Project Big Picture: Why Utd and Liverpool deserve criticism over naked power grab

Manchester United's owners are no strangers to criticism but the revelations around Project Big Picture should bring similar scrutiny on Liverpool's John Henry and any other owners involved in trying to bring this power grab to fruition.

A quick aside. In the world of finance, some people and entities are described as vulture investors, and others distressed investors. There is an overlap between the two, and in light of the recent offer from the Premier League’s biggest clubs to those below them in the football pyramid, it is handy to know the two methods of operating.

There are blurred edges between the two methods, but we can keep it brief. Vulture funds will buy the debt of struggling or bankrupt companies, and force them to pay up in one way or another, under threat of forced sales of assets. It is legal, but the shorthand is it is almost akin to holding the debtor to ransom.

Distressed investors will often buy shares in companies that are flailing, or the debt they own, and offer to take part in the restructuring to help them. Given the shares and debt they hold, this is less of a negotiation, and more of an order.

It is not entirely unfair to characterise the Project Big Picture offer as an exercise to some degree in both these schools of business. The EFL needs some money, and so certain members of the elite have come up with an offer they can't refuse. The Premier League as an organisation, though, has publicly opposed the proposals. As has the UK government.

The deal is essentially this: The Football League and the FA will be given a one-time gift of £350 million between them to ensure they can continue to exist, and in return the country's biggest clubs get to decide the nature of their existence in perpetuity.

Look quickly at what the offer will entail. The pyramid will be reduced by two clubs with the Premier League reducing from 20 to 18, meaning that two clubs will certainly find their finances severely curtailed for the long term. Less than 10 percent of Premier League revenue will be given to good causes (with the FA included, bafflingly, as a good cause), and a quarter of the remainder will go to the Football League. That means every club outside the top division will receive roughly a third of one percent of what the Premier League brings in.

The lower league teams will almost certainly agree to the deal because they can’t afford to choose right now. There is no serious help from the government, which has failed to support arts and entertainment throughout the pandemic.

What of the mid-table Premier League sides? Well, this might give them just enough to appeal to their own self-interest. Only two sides will be guaranteed to be relegated every season, and the club that finishes in 16th will go into a play-off. Those are meaningfully better odds, weighted in favour of the establishment clubs who retain their better funded squad against their Championship challengers.

Similar plans have been knocking around for a decade, maybe more, in one form or another. The occasional stories talking up a Super League in Europe have the same aim - buttressing the very biggest clubs against the problems of consistency, and allowing them to focus on the most glamorous and money-making events. It allows them to reduce their national obligations and gives them a better chance of succeeding in Europe.

The very best performing investors and businesspeople, are there with wads of cash when needed. Warren Buffett famously will not dip below $20 billion cash on hand, just in case something interesting pops up. In previous cycles, Seth Klarman and Howard Marks have raised billions in funds when everyone else was running for the shotguns or filing for bankruptcy. They get to pick up the pieces by maintaining their power throughout the years. Manchester United and Liverpool are operating similarly.

The Glazers and John Henry will be happy to maximise their clout right now to ensure they take more control and more cash out of the game. While they will be under their own limits due to coronavirus, their importance to the league has not reduced an iota. As such, it is seemingly now time for them to push those in even more discomfort into the dirt.