainly 3G astroturf surfaces in disadvantaged areas. To begin with, each of three funding partners – the Premier League, the FA and the government – agreed to put in £20m. Adjusted for inflation that would correlate to a total of £81m a year. But instead of each partner seeking to raise their contribution to match the others, it has been more of a race to the bottom. In fairness to the Premier League, it now puts in £12m a year, while the FA and the Department of Culture, Media and Sport put in £10m a year each. Half of the Premier League's £12m investment is ring-fenced for the Football Stadia Improvement Fund, which mainly helps non-league clubs to upgrade their grounds, meaning a total of £26m directly funds grassroots projects. The current funding formula is expected to be maintained, but given the pressure on local authority budgets and the dire state of many council-owned pitches, many fear that it will be far from enough and that a step change is required.
More than 70% of the money that the Premier League distributed beyond its own clubs last season went to Football League clubs. And of that £140.7m, more than £90m was paid out in parachute payments to relegated clubs. Designed to soften the blow of being relegated from the top tier, these have proved ever more divisive as the sums on offer have soared. The latest offer, which could see relegated clubs receive an eye-watering £59m over four years, will be a bridge too far according to the Championship chairmen who will meet on Wednesday. They fear it will make the league wholly uncompetitive, particularly in an era of financial fair play where they are being forced to balance the books. The Premier League insists that it will merely help cushion clubs against relegation and prevent them getting into financial difficulties. It also points to the £320m to be invested in its new Elite Player Performance Plan over the next four years, some of which will go to Football League clubs.
Each time there has been a hike in broadcasting income, there has been a commensurate increase in players' wages. And in the Premier League, there is an uncanny relationship between your wage bill and where you finish in the table. It is this inflationary arms race that has ensured most clubs have continued to make a loss even as Sky's money has transformed the game. The clubs are determined that this time it will be different, hence their narrow agreement to bring in new financial controls that will seek to curb wage inflation. In effect, the new rules are an instrument designed to enable clubs to say no to agents and players. Whether they succeed or not remains to be seen.
Formed in 1999 as a result of the same Football Task Force that led to the creation of the Football Foundation, Supporters Direct has, often against the odds, played a key role in the formation of 180 supporters' trusts. In many cases it has been partly responsible for ensuring the survival of clubs or, as at Swansea, ensuring fans have an ongoing interest. It faced a funding crisis two years ago, when its chief executive Dave Boyle was forced to resign amid questions about its future. It is funded through around £1m a year hived off to the so-called Fans' Fund, which itself is funded from the £6m per year that goes into the Football Stadia Improvement Fund. Whittingdale, the chairman of the recent culture, media and sport select committee, has been critical of the arrangement, calling on government and the football authorities to ensure a longer term deal is in place. Even Richard Scudamore, in his evidence to Whittingdale's committee, commented on the perversity of the funding arrangement.
Amid the Premier League's chaotic birth, the PFA threatened to strike unless it could partake in the riches on offer. It originally negotiated a percentage of the overall figure, but that became unsustainable as the numbers soared and around 11 years ago it became a lump sum. Over time, the money distributed via the PFA has been re-routed to a range of causes as well as pension and insurance schemes for players, funding the operation of the union and the reputed £1.1m salary of its chief executive Gordon Taylor. There is a broader debate among some players about the role of their union and whether it still best represents their interests, but it is unlikely to impact on this funding round.
The anti-discrimination body receives £110,000 each from the Premier League, the Football Association and the PFA every year. In the wake of the debate over the future of football's anti-discrimination movement, all three promised a long term funding plan to ensure it could widen its remit and plan for the future. But it is still waiting for news.
The Premier League first made a contribution to the non-league game in 2009 when Setanta went bust, contributing a one-off payment of £1m. Since 2010-11 it has contributed around £2m a year – £1.2m is provided as funds to support all 68 Football Conference clubs, while £800,000 is committed to the Football Conference Trust, to whom all Conference clubs can apply for youth development and community programmes.