What will Brexit Mean for the Premier League?
March 13, 2018
Just in case you’ve spent the best part of two years on safari, the UK voted to leave the EU in the summer of 2016. Whether you love or loathe this decision, it’s sure to be a seminal moment in contemporary British impact on will impact on every single industry and marketplace.
Incredibly, even the almighty Premier League has been impacted by the referendum vote, while the enactment of Brexit will ultimately wreak more havoc on England’s top flight.
Below, we’ll consider the initial impact of Brexit on the EPL, while asking what it may mean in the future.
Transfer Fees and the Ailing Pound – Why Brexit is a Costly Game
Arguably, it’s the British pound that has borne the brunt of the referendum vote so far, as it continues to trade in a narrow range against other major currencies including the Euro and the U.S. Dollar. So, while sterling has recovered from the 31-year low that it plummeted too in the immediate wake of the vote, it continues to depreciate against a backdrop of sustained uncertainty.
As a general rule, this makes imports more expensive, and this represents bad news for the EPL’s cash rich and player hungry sides. More specifically, British clubs have been forced to pay more for players when transfer fees have been set in Euros, and no single deal encapsulates this better than Paul Pogba’s switch from Juventus to Manchester United in the summer of 2016.
The deal was announced after the referendum vote on August 9th, with United paying Juve a total of €105 million for Pogba’s services. In terms of sterling, the French midfielder ultimately cost a total of £89.7 million, with the Brexit-influenced exchange rate of €1.17 triggering a significant hike in the fee.
If we look back at the day before the referendum, however, we see that the corresponding rate was €1.31, as the pound rallied impressively against the Euro on the back of pre-Brexit optimism among remain voters. At this rate of exchange, United would have paid a fee of just £80.2 million of Pogba, meaning that the Reds would have saved nearly £10 million if they had completed the deal a few weeks sooner.
With the UK not able to officially leave the EU until March 29th, 2019 at the earliest, the pound is likely to fluctuate further and remain with an ever-tapering range. This means that transfer fees will continue to increase disproportionately in the near-term, particularly in deals involving clubs that are native to the EU and the single currency.
What will Brexit Mean Once We’ve Left the EU?
While we should expect the pound to depreciate and transfer fees to rise, however, this is not the only potential consequence of Brexit. In fact, once we leave the EU next year, the Premier League is likely to feel the full impact of exiting the single market, especially in terms of recruitment, the freedom of movement and broadcasting revenues.
In terms of the former, it’s important to remember that Brexit will leave players from the remaining 27 member states classed as non-EU citizens. This means that they would theoretically require a work permit before joining another EPL club or renewing their contract, and it’s estimated that more than 100 players in the Premier League would currently fail to meet the criteria for non-EU citizens.
Similarly, Brexit will also make it difficult for clubs to acquire EU players from continental clubs, particularly they will need to have played in a fixed percentage of games during the previous two years if they’re to be successfully granted a work permit. This percentage varies depending on the coefficient ranking of the country from which the player joins, but without regulatory changes we would almost certainly see less EU nationals ply their trade in the EPL post-2019.
This could restrict the quantity of high-quality players that EPL clubs are able to purchase, which may in turn impact negatively on the lucrative nature of the league. Remember, the value of broadcasting rights may already be poised to fall slightly in line with more competitively priced exports, and a decline in the quality of players and the product on offer could trigger further depreciation.
In simple terms, a shortfall in talented EU performers could significantly diminish the value of broadcasting rights across the globe, and this would only exacerbate the economic pressures and conditions that will ensure post-Brexit.
The Last Word
While these factors and their potential impact are hard to ignore, the potential downside to the EPL can be mitigated by sensible and reasonable politicians.
So, while all EU legislation will be enshrined in UK law for a brief period after leaving the union, our own lawmakers and regulators in Westminster can negate the impact of Brexit by relaxing and adapting rules to suit the new market conditions.
Ultimately, it will be the action of British politicians, the FA and the Premier League that will determine how the EPL fares post-Brexit. Only their actions can mitigate risk and protect the integrity of top-flight football in England, while helping clubs to adapt to life outside of the single market.