Premier League clubs on a cliff edge as Brexit fallout looms large

Editors' Note: This article has been updated since it was first published on Sept. 12, 2018

The United Kingdom is at the height of Brexit negotiations, thrashing out exactly how the country will leave the European Union with the process beginning in March 2019.

On Wednesday, Prime Minster Theresa May unveiled the government's plan. In response, there were resignations, scrutiny on the Prime Minister's plans and political turmoil.

All the while, as the intricacies of the divorce are ironed out, discussions are ongoing between the Premier League and the Football Association over how the most lucrative league in the world will look once the UK leaves the EU.

When the UK voted in favour of Brexit, the immediate effect was a crash in the pound's value. The decision to leave means legislation surrounding the freedom of movement between EU countries has to be re-worked, while it also has far-reaching consequences for international trade and the British legal system. The uncertainty extends to sport, with football drawing most attention.

The current work permit system will likely have to change, clubs may be restricted on which players they can recruit, while the fall in the pound's value has seen transfers -- and even the building of Tottenham's new stadium -- become more expensive. The Premier League, the Football Association and the government are in discussion over how transfers will work post-Brexit.

In its simplest form, the FA sees Brexit as an opportunity to create more avenues for home-grown players, while allowing Premier League clubs to still recruit the very best of overseas talent, as its chairman Greg Clarke outlined. Meanwhile, the Premier League wants its clubs to be able to recruit any player from abroad, as long as they fit into the parameters of a squad, which includes spaces for English players. Whatever the finished system looks like, leagues below the top flight will follow suit. The reality is, the government and the FA will not want to harm the country's most lucrative sports product.

Confused? That would be understandable. Here is how it could all play out:

The best-case scenarios

The view from Westminster

UK politicians want to keep both the Premier League and the FA happy. In a letter to the House of Lords on Aug. 10, then sports minister Tracey Crouch answered a series of questions posed to the Department of Digital, Culture, Media & Sport over the potential effects Brexit would have on the country's sport.

It started with a reassurance the "government absolutely recognises the value of sport to the UK, and we are determined to ensure that our sport sector continues to flourish." It included answers around whether the absence of freedom of movement would have a detrimental effect on sport and how visas would potentially work. The key line in the five-page letter was: "the government will maintain its dialogue with the National Governing Bodies to ensure that any new arrangements for their individual sports balance the need to attract talent with the need to ensure that opportunities for home-grown players are maintained." Since then Ms Crouch has resigned, replaced by Mims Davies, but the government's stance remains the same.

The Premier League's case

The Premier League is understood to want a more streamlined and efficient system for its clubs to sign players. It expressed its concerns that if the UK cuts all ties with the EU, Premier League clubs would not have been able to sign two-thirds of those currently recruited from Europe under the Governing Body Exemption (GBE) criteria.

Currently, a non-EU player needs a GBE. To be granted one of these, a player has to fulfil a number of criteria. If they are playing frequently for a team in the top 50 ranked national sides in the FIFA standings, they are likely to get a work permit. But if not, then they need to apply for an exception, which is judged via a points system advising a panel whether to give the player a permit or not. Here a player's transfer fee secures them a number of points, so too their wage and if they have played in top-level continental competitions.

To prevent the standard of talent falling, the Premier League wants a new system that is effectively an open market. Clubs can recruit whoever they want from wherever they want to fill a set number of spots in a 25-man squad, with eight reserved for 'homegrown' players.

The current work permit system has been unpopular with some managers, with Pep Guardiola criticising it preseason when Manchester City were denied a visa for their Brazilian midfielder Douglas Luiz. The new system would remove these hurdles, with the Premier League believing it would be far more straightforward to administer and allow its clubs to sign new players from abroad more efficiently and give the league an advantage over its rivals.

The FA's case

The FA will not want to damage the Premier League, given it is their sport's leading competition. But it does see Brexit as an opportunity to give home-grown, English players a wider pathway to the highest level. The latest indication is the FA wants to bring in a system where Premier League clubs are only allowed a maximum of 12 foreign players in their 25-man squad. If this new rule was introduced in the next transfer window, this would mean teams like Manchester City, Watford, Tottenham and Brighton would have to rejig their squads as they currently have 17 foreigners out of the 25.

To placate the Premier League, it has been reported that the FA would put forward a proposal to the top-flight clubs to remove all work permit requirements in exchange for a limit of 12 foreigners per 25-man squad. According to The Times, 13 of the Premier League's 20 clubs would be affected, although the extent to which their respective managers' first-team selections would be hampered would vary greatly.

Realistically, if these new rules are brought in, it would coincide with government and EU's transition period, meaning they would likely be introduced in 2020, at the earliest.

Talking in April last year, FA chairman Greg Clarke said: "What we want to do is have a few less journeyman international players. There has to be sensible centre ground where world-class players are welcomed in the Premier League but not journeymen who are displacing the young English talent coming through and are hopefully the future of the English national game and the international game and can't get in the first team.

"We now have an opportunity to see what's right for the game and I don't just mean the international game, I mean getting young English players into the first team. If Manchester City or United want to buy Neymar or someone like that then bring it on, that's wonderful. We want to see wonderful Premier League football and competitive sides, that's good for the game.

"It's the next tier down, the international players who may be only as good as the talent coming through but are proven and easy to pick. I want to make sure if you are going to displace a young English player it's by a world-class player and not an average player."

But ultimately, this will come down to a series of negotiations between the FA and the Premier League. Ask yourself this: Would the FA really want to kill the country's golden goose by making it much harder for clubs to improve their squads?

The worst-case scenario

The no-deal Brexit

It is possible that the UK government cannot reach agreement with its EU counterparts on the exact terms of their "divorce" by the March 29, 2019, deadline. This "no-deal Brexit" would leave no formal agreement between the UK and the EU over trade, law, security and immigration. Discussions are ongoing between the two parties and they are hopeful of avoiding such a scenario, but "no deal" would see all non-UK footballers requiring work permits to join British teams.

"That would be likely to result in the clubs complaining that the GBE system needs to be overhauled in order that they are able to bring in the same types of EU player they previously could (some of whom would not qualify for a GBE)," Owen Jones, a specialist in immigration sports law from the law firm Sheridans, told ESPN.

"Healthy debate then ensues between the clubs, the FA and the Home Office as to whether entirely new rules need to be brought in or whether the GBE/Tier 2 system is fine as it is / could be fit for purpose with a few tweaks to the GBE qualification criteria."

The importance of Article 19

Currently Premier League teams can recruit players aged between 16 and 18 from the EU, under the EU's rules over freedom of movement for workers. FIFA's Article 19 says no club can recruit players under the age of 18 from abroad, but granted an exemption to clubs within the EU. Lose those EU ties and no longer will Premier League players be able to sign those promising youngsters and their talent will be lost to other leagues. Here the FA would point to their Under-20 World Cup-winning squad as the calibre of talent waiting for a chance in the Premier League. The detractors would earmark talent like Cesc Fabregas, Hector Bellerin and Andreas Christensen as players who were allowed to join clubs in the Premier League thanks to the EU/FIFA exemption.

Foreign players get more expensive

If the GBE formula is simply extended to non-UK players then suddenly players from abroad will get a lot more expensive as they will have to tick the required number of boxes on transfer fees and wages. There will also be a bidding war between clubs to snap up the best available European talent from a far smaller pool of players likely to be eligible.

"To get an automatic permit, you need to satisfy a number of international appearances in the last year -- if they extend that to EU players, they'll have to take the best 10-12 players from each country as they'll satisfy the criteria automatically," Tiran Gunawardena, a specialist in sports law at Mills-Reeve, told ESPN.

"If they do satisfy the criteria they'll be more expensive as they're the best players. Alternatively, clubs will have to spend more money to satisfy the criteria. Either way it'll have a dramatic impact on the Premier League."

The demand will outweigh the supply, and as the Premier League clubs scramble for the few overseas players who would be able to obtain a GBE, the best English players will also become more expensive as clubs seek to bolster their squads with available talent. The transfer market will fluctuate and, remarkably, the £10m West Bromwich Albion paid for Jake Livermore last year will look like a bargain.

The Brexit impact so far

The post-referendum crash in the pound's value was felt in the last transfer window as it sent Tottenham Hotspur's new stadium costs spiralling. Spurs manager Mauricio Pochettino was fielding questions on a summer where they did not recruit a single new player and pointed to how the stadium is costing the club "nearly £1 billion." He added: "That's the truth; don't believe when they say £400 million. Then with Brexit it's worse because the cost is 30 percent more. That is a drama, I feel sorry for the English people."

A study by a bookmaker said the fall of the pound caused by the Brexit vote has since cost Premier League clubs £317m -- had the pound stayed at its pre-referendum value, clubs would have spent £2.16bn on transfers since then, rather than the £2.48bn they have actually forked out. Clubs on the continent have also profited, with the weight of the euro compared to the pound making Premier League talent more affordable. And in reverse sources told ESPN the fall in the pound's value post-referendum meant Paul Pogba's transfer from Juventus to Manchester United ended up costing the Premier League club more than initially bargained for.

Burnley chairman Mike Garlick has also spoken out on Brexit. "It threatens to make the widening inequality gap in our top division even worse," Garlick said. "The hit to the value of the pound against the euro, largely caused by Brexit uncertainty, is already making it harder for clubs to sign players."

And Peter Coates, the Stoke chairman, has also voiced concerns. "The fall in the value of the pound that we've already seen, as well as the risk to our country's economic prosperity, cannot be brushed under the carpet," Coates told the BBC.

"Depending on the Brexit deal, the Premier League, one of our country's success stories, could be damaged by freedom-of-movement restrictions. This could also affect the Championship. If this goes badly, it will be places like Stoke that suffer the most."