February 1, 2023



Player wages and contracts will bankrupt EFL clubs: it’s time for the PFA to act | Mark Palios | Football

5 min read

Last month I said the EFL was entering the most critical period in its history as it struggled to respond to the abrupt cessation of football. What we have seen since has elegantly illustrated the game’s inability to act decisively to protect professional football’s future. This is not a criticism of the individuals involved in negotiations, who are trying their best, but reflects structural flaws that prevent cohesive action. Put simply, it is clear the EFL and Professional Footballers’ Association cannot bring the key counter-parties to the table.

The first phase was characterised by the fight for cash given the disappearance of gate-related income. Although there was relatively swift agreement that a player wage deferral would help, it has been left to clubs and players to agree arrangements. Some players have deferred, some have not, and and the scale varies from club to club. The outcome was, in my view, too little and too late for many clubs.

The fact it proved so hard to agree a modest wage deferral, following difficulties in agreeing a position on furloughing players, does not suggest the industry is well-placed for the more complicated second phase of the Covid crisis.

Football is beginning to plan how to survive a prolonged period without income and a post-Covid downturn. For Leagues One and Two the return of paying gates is critical and, without external intervention, I find it difficult to see how playing behind closed doors can get close to compensating the loss of revenues. It is increasingly suggested that paying crowds are unlikely before the end of the year. Overlaid on this is the problem of player wages.

Without material cash injection from another source, large-scale football redundancies are inevitable as soon as furlough support ends. The likelihood is redundancies will first hit back-office employees and support staff, whereas player contracts, by far the biggest cost, are regarded as untouchable.

As they are fixed-term contracts, even if players are technically made redundant clubs would be obliged to pay up the contract and achieve no saving. Unless something changes, many clubs will be unable to afford their player wage cost. For those that can, it will leave a bad taste if players are in a protected bubble where they continue to be paid in full despite not playing while lower-paid colleagues lose their livelihoods.

It looks increasingly unlikely there will be a finish to the season. Unless that changes there will be around 1,400 players out of contract at the end of June and very few are likely to find a new employer. In my view most clubs – particularly those in neither a promotion nor relegation battle – will allow contracts to expire regardless. If there is a prospect of completing the season during the summer, the likely consequence is weakened sides bolstered with youth players to keep costs as low as possible. If this happens, the idea that playing the season to a conclusion protects the integrity of the sporting competition is, frankly, illusory.

I believe there is a very strong argument that the exceptional circumstances of a pandemic and prohibition on all football activities mean player contracts have been frustrated in law. If this is correct, they are void and clubs do not have to honour them. I have not, however, seen any evidence of the parties being forced to confront this scenario.

Speedy, radical solutions are needed. The problem can be solved only if player wages are materially reduced at least until paying crowds return. It may necessitate the PFA using some of its significant reserves in subsidising player wages until clubs are able to reactivate their income streams. What are reserves for if not to help players at a time of national crisis? It may mean an accommodation, recognising the concept of a “suspension” of player contracts.

The third phase is the post-Covid period. Even when crowds come back, revenues will be down for some time. Some people will be wary about putting themselves in a crowded place. Others will have reduced spending money because of loss of employment or reduction in income. Companies are less likely to spend on sponsorship and corporate hospitality. It is realistic, in my opinion, to envisage revenues at 50% of their usual levels for some time even after “business as usual” resumes. The professional game cannot survive without fundamental reform in respect of its major cost: player wages.

Further dangers lie ahead in that I suspect owner funding will be at much lower levels because of the impact on their businesses. Perhaps more dangerously, the appetite of owners may be diminished and opportunities for “carpetbaggers” to pick up clubs for £1 will increase. We have seen how ineffective the regulations are in protecting clubs from inappropriate ownership.

If the football pyramid is to survive we need a root-and-branch rethinking of the game’s structure. Above all, there is a need to renegotiate the collectively bargained standard EFL player contracts. It also requires other elements to be considered: the abolition of parachute payments; rethink of the Elite Player Performance Plan system; complete overhaul of the approach to ownership and monitoring of the health of clubs; and removal of the morally repugnant football creditors rule, for instance.

Pre-Covid the EFL was looking at ways to address player wages and the financial sustainability of the pyramid. The impact of Covid-19, with financially weakened clubs carrying debt and having had advanced income to survive, means we need immediately effective regulations. Although focusing on long-term sustainability is necessary, we need simplicity in the short term and regulations that are draconian in the breach: a simple wage cap and possibly a related squad size. In the short term, issues such as smoothing the transition between leagues is secondary to the need to reduce costs.

Perhaps more controversially, in the absence of any leadership from the FA, I have also reluctantly come to the view that now is the time to at least consider an industry regulator with the ability to make and enforce regulations for the good of the game.

The last couple of months have demonstrated that EFL member clubs are not able to do this themselves, because of conflicts of interest, widely varying financial positions and stances on matters of principle, and the ostensible power of the PFA. The FA, for so many years effectively sidelined by the professional game which wanted to be left alone to sort itself out, has neither the power nor appetite to impose a solution. Someone needs to do that for the good of the game. Without it, we face a future where the pyramid as we know it, and the place of its clubs at the heart of so many communities, may cease to exist.

Mark Palios is the chairman of Tranmere Rovers and a former chief executive of the Football Association who played in the Football League for 12 seasons

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