The English Football League (EFL), organizing and structuring competition between football clubs all across England since 1888, has been forced to go to the private sector to secure funding to bridge the rest of this Covid-19 ridden season. The Financial Times reports that the EFL has borrowed £117m from US insurer MetLife MET as a plan to borrow from the UK government via the Bank of England fell through.

This shows that the UK government appears to fail to understand two important things: first, that sport is a social good that needs protecting especially during a pandemic, and second that soccer in England is a world-leading sector that needs supporting.

That a national institution providing vast amounts of social good to so many local communities around the country is forced to borrow from the private sector makes it clear the government still struggles to appreciate its role in helping communities keep going and recover from the Covid-19 pandemic.

That the government is reported to have demanded clubs curb their spending also shows a sadly rather typical inability of the UK government to recognise what success looks like in a world-leading industry located here in the UK. Its approach to immigration over the years has hit another of its biggest export sectors, the higher education sector, whilst Brexit has had all sorts of adverse impacts on UK exporters. Pay is high in the Championship - English soccers second tier league competition. But its high because its a competitive sector, its a sector producing a product that the UK exports around the world on a weekly basis.

Much of that export is the Premier League PINC , but Championship clubs are competing for three promotion places each season to enter into the Premier League. The team finishing even in last place in the Premier League earns close to ten times what a club finishing top of the Championship earns. There are financial incentives to invest to achieve the goal of promotion to the Premier League.

Part of that fierce competition involves teams trying to gain an edge in everything they do - recruiting the best players from all around the world if need be, recruiting top backroom staff, investing in facilities. Investments with a potentially huge rate of return.

The counter is that this intense competition may lead to clubs overspending to achieve - the clubs engage in an arms race, so to speak, and the level of spending is socially sub-optimal. There may be negative externalities which are made all the clearer when clubs go bankrupt, as has happened in the EFL on a number of occasions.

This then has a knock on effect in the local communities where clubs are located. Locals in Sunderland, Portsmouth, Coventry and a significant number of places around the UK can bear testament to this.

In this scenario, industry level co-operation can help to internalise that externality. If clubs can come together and agree rules to abide by, then some of the arms race might be reduced and investment may become more socially optimal.

Arguably the EFL does this - it imposes rules on transfers outside of mandated transfer windows, and sets in place a host of other regulations on what clubs can and cannot do if they wish to be members of the league. Does it do enough though? Over the last sixty years it has loosened a whole range of additional restrictions - a maximum wage, restrictions on the mobility of players, and a revenue sharing agreement.

With the exception of the revenue sharing agreement, however, these restrictions mainly acted to distribute revenues in the game towards club owners and away from the players themselves. Returning to the theme of player pay, reportedly at the heart of the governments reluctance to offer further assistance to the EFL.

But why doesnt the UK government want UK workers to be paid at their competitive rate? Does it want more of the revenues in the game to go to the owners of clubs, as was the case previously? Will that maintain English soccers status as world leading? Either way, it suggests a rather misguided set of objectives on the part of the UK government.