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The Premier League Homegrown Quota: When Protectionism Is Not Very Protecting Abstract This study aims to analyze the effects of the homegrown quota implemented on clubs in the English Premier League and assess the success of this policy in achieving the FA’s goal of increasing the total number of English players playing regularly at the top level of English football. The policy’s ultimate aim is to improve the performance of the England national team. As a part of this analysis I will question the very basis of the FA’s objectives in designing the quota and make the case that the policy fails to assist in their ultimate aim of improving the performance of the national side. Furthermore I will discuss the implications of the policy for the English league that is fueled by huge broadcasting revenues. As with any economic policy the quota will distort prices in the market and thus alter the equilibrium allocation of footballers. This often results in the hoarding of young homegrown players by top clubs to the disadvantage of the very players it aims to help. I will then strip back the issue to consider what the market for footballers would look like in the absence of the policy. This would bring the benefits of reduced discrimination in the player market, meaning footballers are more likely to be allocated to a club based on their abilities and at a fair market price. This could boost player development and see increased minutes in the Premier League for the best English players. However despite the positives, the free market also brings obstacles both in terms of its political viability and the disincentives it creates for English academies. Thus I will end by suggesting my own ideas on the problem at hand that involve a more considered policy that looks to maintain the quality of the Premier League, whilst also providing sufficient opportunities to talented homegrown players. These proposals include switching towards more focused club-trained player requirements and stricter definitions of a homegrown player. Altering the incentives for English clubs should also be considered to encourage greater investment into academies as well as to shift the aim of the policy towards getting minutes for young players, rather than simply getting them into the top clubs.

The Premier League Homegrown Quota - When Protectionism Is Not Very Protecting

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Page 1: The Premier League Homegrown Quota - When Protectionism Is Not Very Protecting

The Premier League Homegrown Quota: When Protectionism Is Not Very Protecting

Abstract

This study aims to analyze the effects of the homegrown quota implemented on clubs in the English Premier League and assess the success of this policy in achieving the FA’s goal of increasing the total number of English players playing regularly at the top level of English football. The policy’s ultimate aim is to improve the performance of the England national team.

As a part of this analysis I will question the very basis of the FA’s objectives in designing the quota and make the case that the policy fails to assist in their ultimate aim of improving the performance of the national side. Furthermore I will discuss the implications of the policy for the English league that is fueled by huge broadcasting revenues. As with any economic policy the quota will distort prices in the market and thus alter the equilibrium allocation of footballers. This often results in the hoarding of young homegrown players by top clubs to the disadvantage of the very players it aims to help.

I will then strip back the issue to consider what the market for footballers would look like in the absence of the policy. This would bring the benefits of reduced discrimination in the player market, meaning footballers are more likely to be allocated to a club based on their abilities and at a fair market price. This could boost player development and see increased minutes in the Premier League for the best English players. However despite the positives, the free market also brings obstacles both in terms of its political viability and the disincentives it creates for English academies.

Thus I will end by suggesting my own ideas on the problem at hand that involve a more considered policy that looks to maintain the quality of the Premier League, whilst also providing sufficient opportunities to talented homegrown players. These proposals include switching towards more focused club-trained player requirements and stricter definitions of a homegrown player. Altering the incentives for English clubs should also be considered to encourage greater investment into academies as well as to shift the aim of the policy towards getting minutes for young players, rather than simply getting them into the top clubs.

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The State of English Football

The English Premier League is the epitome of a booming sports competition. Fueled by multi-billion pound broadcasting rights earned through its members’ collective bargaining, as well as PR hunting sponsors and oil-rich investors, there has never been more money in the English game (Deloitte 2015a). The league is highly watchable and it’s teams are supported across the globe in a way unmatched by rival domestic competitions. As a result, revenues consistently flow towards the top English clubs over those in other major leagues such as Spain, Germany and Italy. This is shown by Deloitte’s Football Money League which makes seventeen of the top 30 revenue generating clubs in world football English - including half of the top ten (Deloitte 2016a).

The rapidly increasing income in the English game has seen wages and transfer fees soar as clubs look to invest their gains on the pitch, this summer fees paid by English clubs topped £1bn for the first time (BBC Sport 2016a). This all comes as a result of the open league system used in European football that creates a competitive tussle for top honors, or even to simply maintain position. An “arms race” exists whereby clubs must sacrifice the traditional business model of profit maximization in favour of labour expenditure, in order to win at any price (Levante 2007). A virtuous circle grips the game whereby the best performing teams recoup the most broadcasting revenue and gain the most commercial exposure. This in turn leads to a larger potential fanbase and higher income. All this encourages clubs to invest all their money back into playing improvements which can earn them even more down the line. In 21st century football revenue is key. It brings clubs a competitive advantage, and in a sport where wage expenditure explains 92% of league position (Szymanski & Kuypers 1999, p165) whoever brings in the most revenue will in the long run be able to attract the best squad, and end up champions.

Yet despite this golden era for the Premier League, all is not as rosy in the English game. The national team struggles to compete at the major international tournaments, finishing bottom of their group at the last World Cup and being knocked out by Iceland in this year’s European Championships. These results are the latest in a worrying trend which led the FA to produce an 84 page document (The FA 2014) a month prior to the 2014 World Cup, to question why English players are not flourishing at a time when the domestic game is richer than ever. The FA’s ‘England Commission’ report suggested four major policies to help the national side going forwards (The FA 2014, p60), however I will focus on one of these proposals; The gradual increase in the number of homegrown (HG) players required in Premier League squads.

The HG Quota and its Purpose

The aim of the HG rule is to regulate the market in order to achieve the desired balance of British, EU and non-EU players (The FA 2014, p47). In theory it is designed to encourage teams to develop their own players, whilst ensuring that only the very best non-EU players are granted visas to play in Europe. The current rules in the Premier League are an extension of Uefa’s used for their European club competitions from 2008. Initially Uefa said that any club playing in Europe must have four club-trained, and a further four association-trained players in their 25 man squads. Then in 2010 the Premier League decided that only 17 non-HG players would be allowed per team - thus up to eight players should have been trained in England (The FA 2014, p29), however there was no requirement for club-trained players as in Uefa competitions. In order to be classed as HG a player must be registered with the FA for three years prior to their 21st birthday (The FA 2015).

Now, five years on from the introduction of this policy, the FA wants to tighten the rules. Originally in 2014 it was suggested that the number of non-HG players allowed per Premier League squad would be reduced from 17 to 12 over five years from 2016. This would be accompanied by new requirements for club-trained players too, of which teams would require four by 2020 (where club-trained players also count as HG) (The FA 2014, p73). Since then revised plans will mean that clubs will be permitted 13 non-HG players, whilst only two will need to be club-trained by 2020. The

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meaning of HG is also set to be redefined so that players must have been FA registered for three years prior to their eighteenth birthday rather than their 21st. (The FA 2015).

The original aim of Uefa’s HG policy was to “create a system where locally trained players would be given a greater opportunity to play in club sides” and to provide national teams with a “large reservoir” of talent (The FA 2014, p29). Then when the Premier League introduced their own rules regarding HG players, league chief executive Richard Scudamore had this to say on the matter (The Premier League 2011).

However despite these comments the FA now says that the changes have not had the desired effect, with little impact seen on the behavior of clubs (The FA 2014, p72). With this in mind the new proposals aim to ensure that clubs invest more in HG talent and provide these players with suitable first team opportunities (The FA 2014, p73).

Throughout the England Commission’s Report there is a strong focus on the recent successes of the Spanish and German national teams which seems to be used as the blueprint for having a strong national team and domestic league simultaneously. Much is made of the direct relationship between the numbers of players “playing regularly at the highest level in the best performing teams and the performance of a national squad.” (The FA 2014, p12). This seems to have in some way led the commission to believe in a cause and effect relationship between players playing at the biggest clubs and national team performance. The report cites that the most important factor obstructing the the development of English players is the “inadequate competitive playing opportunities for 18-21 year old elite players at top clubs” (The FA 2014, p13).

Much comparative data is then used to show the scale of the problem facing England. The commission points to a lack of English players appearing in the Champions League (22) compared with their counterparts from Spain (75), Germany (54) and Brazil (47) as shown in Figure 1 (The

"We think it gives Clubs an extra incentive to invest in youth and we also think one of the benefits of that will be that it will help the England team... It's not in the Club's

interests to stockpile players, it will make buying Home Grown talent more attractive... what this means is that you can't just buy a team from abroad.”

Richard Scudamore, 2011

Figure 1: Number of players in Champions League Group Stage games by country (2013-14)

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FA 2014, p22). The trend is also evident when looking at the top five European Leagues in England, Spain, Germany, Italy and France. Figure 2 shows that the talent pool available to the England team is significantly less than the national teams of the other big five leagues with only 18 players getting over 50% of minutes at a top six team in these leagues. At the same time the holy grail Spanish and German sides have a pool of 42 players that meet the same criteria (The FA 2014, p24).

The England Commission ultimately decides that too few English players are getting regular

minutes at the best clubs in the Premier League. Figure 3 is a heat map showing the England national squads experience and composition (The FA 2014, p25). From this, an idealised squad structure is put forwards whereby players are densely distributed around playing the most minutes for the club top of a big five league and working out from here. As the data shows both the German and Spanish national sides have players centrally playing around 70% of minutes at a top team. From this base the German team works out towards players playing regular minutes at clubs slightly lower down the leagues, while Spain looks to favour players that play slightly fewer minutes at a better performing club. When we look at England’s heat map they, like Spain, seem to look for players from the top teams, despite the fact most of the players selected play only about 40% of minutes. It can also be seen that the vast majority of players selected came from the top 7 clubs. Then a few players are selected from across a very broad range of clubs from around 18th position in the league and playing any number of minutes.

The FA now hopes that by raising the HG quotas for English clubs that the national team of the future will take more of the ‘idealised’ structure with more players playing regularly at the elite Champions League clubs. However there is a concern that the FA has misinterpreted this relationship. The Commission puts its argument across that if English players were playing regularly for the best teams then the national team would be improved. But if the reality is in fact the reverse - that when you have top quality national players they will then get to play at the top clubs - then these proposed new regulations could in fact have very damaging consequences for the national team in the coming future.

Figure 2: Regular top league players by nationality (2012-13)

Figure 3: Heat maps showing the domestic experience of major national squads (2012-13)

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The Market for Elite Footballers

In its current state the market for footballers is relatively efficient. The Bosman ruling, and free agent market this brings, means that wages now closely reflect the ability of any given player. This is market forces at work. The open league system of European football sees clubs in competition to attract the very best players. This drives down club profits and sees the best players earn the highest wages at the biggest clubs. The effectiveness of wage spend in predicting league performance is reflected by the fact that labour costs explain 92% of league position (Szymanski & Kuypers 1999). However knowing that if left to the free market the best players (who win the most matches) will be paid the most to play for the top teams an intuitive step can be made. This is that if English players were good enough, they would be paid to play at the elite football clubs without the need for market regulation. This is the economic process behind the free market, that in a non-discriminating system, players will be allocated efficiently to those who are most willing to pay for their services. Since the top clubs can invariably afford to pay the most for players this results in a labour market whereby naturally the cream rises to the top.

This basic economic principle undermines the FA’s judgement that if more English players played regularly for the top clubs then the national team would be better. The fact is that if English players were better, the national team would also probably be performing well and English players would naturally be playing at the best clubs as their skills would improve these teams. A shift like this would happen automatically in a free market as clubs compete for talent who will improve their squads. As it is, the quota on Premier League clubs outlining the number of HG players required in every team adjusts the market in the way that is already damaging the English game with the numbers needed only at eight.

The issue that the FA faces is that the Premier League, which they readily compare with the European Leagues of Spain, Germany, Italy and France, is a footballing monster. The commercial nature of the league and unrivaled broadcasting deals make any comparison with another football league difficult. According to Deloitte’s Annual Review of Football Finance club revenues in England in the 2014/15 season were €4.4billion, over €2billion more than any other European League (Deloitte 2016b). A large part of this can be explained by television rights. The new Premier League deal for the 2016/17 season is worth £5.136billion - an increase of 71% on the previous deal (BBC News 2015), other leagues just cannot compete. With the majority of revenues being put back into sporting performance at clubs this means wages are spiraling too. English clubs pay almost double the wages of any other European League (Deloitte 2016b), and unlike in a nation like Spain this wealth and spending is shared throughout the league due to collective broadcasting in England. This means that the Premier League sees competition for labour on a scale unrivaled by any other country, making comparisons by the FA unrealistic.

The financial competition seen in England means that only very few foreign clubs can compete when the Premier League comes knocking for players. Only the super clubs of Real Madrid, Barcelona and Bayern Munich can match the wages and prestige of the top English clubs when it comes to attracting the top players. This leaves England with vast pulling power, flooding the domestic market with high quality players from across the globe during transfer season. This compares with the relatively low and inelastic supply of HG players for English clubs. Top quality HG players are in scarce supply compared to the hoards of talented overseas footballers. Furthermore to train up new HG players to bring to the market takes time and investment on the part of clubs, keeping supply low and unresponsive for these players in the short run.

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The Result of Regulation

The impacts of the HG squad quota on the English transfer market is shown in Figure 4 below. It illustrates the differences in market supply between players trained in England for three years prior to their 21st birthday (Supply HG) and those who were not (Supply RoW). Originally, where no quota was imposed on the market, the aggregated market supply curve would have followed the Supply HG curve until point A. From this point it then becomes more worthwhile and affordable to purchase overseas players and so the market supply curve changes path, following Supply RoW until market clearing at point B. This market system sees players allocated efficiently to clubs who will gain the most utility from having each individual player in their squad composed of Q players.

However with the imposition of a quota for HG players above the free market equilibrium the FA distorts the market. In Figure 4 the quota sees the elite clubs having to continue to purchase HG players above and beyond the level the market previously determined. In this case HG players are purchased until point C whereby the clubs are now paying well above the market price for HG players (P-HG rather than P). Clubs then revert back to the cheaper alternative of overseas players, jumping from point C to D before continuing to fill their squads with these players to point B for the lower price of P.

QuotaSupply HG

Supply RoW

Qty

Price

P-HG

P

Q

Demand

A

B

C

D

Figure 4: The Market for Elite Footballers in the Premier League

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Ramifications of Market Intervention

In the real world this market phenomena is not hard to see at work in the Premier League transfer market. Fans, pundits and managers complain of the inflated prices of HG talent. It is not hard to think of examples of such cases in recent times. Raheem Sterling to Manchester City for a reported £49million (BBC Sport 2015a), Luke Shaw to their city rivals for £27million (BBC Sport 2014b), and while Chelsea’s bid of £40 million was not enough in to tempt Everton into selling John Stones last year, Manchester City stumped up the £47.5million to capture the defender this window after a mediocre 2015/16 campaign (BBC Sport 2016b). These deals seem to represent above market prices, particularly when World Cup and Champions League winning players including Pedro, Mario Gotze and Toni Kroos have been moving around Europe for much smaller fees. Perhaps the best example from recent times however came in January 2011 when on the same day Liverpool signed two strikers, Andy Carroll and Luis Suarez. Suarez had recently starred at the 2010 World Cup as Uruguay made the semi-finals, meanwhile Carroll had only recently made his England debut in a friendly. Yet despite this the Englishman Carroll cost the Merseyside club over £12million more than the Ajax striker (BBC News 2011). Two players of the same position, moving to the same club at the same time. Both were of similar ages, one was more experienced and had shown more ability, yet the other cost over 50% more.

This ‘HG premium’ is also reflected in the wages that these elite HG players are receiving. The agents of young HG talents know their clients are in demand and needed by the top clubs in order to fill their quotas. This bargaining tool allows them bump up the salary that they can negotiate for their player. As such we are now regularly seeing examples of teenage players with relatively little experience often getting a six-figure per-week salary. Luke Shaw for one, a full-back (who usually command lower fees compared to more attacking players) who became the ‘world’s most expensive teenager’ when he made his move to Old Trafford in 2014. Shaw reportedly earns around £100,000 per-week despite previously having played only one full season as a first team player, at a Southampton team who finished 8th in the Premier League (The Telegraph 2014). Another case in point comes from Theo Walcott at Arsenal. Last summer the attacker signed a new four year contract at the club reported to be worth £140,000 per-week (BBC Sport 2015b). This for a player who the previous season played just 447 minutes in Arsenal’s league campaign out of a possible 3420. This is in part due to the players poor injury record, but also because even when fit Walcott is not a regular in the Arsenal (or England) starting eleven. Despite this Walcott’s new contract makes him one of the highest paid players at the club.

This is the reality of enforcing a quota in such a financially powerful competition, prices and wages are hugely distorted in the Premier League in favour of talented HG players. Many in the game have stipulated that this could have a negative impact on English players who can receive too much too young. The Premier League “has turned a generation of talented players into millionaires long before they have fulfilled their potential” (The Telegraph 2013). It is argued that receiving a contract as a teenage player that sets you up for life can lead to a player believing they have “made it”. Focus may drift from training and practice towards fame and lifestyle, at the expense of the players long term ability.

Enforcing a HG quota in the Premier League also has economic ramifications for clubs in the market. With football clubs faced with inflated prices for HG players it creates a stable equilibrium of HG players per club at the quota, currently eight. This comes about since the high prices for English players means that the opportunity cost for clubs of purchasing one more HG player is above that of an extra overseas player. Thus any quota would simply create an incentive for clubs to fulfill the requirements, and no more. Now this may bring HG numbers up at the top clubs in the Premier League for whom most HG players are not of the necessary ability to play. However this may also mean that at lower placed Premier League teams, English players who may be able to perform to the same standard as their overseas counterparts are overlooked for economic reasons. It is the FA’s belief that “too many mediocre [overseas] players are getting work visas” (The FA 2014, p48) to play in the Premier League. Yet it is because of the quota imposed by

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the FA, that raises the price of HG players to clubs, that many mid-table Premier League teams are turning to overseas players. In the competitive open leagues that European football was founded on no team can afford to pay more to bring in a player simply because of their nationality.

Looking at Figure 5 (Sky 2015) it would seem clubs know they cannot afford a squad lavished with HG players. If we ignore that seasons promoted sides (Burnley, Leicester and QPR) who would have squad structures in large part determined by stricter Football League HG rules we can see that very few clubs take on large numbers of HG players. The mean for the seventeen continuing Premier League clubs is 9.76 HG players. Three clubs sat exactly on the League quota of eight HG players, while a further three clubs (Manchester City, Tottenham and Chelsea) actually thought that the opportunity cost of an extra HG player was greater than that of not having an additional player in their squad. Thus these three clubs decided not to fill their quota and had a reduced squad size for their league campaigns.

The inflated price of HG talent could also negatively impact upon English players on an international scale. Due to the financial power of the Premier League combined with the need the quota brings for English clubs to bring in HG players, the price of English players is not competitive in the international market. To the England Commission’s frustration our situation is “not mitigated by English players playing elsewhere in Europe, whereas other countries have many players in the top leagues of other major footballing countries.” (The FA 2014, p23). Again this is because very few European clubs can match the spending power of even mid-table Premier League clubs. When we consider the few clubs who can compete financially we then meet the same challenge that HG players face in England - their talents are not sufficient to improve these teams. A simple illustrative example of this can be taken from this years Deloitte Football Money League in which West Brom feature a place above Napoli (Deloitte 2016a) - a team that features international stars such as Marek Hamsik, Lorenzo Insigne and Jose Callejon.

That fact that foreign clubs do not face quotas for English players further diminishes the demand of our players overseas, which is why very few players HG in England venture abroad. Of those that do play overseas, many have reached the stage of their careers when playing time, or personal goals take precedent over earnings. Steven Gerrard and Frank Lampard for example both now play in the USA, having retired from international football. In fact when you consider players in and around the England squad there are hardly any examples. Joe Hart is one who this year made a loan move to Torino (BBC Sport 2016c), however this only came after he was frozen out by new manager Pep Guardiola and no English club came forward for his services.

Looking back to Figure 5, it can be seen that the three clubs who do not meet the HG quota are all from the ‘Big 6’ clubs in the Premier League - those who regularly fill England’s places in European competition. These Big 6 clubs benefit from having far and away the largest revenue streams of clubs in the Premier League, thus they are also able to offer the best wages for players and in turn demand the best talent for their squads. The fact then that these clubs decide against filling their HG quotas is once again suggestive that currently there are not enough players satisfying the HG criteria that are of the required ability to play regularly for our elite clubs. This point is further

Figure 5: Homegrown Players in Premier League squads (2014-15)

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enforced since two of the clubs in question, Chelsea and Manchester City, have been amongst the highest spenders in the league in recent years. Both of these clubs benefit for vastly wealthy owners looking for success at almost any price. As such, with both these teams building squads with the very best talent available, it can be expected that if the HG talent was of sufficient standard they would be signed for these clubs despite their inflated price.

Damaging Development

Even though some Big 6 clubs choose not to fill their HG requirements in the Premier League it does not prevent the quota negatively affecting some of England’s brightest footballing talents. The rules still incentivize clubs to bring in an extra HG player so long as the cost of doing so is deemed less than having one fewer player in their squad. Since the policy only stipulates that HG players must be squad members, and not playing regular minutes this can lead to the stockpiling some of England’s best young players. The phenomena of purchasing players to fill a quota, and not improve a first eleven, is becoming all to common in English football.

This is particularly an issue for young English players breaking into Premier League football. Due to the low supply of talented HG players for the elite clubs in the league, any young player who shows the potential to be of Big 6 ability is snapped up quickly to add to HG numbers at the top clubs. The leagues elite clubs can ill afford for a rival to beat them to the gold dust that is a HG player who may have the ability to play top level football. Often however these moves end up coming too soon for players who are just breaking into the first team setups at their current club. First team opportunities in the Premier League are proving harder and harder to come by for under 21 players who are easily overlooked in favour of experience by managers under pressure for consistent success. As such it may not be beneficial for a players development to move at a young age to a top club where squads are strong and experienced, and playing time harder to come by.

This is not to say that young English players cannot be successful at elite level clubs. Recent years have shown a few cases of HG players furthering themselves, playing regularly amongst the best players in the game. It is hard to argue that Wayne Rooney’s move to Manchester United has not been a success for both player and club since his move as an 18 year-old back in 2004. Rooney has gone on to captain both club and country since then, scoring 170 Premier League goals for United and winning five league titles (The Premier League 2015a). More recently Jordan Henderson has fought hard to hold down a starting berth, and pick up the captain’s armband at Liverpool following his move from Sunderland in 2011 (BBC Sport 2011). Things are starting to look more positive for Raheem Sterling too, who last summer left Liverpool to join Manchester City (BBC Sport 2015a). Sterling has started regularly this season as City push for the title under Pep Guardiola and the player will surely be benefiting from playing regularly with many other talented and successful footballers.

However all too often young English players can be seen making moves that do not end well for the player or the England team. Calum Chambers (Arsenal), Jack Rodwell (Man City), Nick Powell (Man Utd), Scott Sinclair (Man City), Carl Jenkinson (Arsenal), Wilfred Zaha (Man Utd), Alex Oxlade-Chamberlain (Arsenal), Fabian Delph (Man City), Patrick Roberts (Man City), Kieran Trippier (Tottenham). All these players and more have made dream big-money moves as young professionals and to different extents they have not gone on to fulfill their potentials as footballers. Some of the examples above remain at the big clubs they moved to as squad players. Chamberlain, Delph and Trippier are regulars on benches around the league on Saturday afternoons. Others have been sold on or released after a few years with little first team action - Zaha, Rodwell, Sinclair, Powell. Meanwhile Jenkinson, Chambers and Roberts have all been loaned out with little prospect of first team football with their parent clubs going forwards. All of these players were once touted for the national team, all now are struggling to make a name for themselves following years of lost development.

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The current homegrown quota is a fundamentally flawed policy. It succeeds to the extent that it increases the numbers of homegrown players at the best clubs, however this is not the root of the problems in English football. Looking back at Figure 3 it can be seen that English players are all too regularly playing less than 50% of minutes at their Premier League clubs. Yet the FA’s HG policy does little to address this issue with the main aim to increase the numbers of English players at the best clubs in England. This leads, as we have seen, to many cases of the purchasing of a HG player in order to fill a quota, and not to play minutes. This is likely to be detrimental to the development of HG players.

In his book ‘Bounce’ Matthew Syed explores the benefits to skill levels that come simply from good quality practice rather than simply an innate talent. This principle can be seen in football when a player stops (or starts) getting regular first team minutes. For example look at the career to date of Ryan Bertrand (Transfermarkt 2015). Signed to the Chelsea academy from Gillingham in 2005 Bertrand developed through the loan system with several successful spells at League One and then Championship clubs between 2006-11. In 2012 Bertrand returned at Chelsea looking to break into their first team setup. A string of fine performances towards the end of the season, combined with injuries to other players, led to Bertrand starting in the Champions League Final against Bayern Munich that year. A goal in the 2012 Community Shield three months later saw him start Chelsea’s first league game a week later. Bertrand was called up to the England senior squad and was set up for a successful career at Chelsea. But things soon turned sour. A frustrating year followed as deputy left-back to Ashley Cole. He dropped down the England pecking order with the likes of Kieran Gibbs and Leighton Baines impressing for their respective clubs. The next season Bertrand made just one Premier League appearance before a January loan move to Aston Villa was arranged. He struggled to impress in his sixteen appearances in a Villa team fighting relegation, a shadow of the player who had started the pinnacle match in European club football just two years earlier. However in the summer of 2014 a loan move to Southampton changed Bertrand’s fortunes. Regular football saw his football return to its best, a permanent move to the South coast club followed as Bertrand was named in that seasons PFA Team of the Year, and in 2015 he received his first England call up for three years, he remains a regular for club and country.

Although this is just one example of a player benefiting from regular playing time similar patterns can be seen elsewhere. Micah Richards’ promising career took a downturn when he fell out of favour at Manchester City. Prior to the 2015/16 season Richards had played just 772 Premier League minutes in three years, but back in 2011/12 alone he received over 2000 minutes (The Premier League 2015b). Another example can be seen in Danny Drinkwater. In the Manchester United academy from the age of nine, Drinkwater progressed though the youth teams to the fringes of the first team squad at Old Trafford. However with minutes hard to come by Drinkwater bounced from loan-to-loan between 2009-2012, finally moving permanently to Championship side Leicester in 2012. Since this move Drinkwater has started 170 matches for the Foxes as they rose from the middle of the Championship to the top of the Premier League. In and around the England setup and with a Premier League winners medal, Drinkwater is another example of a player reaping the benefits of playing regular Premier League football.

What about the Free Market?

The FA should look at these kind of examples and adapt their HG policy to suit. Young English players should be encouraged to put regular football ahead of money and “big club status” in their careers. Meanwhile HG policy should be altered to remove the incentives for the elite clubs to stockpile English talent that will be wasted on their benches come Saturday afternoon. Clubs should want to purchase English players for their abilities, as would be the case without the quota under market forces. Although this may result in fewer HG players at the top clubs it will allow English professionals to be the best they can be, showcasing their talents in a team befitting their abilities whether that be Arsenal, Aston Villa or Aldershot.

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A move towards a free market system would also ensure the high level of competition that the Premier League is renowned for is maintained, and even reinforced. In the FA’s own words they want to improve on the “number of English players playing regularly at the highest level” (The FA 2014, p59). But enforcing the strict new HG policy that is being put forwards will see the standard of the Premier League deteriorate. It will in effect pull the Premier League down to the level of its English players, rather than encouraging English players to push on and compete with their international rivals. A HG quota requiring 12 association-trained players is in effect a protectionist policy by the FA. It will shield young English players from competition, however it will not promote a robust and efficient industry that is competitive on an international scale; something that the England national team needs in order to thrive.

The FA should embrace the success of the Premier League in bringing the best available competition in world football to the UK. It provides an opportunity for our young players to test themselves against the top international players. However to do so they must be playing regularly rather than filling squad places. They should also be exposed to competition that pushes players to be the best they can, not protected and handed a huge salary simply due to their place of birth. As Richard Scudamore suggested recently, “artificially protecting the species” that is English players is not the answer. “We get hung up [that] they can’t possibly be good enough unless they’re playing for Chelsea or Man United. Of course they can.” (The Telegraph 2015). If the Premier League is strong enough then it will not matter if English players do not play at the elite clubs. As long as they are getting minutes in the Premier League, they will be playing at the “highest level”.

While the basic principle of a free market policy can bring many benefits to the Premier League and its HG players, it must also be noted that complete deregulation could pose issues. Although the Premier League and FA can adopt their own policy, clubs competing in Europe must adhere to Uefa’s rules. Thus even if HG policy was scrapped in England, our elite clubs will still be required to have four club-trained players, and a further four association-trained players in their European squad of 25 (The FA 2014, p29). With a big problem of current policy the resultant hoarding of English players to fill squad places at the top teams, it would be questionable if a free market policy in England alone will be totally effective in solving this issue.

A further issue with a completely free market is the risk that Premier League clubs could make an economic decision to close their academies. Removing the need for clubs to provide a supply of young HG players to the market could see some clubs decide to scrap this cost centre and focus resources on player recruitment to improve short term performance. Clubs need an incentive to invest their time and money in young players. Whether that be to fill a quota for their first team in ten years time, or to provide an income stream through the selling off talented HG players at above free market prices. It is hard to say exactly how much a Premier League academy costs. An extreme case is the supposed £200m state-of-the-art academy opened by Manchester City recently (The Independent 2014). Meanwhile both Tottenham and Southampton have also recently opened new training complexes that include academy facilities for around £30m (The Independent 2012 & The Guardian 2014). In terms of running costs it is said that Chelsea’s youth setup requires £8m a year for operations (The Independent 2014). However clubs may decide this investment is not worthwhile if there is not a clear benefit to them for doing so.

Politically too it would be hard for the FA to justify a free reign for Premier League clubs on HG players at a time when the national team is coming under heavy criticism. Fans want to see action, and although a free market policy brings its benefits, it would require time to work and appears at first glance a regressive policy for the England team. As such, realistic and thought out changes to the policy are required. As things are, and how the FA plans to proceed, sees an over simplified policy implemented. The negative connotations of which have been identified and discussed in this piece. Instead the FA should look to adapt their HG policy to focus more on providing direct playing opportunities for English players, and to encourage the clubs to invest in their academies as a source of future first team players. All this whilst still maintaining the Premier League’s world-class status and with the benefits of a free market in mind.

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A More Considered Policy

Firstly the FA must reconsider its own definition of what constitutes a HG player. Under current rules “a home grown player has to be registered with The FA or FAW for three years before their 21st birthday” (The FA 2015). FA rules state that Premier League clubs should have eight of these players in their 25-man squads, irrespective of their nationality, or the club(s) they trained with prior to their 21st birthday. This leaves the system open to abuse, meaning that the development of young British players is not essential for clubs.

The first clear issue here is that a HG player need not be eligible to play for any of the home nations, let alone England. A foreign player moving to a Premier League club at the age of 18 or under can go on to be classed as HG. This has led to a startling state of affairs whereby just 60% of HG players registered for Premier League clubs for the 2014/15 season were of English nationality (The Premier League 2014). It is acceptable that this figure should not be 100% due to players coming in from the other home nations. For instance it can be expected that Swansea would have some HG Welsh players in their squad who absolutely should be classed as HG. It is also true that some foreign players may have moved to the UK at a very young age and trained here, yet still wish to represent their land of birth internationally - Victor Moses, and the Ameobi’s are originally Nigerian, but grew up in England. However under current rules players such as Cesc Fabregas, Gael Clichy and Morgan Schneiderlin are HG. These three players among many other “HG” Premier League talents all signed for English clubs from European teams as young starlets. Furthermore as a part of these moves Barcelona, Cannes and Strasbourg respectively all received a transfer fee. Around eighteen at the time of their moves, these players went on to be trained for three years at English clubs before turning 21 and are thus “HG players”. Despite this, all are regulars for their international teams of Spain and France. Certainly home-developed, it is hard to argue however that this trio are truly homegrown.

This issue is something the FA are now looking to address. As a part of the proposed changes to the HG quota it has been suggested that in order to be classed as HG, a player must have been FA or FAW registered for three years before their eighteenth birthday (The FA 2015). This would exempt the players mentioned previously who signed for English clubs in their late teens, players would now need to be fifteen or younger when registered to qualify. This is a promising step which should ensure that more HG classified players will actually be eligible to play for one of the home nations.

Along with this, and to incentivize top clubs to put more of their resources into player development I would suggest that association-trained quotas are scrapped in favour of a smaller, but more

effective club-trained requirements. The FA cites the vast money in the Premier League as one of the main reasons for the decline of English players playing in the competition (The FA 2014, p27). However the fact that our league is so wealthy means that our clubs should have the best opportunity in order to develop talented young players. Premier League clubs have these resources, they just need the incentive to invest in young players. The FA can turn this problem onto the clubs by requiring club-trained players to be named in all Premier League squads. Thus the clubs will no longer be able to solve their quota problems by throwing money at an association-trained player that another club has spent time

01 Casillas - Real Madrid 03 Pique - Barcelona 15 Ramos - Sevilla 17 Arbeloa - Real Zaragoza 18 Alba - Valencia (and others) 06 Iniesta - Barcelona 08 Xavi - Barcelona 10 Fabregas - Barcelona 14 Alonso - Real Sociedad 16 Busquets - Barcelona (and others) 21 Silva - Valencia 09 Torres - Atlético Madrid 13 Mata - Real Madrid (and others) 07 Pedro - Barcelona (and others)

Figure 6: Spanish Players used in Euro 2012 Final

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developing. This is what many of the top clubs can do under current rules, effectively passing the buck when it comes to player development. The top clubs have the best resources and finances available to them, they too should play a role in bringing though the best players.

When spending their time thinking why it is that the England team lags behind the great Spanish and German sides of recent times, the FA makes no mention of the stature of club that each teams players learnt their trade with. Figure 6 and 7 show the Spain and Germany teams at arguably their respective peaks. Figure 6 is the starting eleven and substitutes used by Spain in their 4-0 defeat of Italy in the final of Euro 2012. Meanwhile Figure 7 is the same for the German team that defeated Argentina after extra time in the 2014 World Cup Final. In all these teams, the academy from which each player graduated from is listed. Where ‘(and others)’ is listed it means that this player was signed with at least one other academy after turning fifteen, but they graduated at the club named. Then in bold are the players from the top five revenue earning clubs in each country. (All team sheets were sourced from BBC Sport, academies from Transfermarkt and club revenues from the 2009/10 Deloitte Football Money League.)

It is interesting to compare this to the England squad for this years European Championships. Following England’s elimination from the tournament the BBC listed the first club of every player in the 23-man squad, this is outlined in Figure 8. Looking at these three squads it is evident that many more international players from Spain and Germany have academy training from the elite, high revenue clubs. This is hardly astonishing news when it is clear that successful clubs, who are

regularly in European competition, consistently make the most money and have the best resources available to them. This enables better scouting, training and facilities to aid in player development and is why the best young players are invariably found at the top clubs. However it can be seen that in Spain and Germany these players go on to be the best senior players too. So why is it this is not the case in England?

England’s top clubs do have great youth players. Chelsea were the winners of the last two Uefa Youth Leagues - the academy equivalent of the Champions League (Uefa 2016). Furthermore, since its birth in 2012, the U21 Premier League winners have been Chelsea, and Manchester

01 Neuer - Schalke 04 20 Boateng - Hertha Berlin 04 Höwedes - Schalke 04 16 Lahm - Bayern Munich 17 Mertesacker - Hannover 96 05 Hummels - Bayern Munich 18 Kroos - Bayern Munich (and others) 13 Müller - Bayern Munich 08 Özil - Schalke 04 (and others) 19 Götze - Borussia Dortmund 23 Kramer - Bayer Leverkusen (and others) 11 Klose - SG Blaubach-Diedelkopf 09 Schürrle - FSV Mainz 05 07 Schweinsteiger - Bayern Munich

Figure 7: German Players used in 2014 World Cup Final

Joe Hart - Shrewsbury Tom Heaton - Wrexham Fraser Forster - Newcastle United Kyle Walker - Sheffield United Danny Rose - Leeds United Gary Cahill - Aston Villa Chris Smalling - Maidstone Nathaniel Clyne - Crystal Palace John Stones - Barnsley Ryan Bertrand - Gillingham James Milner - Leeds United Raheem Sterling - Queens Park Rangers Adam Lallana - Southampton Jordan Henderson - Sunderland Eric Dier - Sporting Lisbon Jack Wilshere - Arsenal Ross Barkley - Everton Dele Alli - MK Dons Harry Kane - Tottenham Wayne Rooney - Everton Jamie Vardy - Sheffield Wednesday Daniel Sturridge - Manchester City Marcus Rashford - Manchester United

Figure 8: England Squad for Euro 2016 - First Clubs

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United three times. This is not just recent success either. After England were knocked out of qualifying for the European Championship in 2007 the Daily Mail published what is still a well-renowned article looking at what could be a bright future for English football (Daily Mail 2007). The article identified 60 bright prospects from across Premier League academies. There was also a prediction made from this of a potential England team of the future, this side is shown in Figure 9. Back then of these eleven predicted England stars, nine were from the academies of Big 6 clubs. However eight years on and only one player from the England team of the future is anywhere near the England setup - Theo Walcott. In fact the Arsenal forward is the only one even at a Premier League club. Furthermore of the 60 teenagers tipped for the top by the Football Association and their Premier League clubs only three are regulars in the England squad, Walcott, Danny Rose and Fraser Forster. It is understandable that not all of the players identified by the article may have made it professionally, but not on this scale. The article refers to these as amongst a ‘golden generation’ of HG players. Clearly they all had ability, but the FA needs to alter its policy to ensure that talent like this does not go to waste.

By introducing requirements for club-trained players the FA will pave a development path for players at Premier League academies across the country. Clubs would have to consider that the strength of their squad in the future will be directly impacted upon by their ability to bring through young HG players to the Premier League market. This should provide more playing opportunities for under-21 players who will become vital squad members in the future. The positive thing is that the FA has recognized a need to bring in club-trained requirements. As a part of their restructure of HG policy it has been put forwards that club should have at least two club-trained players in their 25-man Premier League squads (The FA 2015). This is a move in the right direction if considered separate to the proposed increases in association-trained requirements. However as we have already seen in Figure 5, many Premier League clubs would chose to sacrifice squad spaces to forgo the cost of purchasing, or developing a HG-player. Due to this I would suggest that two should only be the beginning of the club-train rules. An increasing requirement rising to five or six club-trained players in 25-man squads would provide the necessary incentive for clubs to invest in the development of their young players. This would make the requirements harder for clubs to ignore, and should competitively impact upon clubs who still decide against investment. Clubs who buy into developing good young HG players will benefit from stronger and deeper squads which should see improved league standing, and financial reward for their successes.

The benefits of having club-trained needs instead of association-trained rules will also be passed onto the player market. No-longer will all English players command a premium price and wage for their coveted nationality. Instead once a player leaves the club they were trained at they will no longer be wanted for anything other than the abilities they can bring to a team. While still at their academy club they will however still command a high fee, although this will bring its benefits. It should help provide a financial reward for the club who trained up the player, and possibly see more players enjoy longer spells at their original club before moving on to better things. It will also mean any big club coming in with a large fee to take the player off of their academy club will be signing the player to directly improve their team, and hence play top level football. This is because the players HG status will not benefit any club but their first, which should help put an end to the stockpiling and squad filling use of talented HG players.

Figure 9: England’s Team of the Future (2007)

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In addition to these requirements I would also suggest a direct incentive to give these club-trained players league minutes, in order to prevent them becoming professional squad fillers at Premier League clubs. This could be achieved through distributing prize-money and broadcasting revenues dependent on minutes played by club-trained players throughout the season, as well as for final league position.

The way broadcasting revenue is split is a contentious point in football. Under current Premier League rules broadcasting rights are split with 50% being shared equally between all clubs, a further 25% split by league position with the remaining quarter dependent on number of live matches broadcast (The Premier League 2015d). However this last quarter is also highly correlated to success, with the highest performing and best supported clubs getting shown in the most live games. In the 2014/15 season number of live games broadcast had a correlation of 0.77 to league position and 0.82 to average attendance.

All this means that around half of the Premier League’s broadcasting deal is split by how successful a club is. Further to this successful clubs tend to have more fans and gain financially from this too. This all plays a large part in the virtuous circle of success that precedes over the European game currently whereby winning breeds winning. The best clubs earn the most prize-money, TV revenue and merchandise income, which can be invested in labour to ensure further success and revenue in the future.

In sport it is important for the sake of competition that there is a reward for finishing higher up in the league. This is because if clubs could earn the same amount no matter where they finish in the league, then there would be little incentive for them to invest in a better squad to help improve their position. Winning would no longer be a worthwhile cause. This is an area explored at length in Playbooks and Checkbooks (Szymanski 2009). However many argue that the Premier League is currently too regressive in its distribution of broadcasting revenues. As explored earlier, successful clubs already benefit financially from their larger fanbase, sponsorship and commercial deals before considering the distribution of broadcasting money. This should be incentive enough to finish higher up the league and few teams have ever been successful for a prolonged period of time without these key ingredients. So instead of using the commercial success of the Premier League to extend the economic divisions between the top clubs and the rest, as 50% of the television rights currently do. Why not move to protect the league’s longevity and incentivize the development of homegrown players, whilst helping smaller clubs keep pace and maintaining the strong competition that makes the Premier League so watchable.

I feel it may be beneficial to incentivize clubs to aid HG player development by splitting a quarter of the broadcasting payments dependent on minutes played by club-trained players under the age of 21 instead of for the number of live TV matches a club plays in. This should help give clubs an incentive to provide more playing opportunities for the talented HG players in their academies. Putting some of the vast commercial money in the domestic game towards maintaining a high quality product in the future built around an exciting core of English players. In the long-run a move like this will provide a small, but not insignificant financial advantage to clubs who are willing to invest time and money in their academy talent.

Alternatively a minutes benchmark could be set for club-trained players with penalties and bonuses for clubs that miss or exceed this target. This policy would look very much like a tax and subsidy system on Premier League clubs in order to correct the current under provision of young HG players to the market. The crucial factor in both these proposals is to shift the focus of the policy away from getting HG players signed on at clubs and towards getting them the playing time they need, when they need to be breaking into competitive football.

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Conclusions

Most modern economics textbooks will say that quotas are an outdated and oversimplified policy tool that do not actually do markets much good. In the particular case of the Premier League the HG quota brings a lot of problems without actually addressing the issue at hand. In fact it probably acts against the very problem it is trying to prevent - the lack of playing opportunities for English players.

HG players in the league are prized assets not for their playing abilities, but their nationality. Clubs snap up any to show a glimpse of talent in order to fill out their squads whilst the rules make no attempt to get these players some quality game time. For the elite clubs supply is low whilst demand is rigid under the FA’s quota, which in the bank-rolled Premier League means inflated and uncompetitive prices for our young starlets turned mediocre squad fillers. To undermine the rule further, these players do not even have to be eligible to play for a home nation.

If the FA really wants to help the development of young English players at Premier League clubs then the policy needs to fundamentally change. For starters any quota should be for club-trained players. This will put more of pressure on clubs to bring through the talented players at their academy rather than simply buying in a ready made HG player. Every club should be investing their own resources and providing opportunities for the future stars of the league. Club-trained requirements will also remove the HG premium on players after they have made their first transfer. This will help the market allocate players to clubs based on their ability which should be beneficial for their long term development.

A fine balance is then required in order to maintain the high quality and excitement of the Premier League, whilst also providing these club-trained players the chance to flourish. Any restriction should be small initially as it will take time for clubs to adapt and bring through their own academy players who can maintain the standard of the league. However in order to ensure that these club-trained players do not become the squad-fillers of the future the requirements should increase overtime so that it would significantly affect squad size and performance if the rules were not adhered to. In addition policy to directly incentivize giving these players minutes could also be introduced steadily.

The Premier League of the future should be competitive and of the highest quality. Fans should be able to look forward to seeing a blend of local young talent and the best imported stars from across the globe when they go and see their team on a Saturday afternoon. A competition like this would benefit the league and the national team hugely and it is possible given the right environment. The talent is their, we just need the right conditions to encourage clubs to think a little more long-term.

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