UK Chancellor of the Exchequer Jeremy Hunt praised the English Premier League in a report earlier this year for helping British sport “stand tall on the world stage”.

Yet within months, one of the league’s most famous clubs is struggling to remain in business. Everton FC has held talks with restructuring advisers after its proposed takeover by Miami-based 777 Partners stalled, a deal that the Premier League declared it was “minded to approve” only a few weeks ago. 

Successive UK governments have extolled the world’s best-known football league as a cultural export contributing billions of pounds to the economy and supporting thousands of jobs. But away from the hype, the prevailing political wind is changing.

The ownership of clubs, their finances and how the league is governed are under scrutiny. As this year’s season draws to a close, more people inside English football are saying the Premier League is sleepwalking into chaos.

Club owners are squabbling over everything from how to make money to supporting smaller teams in lower tiers, compounded by a recent decision by the Premier League to force changes to the historical FA Cup competition. There is also festering controversy over penalising clubs breaking financial rules, while serial champion Manchester City is fighting charges of over hundred breaches dating back over a decade. The club denies wrongdoing. 

Now politicians are intervening by creating a regulator, something that has been opposed by the 20-member league for years. The decision means the Premier League will become the only major league across the world that has its own dedicated regulator. Or, to look at it another way, it is now the only major league in the world not trusted to manage itself. 

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“Certainly, there’s significantly more political scepticism and distrust,” said Conservative lawmaker Caroline Dinenage, who is chair of the culture, media and sport select committee in the UK Parliament.

A spokesperson for the Premier League declined to comment, referring to a recent UK parliamentary committee hearing and an editorial from Premier League chief executive officer Richard Masters published in February 2023.

“It is a risk that regulation will undermine the Premier League’s global success,” he wrote, “thereby wounding the goose that provides English football’s golden egg.”

According to club executives and football finance analysts, the problems aren’t helped by a dysfunctional business model for a competition that reckons it contributes at least £8 billion (S$13.6 billion) a year to the British economy.

Every January, consulting firm Deloitte lists the football teams with the biggest revenue in Europe. Premier League teams dominate, with six clubs featuring in Europe’s top 10 this year. What Deloitte’s table does not show are the large losses most Premier League teams make.

Collectively, the Premier League’s revenue has jumped to almost £7 billion a year mainly because of broadcasting rights payments, yet the most recent accounts showed only four clubs made an operating profit.

The persistent losses have led to the league bringing in financial rules designed to rein in spending on player wages and transfers. So far, after 11 years of the rules being in place, only Everton and Nottingham Forest – both during the current season – have been docked points for failing to adhere to them.

Those who have the resources and want to spend are not always happy. Executives such as Amanda Staveley said that clubs are too constrained financially, and the Premier League was going through a “difficult time”.

“You’ve got to remember we’re running an entertainment business,” Staveley, co-owner of Saudi-backed Newcastle United, said at a recent Bloomberg event. “We have forgotten we have to grow this business,” she noted, adding “that’s not easy” in the current climate, given all the restrictions.

In truth, every club could adhere to the rules. But decades of light touch regulation from the Premier League has created a culture of spend big now and worry later. The current spending rules were introduced by the league in 2013, in part to try to curb what was deemed to be excessive spending by Roman Abramovich’s Chelsea and then by UAE-backed Manchester City. They failed. 

Over recent years, an increasing share of the revenue has been spent on players and agents. Total wages have soared to £3.6 billion in the 2021-22 season from about £2 billion in 2014-15, according to Kieran Maguire, a football finance expert at the University of Liverpool. 

Alan Sugar, a former owner of Tottenham Hotspur, famously described a bumper £5.1 billion TV deal in 2015 as similar to prune juice in that it “went in one end and out the other”, explaining that the money would end up going almost entirely to players and their agents.

Such huge spending on player wages and transfer fees in the Premier League – in the summer of 2022, Nottingham Forest spent more on transfers than European giants like Barcelona, Paris Saint-Germain and Bayern Munich – is juxtaposed with a reluctance by the same club owners to redistribute some of their riches to the 72 other teams that make up the top four tiers of the so-called “football pyramid”.

Failure to reach an agreement on this deal has played a part in the establishment of a regulator that the Premier League’s Masters says he fears. “We are taking a big risk with a very successful industry,” he said in a recent meeting in London.

Arguably, every criticism aimed at the Premier League in recent years – from soaring debts to questionable ownership – can be found at Everton.

In theory, the Liverpool-based club should be an attractive asset, with investors and billionaires gripped by a high-spending sporting boom. One of England’s most historic teams, it is soon to finish a £800 million high-tech stadium, and boasts a sizeable and loyal fan base.

But the club is close to collapse. Miami-based investor 777 Partners, which is attempting to raise funds to acquire the club, has lent it over US$100 million over the past few months to keep it afloat. 

Owned by Farhad Moshiri, a relatively unknown accountant until he began working with Russian billionaire Alisher Usmanov, Everton has struggled both on and off the pitch. Usmanov has been sanctioned, leading to a cancellation of lucrative sponsorships, while Moshiri has run up massive debts. Buying high-profile players, funding the ballooning costs of the stadium, coupled with years of poor performance, forced Moshiri to sell. 

777 Partners has been waiting since September for the Premier League to approve its takeover. While many US investors are seen as potential saviours to struggling UK football clubs, 777 Partners has faced criticism over its own investments, which span from airliners to other football clubs.

In March, the board of the Premier League said that it was “minded” to accept 777 Partners’ deal if it met a series of conditions. If it now collapses, Everton could fall into administration, meaning a penalty of nine points. It would also become only the second Premier League team to face the UK’s version of bankruptcy after Portsmouth FC, a much smaller club, in 2010.

The Premier League has scrambled to enforce its rules and bring in new ones. It is bringing in a new league-wide financial system, based more on the Uefa rules that restrict player costs to a percentage of revenues, according to people familiar with the situation. 

Earlier this week, the clubs agreed to push forward with plans for a spending cap on squads, although any rules have yet to be approved. 

“A cap on player costs has got to be good for football,” said Christina Philippou, lecturer in accounting, economics and finance at the University of Portsmouth. “Investors see the revenues generated by Premier League teams – which are large compared to most other clubs across sports, and which should make them very attractive. However, there is a tendency to make losses.”

Others, though, worry that spending caps simply lead to the biggest clubs always being at the top and they burst the dreams of the aspirational teams whose owners are prepared to dig deep financially.

Nottingham Forest, owned by the Greek shipping tycoon Evangelos Marinakis, referred to the potential “stagnation of our national game” in its official statement after it was docked points for – in his view – being punished for mistiming the sale of one of its star players.

Dan Corry, an adviser to former Prime Minister Gordon Brown, said that he argued as far back as 1993 that the advent of the Premier League would lead to the need for a football regulator. That was because “market forces would be brought into play more than they had been,” he noted. In those days, though, the threat was always enough, he added. BLOOMBERG