By Tony Attwood
Overnight the value of the pound fell. And then fell some more. And then more. And then…
As most Untold readers recognised a long time ago I am not a clairvoyant so I don’t know what happens next, although I can look back to 11 September 2001 and 15 September 2008 when the markets did much the same sort of thing. And those are not my best memories of a lifetime running businesses in Britain.
What it means for football in England is that today the cost of a player, currently playing with an English club, and who is wanted by a club elsewhere in the world, has gone down. A lot. Something between 10% and 20%.
This is nothing to do with the EU, but to do with the reaction of the international markets to the EU referendum in Britain. The markets have reacted and the pound has gone way, way, way, way down.
Arsenal, being a UK company, has bank accounts holding its money in pounds. And when it trades with other UK companies, and mere mortals like me who pay for tickets to the game, it deals in pounds. When it buys players from overseas it pays in the currency of that country. When they buy from Arsenal the deal gets translated into pounds. (For Arsenal to overcome this by holding the registration of players in another country would be illegal).
Overnight players of any nationality in an English club have potentially become a lot cheaper buy for the rest of the world. Players of any nationality playing for a club outside the UK, will still be quoted in overseas currencies and will be a lot more expensive if a UK club wants to buy. At the moment of writing about 15% more expensive, but that could change.
Of course clubs can change the prices of players to accommodate the new situation. Arsenal could put up the price of its players when selling to clubs outside the UK – but they have to find buyers. They could quote prices in Euros, and hold the money in a Euro account and use that for trading (which is what I expect they will do) but with the UK outside the EU I suspect the government will quickly move to stop that, since the impact would probably be to make the pound even weaker.
But with the pound dropping fast in value, it does mean that the assets of the club are liable to plundering.
Of course the Bank of England will be trying to calm the markets down – although since their experts were endlessly showing the risks of voting to leave, they are now in a position of great weakness vis a vis the rest of the world. Many financiers said this would be a disaster, so it is hard to pretend otherwise.
So, players with English clubs (not English players I stress, but players with English clubs) have become a lot cheaper overnight when sold outside of the UK. Players currently playing outside the UK have become a lot more expensive for clubs within the UK.
On the other hand Scotland voted decisively for remain, while England outside of London voted for leave. That must mean another independence for Scotland referendum which I suspect would now be won, and Scotland would then stay in the EU. It would almost certainly uncouple itself from the pound and go for the now much stronger Euro, and in footballing terms certainly rise up the ladder.
What we will lose completely in the next two years is the freedom of movement that allows all of us in the UK to travel, live and work without a permit anywhere in the EU. (A bit tough if you’ve just moved to Spain to retire, and sorry Walter but you’ll have to show your passport. And since the central focus of the Leave campaign was to make it harder for non-UK nationals to get into Britain I suspect you will need a visa too).
The UK’s Home Office requires non-EU players to have played in a certain percentage of their national team’s matches, before getting a transfer. Although there are ways around this (Gabriel was an example) the FA (that has now taken over the running of the football immigration system from the UK government) is tightening the rules dramatically. Over 100 current Premier League players would not be in the UK without a work permit, and given the mood of the country in voting yesterday to leave the EU, it would seem bizarre if the government then suddenly relaxed the rules and went the other way.
All of which is why Richard Scudamore, the Premier League executive chairman and all 20 Premier League clubs publically supported staying in Europe.
Dr Babatunde Buraimo, senior lecturer in sports economics at the University of Liverpool, recently said, “Clubs will be limited to hiring higher-calibre players from highly Fifa-ranked EU countries. If the Premier League is limited to these players, this will increase the values, in terms of transfer fees and wages, of acquiring proven and established EU players. Missing out on rising talent will be one of the drawbacks.”
And that was said before the pound collapsed against the Euro and the stock market went into free fall.
It is also possible that the FA which has long campaigned for more British players in English teams, will now put quotas on who can play in FA Cup matches – something it was not able to do until now. I really am not sure what the Premier League, so totally opposed to leaving the EU, will do now.
Certainly the Cotonou Agreement and the Kolpak Ruling in 2003, which means sportsmen from Africa, Caribbean and Pacific Group of States (ACP) enjoy the same rights as EU players will crumble as well as the free movement of players from Europe.
As Christian Abt, a director at the Essentially sports management group, “The Premiership will suffer as a result because it has such a cosmopolitan flavour to it which makes it such attractive to viewers and sponsors. As a product the best model is having international players playing alongside local and homegrown players.”
Patsalos also believes the vote yesterday endangers London’s status. “The way the NFL view it is that London is a gateway to Europe,” Patsalos said. “My view is that as we pull out of Europe then they will reconsider that deal.” That might not be the best news for Tottenham, for whom having an NFL team playing at its stadium, is part of its financial package that it has put to the banks.
In practical terms for Arsenal had we not been in the EU in the past it would have meant Thierry Henry would not have got the right to play for Arsenal. He had not played enough games for France when he joined from Juventus, and although Mr Wenger saw his potential, virtually no one else did.
Finally there is the issue of players who are looking to join us now from other countries. They will know that after a couple of years in England they will want to return to Europe, and they will know that their salaries are now worth a lot less in European terms. So they too will want more.
The renegotiation of Vardy’s contract by Leicester, following the triggering of the buy out clause, will cost Leicester around £40m extra if, as is reported, it is part of a deal within Leicester to secure three or four players in the same way. If any of those players are not British, their agent is now going to want an awful lot more to compensate for the decline of the pound.