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The UK withdrawal from the EU & the potential impact on recruitment

The United Kingdom’s impending withdrawal from the European Union has dominated the news agenda for approaching 18 months now, but what will Britain’s exit from the Bloc mean for professional clubs, players and coaches looking to work across the home nations?

Whilst the final impact on the industry will remain unknown for some time, several outlets have speculated on what could potentially happen, particularly when it comes to foreign player recruitment and the specific requirements that may be needed by non-British players and staff to meet employment criteria.

Any changes to legislation is likely to take place under a backdrop of record transfer spending at the highest level of the game. According to Deloitte, the Premier League’s collective transfer spending this summer was a record £1.4 billion, a 23% increase on the previous record.

On top of this, according to a 2015 report by Consultancy.uk, the Premier League and its clubs contributed £3.36 billion towards the United Kingdom’s total GDP, as well as contributing £2.4 billion in tax, which highlights how big the league has become since it was formed in 1992.

In September 2016, the 20 Premier League clubs collectively had 175 European Economic Area (EEA) players in their 25-man squads, excluding the home nations, which equates to 38.2% of the total players and demonstrates how integral European players currently are to the make-up of the competition.

In this blog, we are going to look at four areas of the industry which could be impacted by Brexit: Work Permits, Transfer Fees, Youth Football and Training Compensation, affecting not only the Premier League but also other professional leagues in the UK.

Part 1 – Work Permits

In 2016, a BBC study found that 332 European players then attached to Premier League, Football League Championship and Scottish Premiership clubs would not have met the work permit criteria to play in the UK, if the UK hadn’t been part of the European Economic Area (EEA) at the time.

If the UK was to withdraw from the EU in 2019 without retaining membership of the EEA, then it is almost inevitable that the existing work permit regulations in England and Scotland will need to be completely overhauled.

Looking at England in isolation, any player at present possessing a passport from any of the 31 nations which make up the EEA, plus Switzerland, is free to sign for any club, whilst non-EEA passport holders need to meet the FA’s strict permit criteria in order to get a work permit.

The current rules, which were only introduced two years ago, require a player to not only be an established international with a nation in the top 50 of the official FIFA world rankings, but also require them to have played in a percentage of matches during the previous two years at the time of the application.

The percentage required to be eligible depends on the nation’s overall ranking, whilst players aged 21 and under have their reference period reduced to 12 months. The full breakdown can be found below.

Ranking

Percentage of matches required over 24 months

FIFA 1-10

30% +

FIFA 11-20

45% +

FIFA 21-30

60% +

FIFA 31-50

75% +


It is not clear yet if any changes to employment rules will come into effect immediately following the UK’s withdrawal in 2019, or if there will be a transitional period during which the rules currently in place are retained, but the UK Government has hinted that from 2019, EU workers looking to move to the UK will have to register until a permanent immigration policy is put in place. This would put scrutiny on articles such as 45, 49 and 56 of the EU Treaty, which are:

    Article 45 – Freedom of movement of workers to work in another member state.

    Article 49 – Freedom to establish in another member’s state.

    Article 56 – Freedom to provide services in another member state.

Potentially, this could result in similar regulation sanctions for European Nations as the current non– EEA players, unless the regulations are changed.

So what would it mean if the current rules did stay in place? Well it could provide opportunities for more home-grown players to play more regularly, at all levels of the game, however the real question is would that come at a cost of quality?

Last season, EEA nationals made up 38% of the total Premier League appearances, with EEA appearances for the Champions Chelsea’s totalling 74%. Whilst players from countries like France and Spain who play international football regularly will be unaffected, it is worth noting that there were 26 French and 36 Spanish players across all the 25-man squads last season, which means that many would not have met the existing criteria simply because they wouldn’t have had enough opportunities to play regular international football.

The key question is would the UK want to risk the £4.55 billion revenue streams generated by the Premier League, as a direct result of losing several European players who bring great quality to the league as a whole?

One thing which may get consideration is a review of the existing ‘Exceptional Talent’ visa rules, from which professional sportspeople and coaches are currently excluded, or an introduction of a new initiative, run along similar lines for elite sport. If the Government were to lift this exemption, it would allow professionals the opportunity to apply for a visa for up to 5 years, which could then be extended. It could also result in players and staff getting the opportunity to settle in the country permanently long-term.

That, in addition to a review of the current work permit rules, could help clubs continue to target leading European talent, both established and emerging, for recruitment, however it still may mean fewer opportunities for non-British passport holders further down the football pyramid, as they may struggle to meet the ‘exceptional talent/promise’ criteria.

Part 2 –Transfer Fees

During the summer, seven of the top ten signings in England involved players originally from EEA countries. This demonstrates how the current free movement rules (Article 45) play an essential part in a Premier League club’s transfer activity.

Name

From

To

Fee

Romelu Lukaku

Everton

Manchester United

£75 million

Alvaro Morata

Real Madrid

Chelsea

£58 million

Alexandre Lacazette

Lyon

Arsenal

£52 million

Benjamin Mendy

Monaco

Manchester City

£52 million

Kyle Walker

Tottenham Hotspur

Manchester City

£50 million

Gylfi Sigurðsson

Swansea City

Everton

£45 million

Bernardo Silva

Monaco

Manchester City

£43 million

Davinson Sanchez

Ajax

Tottenham Hotspur

£42 million

Tiémoué Bakayoko

Monaco

Chelsea

£40 million

Nemanja Matic

Chelsea

Manchester United

£40 million

Italics indicate players from EEA countries (excluding Home Nations)

However, one of the consequences already evident from last year’s UK Referendum result has been the rise in transfer fees, as a result of the diminishing value of the pound against the euro.

In a recent article, the Dutch newspaper De Telegraaf highlighted how Tottenham had to bridge the 6% fall in the value of pound from last season to secure the services of Davinson Sánchez of Ajax.

The same article also highlights concerns from foreign players that the pound’s value will continue to drop, which they suggest has meant that players are increasingly looking for their salaries to be paid in euros, rather than pounds, which could further increase the total cost of a transfer.

Looking further ahead, if the number of players who qualify for a permit is dramatically reduced in future, then it is likely that transfer fees are going further inflate, as demand for leading players may well end up outstripping supply.

Part 3 – Youth Football

From a recruitment perspective, if the UK leaves the EEA then there could be potentially significant ramifications on youth recruitment activities at British clubs.

Under Article 19 of FIFA’s regulations on the transfer of players, clubs can only complete international transfers if a player is over the age 18, however there is an exemption in place if the transfer takes place within the EU or EEA, where a club can sign a player from the age of 16 so long as they fulfil obligations around education and living standards.

If the UK is no longer part of either area, then it is conceivable that European players will no longer be able to move to British clubs until they are 18, potentially putting those clubs at a disadvantage compared to their counterparts on the continent, who will still be able to recruit players’ cross-border across the EEA territories.

Another area which could be impacted is elite youth development in England, which has benefited from EU funding in the past through the Erasmus+ programme.

At present, League Football Education (LFE) use Erasmus funding to offer 12 EFL club academies the opportunity to take part in fully-funded overseas pre-season tournaments each summer. This initiative provides scholars with opportunities to play in matches against continental opposition, to aid their development as they look to secure a career in the professional game.

On top of that, LFE also use the funding to offer Academy Managers and coaches the opportunity to participate in overseas placements around Europe, where they can learn about how training programmes are implemented at some of Europe’s leading clubs and how they instil philosophies into their young players.

Applications for funding are also available at grass-roots level, but once the UK withdraw from the EU several of these programmes will need to secure funding from other sources if they are to continue, unless an arrangement is put in place where the existing funding is protected.

Part 4 – Training Compensation

If the UK leave the EU and are not operating within the EEA, then there could hypothetically be an impact on training compensation mechanisms for British clubs.

Training compensation is owed to each club involved in a player’s footballing education between the ages of 12 and 23, if and when that player signs their first professional contract, as well as when they are involved in any subsequent transfers before they reach the age of 23.

As with many FIFA regulations, special provisions currently exist for clubs operating in the EU/EEA.

At present, this special provision means that clubs operating in these territories lose their right to training compensation if they fail to offer a player a new contract 60 days before their existing one expires.

So potentially, if UK clubs are not party to these exemptions, then there is an argument that clubs could still be entitled to training compensation, even if they don’t offer a player a contract, as long as they haven’t terminated the player’s contract without just cause, or if the player signs for a new club, either as an amateur or for a club with FIFA Category 4 status.

It could mean more work for Club Secretaries, who will be required to follow up the movements of a larger number of youth team players to ensure they claim monies rightfully owed to them.

An Uncertain Future

As is the case with every industry affected by Brexit, it is impossible to predict what the eventual impact will be, but what is clear is several existing regulations and mechanisms will require extensive review if anything remotely resembling the current status quo is to be maintained.

Leagues will have a requirement to protect their revenues and the standard of their competition, which you could argue are intrinsically linked, which will mean taking steps to minimalise any negative impact of new regulations as and when they are introduced, either in 2019 or at the end of an extended transitional period.

Whatever happens, there will be ramifications for budgeting, strategies and working processes across several club departments, notably in recruitment and development, as British clubs look to continue to challenge for honours, both domestically and in Europe.

by Sam Dickinson Guest Blogger

Published 06 September 2017

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