Brexit
Brexit strategies

What the UK would look like after leaving the European Union is still unclear, but the referendum result means that the sport sector will have to begin making plans

By Leigh Thompson | Published in Sports Management 11 Jul 2016 issue 124


On 24 June the UK delivered perhaps the most significant referendum result in a generation by voting to leave the European Union.

It is fair to say that, less than a month later, the aftershocks are still being felt. While much of the ensuing media frenzy has focussed on the broader economic and political fallout, the vote is significant for sport given the extent to which the UK’s membership of the EU influences the sector at every level from elite down to the grassroots.

Perhaps, unsurprisingly, a great deal has already been written speculating on what Brexit might mean for the sector but it is important to remember that, in day-to-day terms, the vote has not changed anything.

This process of withdrawal will only begin once Article 50 of the Lisbon Treaty is triggered and, as such, it appears unlikely there will be clarity on the key issues for some months to come. The intervening period therefore provides a useful opportunity to reflect calmly on the situation and to identify the key issues affecting the sports sector that will need to be addressed by officials once the process of detailed negotiation begins.

What might the terms of Brexit look like?
As a single market, a central plank of the EU is that people, goods, services and capital are free to move across borders. In particular, the principle of free movement of people was the most contested issue in the referendum debate; many of those in the leave campaign argued strongly that only with control of UK borders can immigration be controlled properly.

While it is not yet clear what model the UK would adopt once it leaves the EU, it is possible to consider some options. Some countries outside the EU – such as Switzerland and Norway – have agreed to some form of freedom of movement (alongside compliance with other EU rules) in return for access to the EU’s single market. In effect, these countries get access to the benefits of the EU but at the cost of having little influence on the rules they must abide by due to their position on the periphery.

Looking at the UK, it is hard to see how this sort of ‘halfway house’ would be sufficient to satisfy those that want to take back control of law-making and, crucially, immigration policy. In this context we could well see the UK adopt a model based on full sovereignty and access to markets via free trade agreements with individual countries or blocs such as the EU. Such a model would deliver the primacy of UK law demanded by hard-line Brexiteers but would, equally, mean limitations on freedom of movement and, probably, more complex and costly trading arrangements.

Ultimately, the final form Brexit takes will depend to a large degree on the extent to which the UK government is prepared to trade off controls on freedom of movement for access to the single market.

Clearly, sport is not going to be foremost in officials’ minds when these ‘red line’ negotiating positions are discussed. Nonetheless, it is possible to identify a number of key areas where the sector is likely to be affected depending upon the precise terms of what is agreed.

Employment
Any restriction on the freedom of movement would be a key issue for the sports sector. The impact would be felt most keenly within major professional sports such as football and rugby where players from across the EU can currently move freely to play in the Premier League and Aviva Premiership respectively.

At present, in football at least, non-EU/EEA players wishing to play in England must satisfy more stringent work-permit rules. These rules were devised in part to support the development of domestic players who, it was felt, were being denied opportunities to progress by players from overseas.

Were the UK to leave the EU, it is possible EU/EEA nationals would face similar tests to non-EU/EEA nationals with potentially major impacts on some top clubs, although some sports lawyers believe that, ultimately, a compromise set of rules would probably be worked out.

While much of the focus is on the top tier of major sports competitions, it is also important to realise that additional immigration restrictions would affect employment in the sector more broadly. Any new rules would likely apply across the widest range of organisations and sports and apply not just to athletes but also to other EU nationals seeking employment in sport in the UK, for example in coaching or in other branches of the sports sector.

EU funding for sport
Currently, sports organisations in the UK can access EU funding streams that can be used to benefit grassroots sport – notably ERASMUS+ Sport – but also other aspects of the ERASMUS+ programme aimed at improving education and training and, more broadly, the EU Structural Funds.

In a post-Brexit world, UK sports bodies will no longer be guaranteed access to these funds as they are now. Taking ERASMUS+ Sport as an example, only full EU member states are automatically classed as ‘programme countries’ and therefore by definition able to participate in all ERASMUS+ funded projects. Other, non-EU countries are able to able to access ERASMUS+ funds but they are subject to specific conditions which can restrict the extent of their involvement.

In the immediate term, UK organisations may reconsider bidding for ERASMUS+ funding – particularly funding for multi-year projects – until the precise timescales and terms of Brexit become clearer. Looking further ahead, once the UK leaves the EU, the sector will want some reassurance that funding might still be available through EU mechanisms via some bilateral agreement, albeit recognising this would still require some contribution from the UK and would probably mean more restricted access to funds compared to now. If EU funds are no longer available, for example because the UK government no longer wishes to contribute, then the sector will want to understand if an equivalent national funding arrangement for sports projects is likely to be made available.

Trade
Currently the UK enjoys the benefits of being a full member of the EU single market. While this means accepting the free movement of people, it also means the UK gets the trade benefits from the free movement of goods and services. In particular, goods (including sports goods) move within the EU single market free from tariffs and other trade barriers.

In the event of Brexit, the UK would need to agree a range of free trade agreements with a range of countries as well as the EU itself. Most commentators accept these deals could take years to negotiate which means, in the interim, the UK could find itself not just facing tariffs on exports to the EU but also having to apply tariffs to goods imported from the EU.

In this context, sports goods producers and service providers in the UK will probably face tariffs and/or other restrictions on selling into the EU which could affect the health of the broader UK sports business sector.

Similarly, tariffs on EU imports will mean UK consumers having to absorb increases in the cost of imported sporting goods, clothing and equipment. At a time when sports participation has been the subject of intense debate, price increases of this kind would make it harder for those on low incomes to participate and create additional cost pressures for sports clubs and other grassroots providers. This price impact will be exacerbated if the pound continues to depreciate since it will increase the price of sports goods imported from the EU.

Conclusion
Overall it is still very early days in terms of understanding what happens now and the full implications of the vote to leave the EU. Nevertheless, the sector needs to use the coming few months to consider carefully the likely impact of Brexit on sport so as to be well-placed to engage with officials once the detail becomes clearer. At the Alliance we are already beginning to do this and we look forward to engaging with our members and stakeholders to help us in this important task.

Leigh Thompson, policy manager at the Sport and Recreation Alliance
Leave supporters celebrate Credit: kaname muto / press association images
Exiting the single market may create tariffs on the importing and exporting of sports goods Credit: dktaylor / shutterstock.com
The movement of European sportspeople, such as West Ham’s French footballer Dimitri Payet, could be restricted Credit: thibault camus / press association images
 


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SELECTED ISSUE
Sports Management
11 Jul 2016 issue 124

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Leisure Management - Brexit strategies

Brexit

Brexit strategies


What the UK would look like after leaving the European Union is still unclear, but the referendum result means that the sport sector will have to begin making plans

Leigh Thompson, Sport and Recreation Alliance
Those who voted remain demonstrate against the referendum result Ik Aldama / DPA / press association images
Leigh Thompson, policy manager at the Sport and Recreation Alliance
Leave supporters celebrate kaname muto / press association images
Exiting the single market may create tariffs on the importing and exporting of sports goods dktaylor / shutterstock.com
The movement of European sportspeople, such as West Ham’s French footballer Dimitri Payet, could be restricted thibault camus / press association images

On 24 June the UK delivered perhaps the most significant referendum result in a generation by voting to leave the European Union.

It is fair to say that, less than a month later, the aftershocks are still being felt. While much of the ensuing media frenzy has focussed on the broader economic and political fallout, the vote is significant for sport given the extent to which the UK’s membership of the EU influences the sector at every level from elite down to the grassroots.

Perhaps, unsurprisingly, a great deal has already been written speculating on what Brexit might mean for the sector but it is important to remember that, in day-to-day terms, the vote has not changed anything.

This process of withdrawal will only begin once Article 50 of the Lisbon Treaty is triggered and, as such, it appears unlikely there will be clarity on the key issues for some months to come. The intervening period therefore provides a useful opportunity to reflect calmly on the situation and to identify the key issues affecting the sports sector that will need to be addressed by officials once the process of detailed negotiation begins.

What might the terms of Brexit look like?
As a single market, a central plank of the EU is that people, goods, services and capital are free to move across borders. In particular, the principle of free movement of people was the most contested issue in the referendum debate; many of those in the leave campaign argued strongly that only with control of UK borders can immigration be controlled properly.

While it is not yet clear what model the UK would adopt once it leaves the EU, it is possible to consider some options. Some countries outside the EU – such as Switzerland and Norway – have agreed to some form of freedom of movement (alongside compliance with other EU rules) in return for access to the EU’s single market. In effect, these countries get access to the benefits of the EU but at the cost of having little influence on the rules they must abide by due to their position on the periphery.

Looking at the UK, it is hard to see how this sort of ‘halfway house’ would be sufficient to satisfy those that want to take back control of law-making and, crucially, immigration policy. In this context we could well see the UK adopt a model based on full sovereignty and access to markets via free trade agreements with individual countries or blocs such as the EU. Such a model would deliver the primacy of UK law demanded by hard-line Brexiteers but would, equally, mean limitations on freedom of movement and, probably, more complex and costly trading arrangements.

Ultimately, the final form Brexit takes will depend to a large degree on the extent to which the UK government is prepared to trade off controls on freedom of movement for access to the single market.

Clearly, sport is not going to be foremost in officials’ minds when these ‘red line’ negotiating positions are discussed. Nonetheless, it is possible to identify a number of key areas where the sector is likely to be affected depending upon the precise terms of what is agreed.

Employment
Any restriction on the freedom of movement would be a key issue for the sports sector. The impact would be felt most keenly within major professional sports such as football and rugby where players from across the EU can currently move freely to play in the Premier League and Aviva Premiership respectively.

At present, in football at least, non-EU/EEA players wishing to play in England must satisfy more stringent work-permit rules. These rules were devised in part to support the development of domestic players who, it was felt, were being denied opportunities to progress by players from overseas.

Were the UK to leave the EU, it is possible EU/EEA nationals would face similar tests to non-EU/EEA nationals with potentially major impacts on some top clubs, although some sports lawyers believe that, ultimately, a compromise set of rules would probably be worked out.

While much of the focus is on the top tier of major sports competitions, it is also important to realise that additional immigration restrictions would affect employment in the sector more broadly. Any new rules would likely apply across the widest range of organisations and sports and apply not just to athletes but also to other EU nationals seeking employment in sport in the UK, for example in coaching or in other branches of the sports sector.

EU funding for sport
Currently, sports organisations in the UK can access EU funding streams that can be used to benefit grassroots sport – notably ERASMUS+ Sport – but also other aspects of the ERASMUS+ programme aimed at improving education and training and, more broadly, the EU Structural Funds.

In a post-Brexit world, UK sports bodies will no longer be guaranteed access to these funds as they are now. Taking ERASMUS+ Sport as an example, only full EU member states are automatically classed as ‘programme countries’ and therefore by definition able to participate in all ERASMUS+ funded projects. Other, non-EU countries are able to able to access ERASMUS+ funds but they are subject to specific conditions which can restrict the extent of their involvement.

In the immediate term, UK organisations may reconsider bidding for ERASMUS+ funding – particularly funding for multi-year projects – until the precise timescales and terms of Brexit become clearer. Looking further ahead, once the UK leaves the EU, the sector will want some reassurance that funding might still be available through EU mechanisms via some bilateral agreement, albeit recognising this would still require some contribution from the UK and would probably mean more restricted access to funds compared to now. If EU funds are no longer available, for example because the UK government no longer wishes to contribute, then the sector will want to understand if an equivalent national funding arrangement for sports projects is likely to be made available.

Trade
Currently the UK enjoys the benefits of being a full member of the EU single market. While this means accepting the free movement of people, it also means the UK gets the trade benefits from the free movement of goods and services. In particular, goods (including sports goods) move within the EU single market free from tariffs and other trade barriers.

In the event of Brexit, the UK would need to agree a range of free trade agreements with a range of countries as well as the EU itself. Most commentators accept these deals could take years to negotiate which means, in the interim, the UK could find itself not just facing tariffs on exports to the EU but also having to apply tariffs to goods imported from the EU.

In this context, sports goods producers and service providers in the UK will probably face tariffs and/or other restrictions on selling into the EU which could affect the health of the broader UK sports business sector.

Similarly, tariffs on EU imports will mean UK consumers having to absorb increases in the cost of imported sporting goods, clothing and equipment. At a time when sports participation has been the subject of intense debate, price increases of this kind would make it harder for those on low incomes to participate and create additional cost pressures for sports clubs and other grassroots providers. This price impact will be exacerbated if the pound continues to depreciate since it will increase the price of sports goods imported from the EU.

Conclusion
Overall it is still very early days in terms of understanding what happens now and the full implications of the vote to leave the EU. Nevertheless, the sector needs to use the coming few months to consider carefully the likely impact of Brexit on sport so as to be well-placed to engage with officials once the detail becomes clearer. At the Alliance we are already beginning to do this and we look forward to engaging with our members and stakeholders to help us in this important task.


Originally published in Sports Management 11 Jul 2016 issue 124

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