What a No-Deal Brexit may mean for Future Football Transfer Windows

By Judith McMinn, Owen Jones and Daniel Geey

Introduction

Halloween is likely to be upon us sooner than we think and with it comes the very real prospect of crashing out of the EU without a deal. The authors appreciate that the broader and more critical issues of the Irish border, food shortages, medical supply stockpiling and airlines’ operations are all higher on the no-deal Brexit list (if such a list exists) when the Government is making preparations for a no-deal scenario. Nonetheless, the effect on the football industry may well be significant for a range of reasons. We set out some of the talking-points, consequences and practical considerations that football’s stakeholders will currently be considering and debating for future windows as the no-deal countdown clock ticks ever closer.

1.   Business As Usual (For Now): In a no deal scenario there will be no implementation period so free movement will effectively end. However, the Government announced back in January 2019 a new immigration category called EU Temporary Leave to Remain (TLR) would be created which means that the drawbridge won’t be pulled up for EU workers come 1st November 2019. For a temporary period new EU nationals will still be welcome to come to the UK and work for up to three months. If they want to stay for longer than three months, they will need to make an application and will be given a three-year visa, permitting work as a player or in other roles within a club. This may be somewhat surprising to the British public sold on the idea that a no-deal Brexit actually stops European workers from entering the UK to work. There will no doubt be question marks around what happens to employment contracts longer than three years (clubs maybe on the hook to pay a player who has signed a five year deal but may not be entitled to work in the UK after the three year period is up) or at what point TLR is then replaced or amended in the future. At present we anticipate TLR will last only until the end of 2020 and from 1 January 2021 all new EU players and coaches coming to the UK for the first time will need to be sponsored in the same way as players and coaches from outside the EU. This ‘level playing field’ is set to radically change the transfer picture in the medium term.  

2.    Think About the Kids: Leaving the EU will impact on youth academy recruitment especially for 16-18 year olds. The FIFA Regulations permit the “transfers of minors between the age of 16 and 18 within the EU or EEA”.As the UK will no longer be in the EU, clubs would not benefit from this exception. Ultimately, the question is whether this creates more chances for UK citizens/residents (UK Players) in first team squads or whether it will just lead to more UK Players populating the academies but not actually transitioning into the first team. This is because at present, clubs can have an unlimited number of under 21 players to supplement a club’s 25 man first team squad. Could it actually mean that older more mediocre UK Players are recruited to fill such positions? There will no doubt continue to be an incentive to train, develop and provide a pathway for youth players into the first team squad and with Brexit likely to make the path to employing non-UK players more restrictive, it will become even more (financially and practically) attractive to produce first team players from the academies. In turn, these academy graduates will be more valuable to sell and if good enough for the first team squad will mean fewer recruitment resources will need to be employed for buying overseas players and navigating more nuanced and difficult employment restrictions.

3.    Rising Costs: The logical extension of non-UK Players being harder to recruit will mean elite UK talent will continue to become more expensive. This may make UK Player transfers to non-UK club seven less likely. Indeed, the current trend that some EU clubs have adopted has been to recruit young talented UK Players from elite EPL academies, give them exposure to domestic and UEFA club competition and watch their talents (and transfer values) blossom.  Players like Sancho and others who are currently abroad will become even more valuable (and attractive) to elite UK clubs.

One of the consequences of potentially no longer being in the EU will be the difficulty of younger players looking abroad for more diverse playing experiences. At a time when more and more young players are being lauded for adventuring abroad, including the likes of Sancho, Panzo, Lookman, Vieira and Oxford to broaden their horizons, Brexit will make it more difficult for our younger players to develop due to the UK’s non-EU Member State status, the quota restrictions in particular EU countries for non-EU players and the lack of free movement protections.

4.    A Work Permit Overhaul: The Government in its December 2018 immigration policy paper set out its intention to create "a level Playing Field” so that EU and non-EU nationals effectively gain the same UK employment opportunities after the end of freedom of movement. It seems clear that the current work permit system will therefore need an overhaul if UK clubs are to continue to be able to have ready access to the best international players. It will also be interesting to consider the impact of Free Trade Agreements (FTAs) as and when they are entered into (which is likely to take many years of difficult bi-lateral negotiation). Particular FTAs may foster smoother employment pathways so that if an FTA was entered into with say Brazil, that could that mean Brazilian players, who under the current work permit system would not have qualified under the Governing Body Endorsement criteria, could be free to be employed in the UK.  As a result of future bespoke FTAs, we might actually see a greater number of players from outside the EU within squads, and particularly young non-EU players, who otherwise would not have been able to work in the UK. In the longer term, the transfer window could become more global and less Eurocentric.

6.    Currency Volatility:  Future transfers are likely to become more expensive given a weaker pound. A weaker pound as we saw at the time of the referendum result will make it more expensive to pay future transfer fees, to activate Euro buy-out and release clauses and to potentially pay agents and players a Euro amount which converted into pounds makes for more expensive transfers.  Consequently more clubs will also need to give further consideration to determine their currency hedging strategy and FX management; this may be something club finance directors take as an immediate to-do action for the January window. 

7.    Agents of Change: With immigration and regulatory change on the horizon because of Brexit and reported FIFA agent reforms, a greater degree of knowledge and understanding of the regulations and working qualification criteria will be needed. Agents will require a more nuanced perspective of the UK landscape for their clients well ahead of subsequent transfer windows. In addition, agents who previously targeted UK clubs with EU talent because of the perceived deep pockets of elite UK clubs may look to other, more immigration friendly jurisdictions and less complex work permit structures for future ‘easier’ player transfers.

Conclusion

At the end of this transfer window, we will be looking across a new political horizon. The end of the UK’s membership of the EU will ultimately have a significant impact on elite domestic clubs’ ability to recruit EU players and coaches. Whilst the short term introduction of the TLR immigration route may provide a sticking plaster for the next two transfer windows it will still add complexity to transfer negotiations and formalities. From 1 January 2021 we anticipate that even that sticking plaster will be removed and clubs will need to engage with the same visa considerations and restrictions for both for EU and non-EU players alike.